-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mo0TiG8CtO+HqsJOKkvt8pGojEG+jJ2LLQtebrufWr0WIR4EwTIzyKzAKjDUwEVx s37O9Kwjby2bYNIMIDWcXg== /in/edgar/work/20000913/0001012709-00-000860/0001012709-00-000860.txt : 20000922 0001012709-00-000860.hdr.sgml : 20000922 ACCESSION NUMBER: 0001012709-00-000860 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 23 FILED AS OF DATE: 20000913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW MILLENNIUM MEDIA INTERNATIONAL INC CENTRAL INDEX KEY: 0001108967 STANDARD INDUSTRIAL CLASSIFICATION: [7310 ] IRS NUMBER: 841463284 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2 SEC ACT: SEC FILE NUMBER: 333-45722 FILM NUMBER: 722327 BUSINESS ADDRESS: STREET 1: 101 PHILIPPE PARKWAY STREET 2: SUITE 300 CITY: SAFETY HARBOR STATE: FL ZIP: 34695 BUSINESS PHONE: 7277976664 MAIL ADDRESS: STREET 1: 101 PHILIPPE PARKWAY STREET 2: STE 300 CITY: SAFTETY HARBOR STATE: FL ZIP: 34695 SB-2 1 0001.txt NEW MILLENNIUM MEDIA INTERNATIONAL, INC. As filed with the Securities and Exchange Commission on August 28, 2000 Registration No. ________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (Name of Small Business Issuer in Its Charter) Colorado (7310) 84-1463284 ---------------------------------------------------------------------- (State or jurisdiction (Primary Standard (I.R.S. Employer of incorporation or Industrial Classification Identification No.) organization) Code Number) 101 Philippe Parkway, Suite 300 Safety Harbor, Florida 34695 (727) 797-6664 -------------- (Address and Telephone Number of Principal Executive Offices and Principal Place of Business) John D. Thatch, President New Millennium Media International, Inc. 101 Philippe Parkway Suite 300 Safety Harbor, Florida 34695 ---------------------------- (Name, Address and Telephone Number of Agent for Service) Copies to: Gerald C. Parker, Chairman of the Board of Directors 7820 South Holiday Drive Suite 320 Sarasota, Florida 34321 (941) 925-2500 Fax (941) 925-2503 Approximate date of proposed sale to the public: As soon as practicable after the effective date of this registration statement. 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, 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. | | 1 If this form is a post-effective amendment filed pursuant to Rule 462(d) 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. | |
======================================================================================= CALCULATION OF REGISTRATION FEE - --------------------------------------------------------------------------------------- Title of each Amount to Proposed maximum Proposed Amount of class of be offering price maximum registration securities to registered per unit aggregate fee be registered offering price - --------------------------------------------------------------------------------------- Common stock 2,160,000 (1) $ 0.70 1,512,000 399.17 - --------------------------------------------------------------------------------------- Common stock(a) 17,181,818 (2) $ 0.70 12,027,273 3,175.20 - --------------------------------------------------------------------------------------- Common stock(b) 1,100,000 (3) $ 0.70 770,000 203.28 - --------------------------------------------------------------------------------------- Common stock(c) 1,718,182 (4) $ 0.70 1,202,727 317.52 - --------------------------------------------------------------------------------------- Common stock(d) 3,000,000 (1)(5) $ 0.70 2,100,000 554.40 - --------------------------------------------------------------------------------------- Totals 25,160,000 17,612,000 4,649.57 - ---------------------------------------------------------------------------------------
Title of each class of securities to be registered: (a) Swartz Investment Agreement purchase over three years. (b) Shares of Common Stock issuable upon exercise by Swartz "Commitment warrants" and "additional warrants". (c) Shares of Common Stock issuable upon exercise by Swartz "Purchase warrants". (d) Shares of Common Stock issuable upon conversion. Proposed maximum offering price per unit: (1) Based upon the average of the bid and asked prices of New Millennium Media International, Inc. common stock as reported on the OTC Bulletin Board on August 28, 2000 (within 5 business days of this filing), pursuant to Rules 457(c) and (g) of the Securities Act of 1933. (2) Issuable periodically over a 36 months term pursuant to the Swartz Investment Agreement. Swartz Private Equity, LLC will purchase under Regulation D up to $25,000,000 of shares at a price of the lesser of the market price minus $0.10 or 92% of the market price for 20 days following each put date. (3) Swartz has already received a "commitment warrant" ((c) above) to purchase 1,000,000 shares at signing the letter of intent at an initial price of $0.30 per share and may thereafter be reset every 6 months. At the earlier of March 15, 2001 or the date of the first put notice delivered to Swartz, Swartz shall receive "additional warrants" (included in (c) above) for additional shares and on the date of any reverse stock split and on each one-year anniversary thereafter Swartz shall receive "additional warrants" so that the sum of "commitment warrants" and "additional warrants" may equal up to 4% of the number of fully diluted common outstanding shares. The price shall be the same as that calculated for "commitment warrants". (4) Issuable to Swartz Private Equity, LLC upon the exercise of common stock purchase warrants. The warrants are issuable to Swartz from 2 time to time when NMMI exercises its put right to sell shares of common stock to Swartz. The exercise price of a warrant will initially be equal to 110% of the market price for that put and thereafter may be reset every six months. Each warrant initially will be immediately exercisable and have a term beginning on the date of issuance and ending five years thereafter. (5) Issuable upon conversion of Series A Convertible Preferred stock issued to Investment Management of America, Inc. The conversion ratio is 1:1. 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 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 3 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. Filing Type: SB-2 Description: Registration Statement for Small Business Issuers Filing Date: August 28, 2000 Period End: N/A Primary Exchange: Over the Counter Includes OTC and OTCBB Ticker: NMMI 4 Table of Contents - -------------------------------------------------------------------------------- Page ---- Part I ............................................................ 9 Item 3, Summary Information and Risk Factors ....................... 9 Item 4, Use of Proceeds ............................................ 19 Item 5, Determination of Offering Price ............................ 19 Item 6, Dilution ................................................... 20 Item 7, Selling Security Holders ................................... 21 Item 8, Plan of Distribution ....................................... 22 Item 9, Legal Proceedings .......................................... 26 Item 10, Directors, Officers, Promoters and Control Persons .................................................... 26 Item 11, Security Ownership of Certain Beneficial Owners And Management ............................................. 27 Item 12, Description of Securities .................................. 28 Item 13, Interest of Named Experts and Counsel ...................... 29 Item 14, Disclosure of Position of Indemnification for Securities Act Liabilities ................................. 30 Item 15, Organization within Last Five Years ........................ 30 Item 16, Description of Business .................................... 30 Item 17, Management's Discussion and Analysis or Plan of Operation .. 33 Item 18, Description of Property .................................... 34 Item 19, Certain Relationships and Related Transactions ............. 35 Item 20, Market for Common Equity and Related Stockholder Matters .................................................... 35 Item 21, Executive Compensation ..................................... 36 Item 22, Financial Statements ....................................... 37 Part II ........................................................... 58 Item 23, Changes and Disagreements with Accounts on Accounting and Financial Disclosures ....................... 58 Item 24, Indemnification of Directors and Officers .................. 58 Item 25, Other Expenses of Issuance and Distributions ............... 58 Item 26, Recent Sales of Unregistered Securities .................... 59 Item 27, Exhibits Index ............................................. 60 Item 28, Undertakings ............................................... 61 EX-3.1, Articles of Incorporation .................................. EX-3.1(a), Designation of Preferred Stock ............................. EX-3.2, Bylaws of NMMI ............................................. EX-4.1, Swartz Agreement ........................................... EX-4.2, Form of Commitment Warrants to Swartz ...................... EX-4.3, Form of Purchase Warrants to Swartz ........................ EX-4.4, Warrant Side-Agreement with Swartz ......................... EX-4.5, Registration Rights Agreement with Swartz .................. EX-4.6, Letter Agreement with Swartz ............................... EX-4.7, Employees Stock Option Plan ................................ EX-5.1, Legal Opinion .............................................. EX-8.5, Form of Additional Warrants to Swartz ...................... EX-10.1, Contract with Investment Management of America, Inc. ....... EX-10.2, Progressive Mailer Corporation Merger Agreement ............ EX-10.3, LuFam Technologies, Inc. Asset Purchase Agreement .......... EX-10.4, Unergi, Inc. Amended Agreement and Plan of Merger .......... EX-10.5, Scovel Corporation Agreement and Plan of Merger ............ EX-10.6, Multiadd, LLC Exclusive Distribution Contract .............. EX-10.7, Carson-Jensen-Anderson Enterprises, Inc. Marketing Agreement ........................................ 5 EX-10.8, St. James Properties, Inc. Lease Contract .................. EX-21.1, List of Subsidiaries ....................................... EX-23.1, Consent of Legal Counsel ................................... EX-23.2, Consent of Independent Auditors ............................ EX-27.1, Financial Data Schedule .................................... EX-99.1, Trademark Registration Pending Documents ................... EX-99.2, John Thatch, President/CEO Employment Agreement ............ 6 PROSPECTUS New Millennium Media International, Inc. 101 Philippe Parkway Suite 300 Safety Harbor, Florida 34695 (727) 797-6664 The Resale of 25,160,000 Shares of Common Stock The selling price of the shares will be determined by market factors at the time of their resale. This prospectus relates to the resale by the selling shareholders of up to 25,160,000 shares of common stock. The selling shareholders may sell the stock from time to time in the over-the-counter market at the prevailing market price or in negotiated transactions. Of the shares offered, o 2,160,000 shares are presently outstanding to accredited investors, o up to 17,181,818 shares are issuable to Swartz Private Equity, LLC based on an Investment Agreement dated as of May 19, 2000, o up to 1,100,000 shares are issuable to Swartz Private Equity, LLC upon the exercise of warrants issued to Swartz under the Investment Agreement as Commitment Warrants and Additional Warrants, o up to 1,718,182 shares are issuable to Swartz Private Equity, LLC upon the exercise of warrants issued to Swartz under the Investment Agreement as "Purchase Warrants", o 3,000,000 shares are outstanding to Investment Management of America, Inc. to convert 3,000,000 shares of Series A Convertible Preferred Stock. We will receive no proceeds from the sale of the shares by the selling shareholders. However, we have received proceeds from the sale of the Series A Preferred shares that are presently outstanding and may receive up to $25 million of proceeds from the sale of shares to Swartz and we may receive additional proceeds from the sale to Swartz of shares issuable upon the exercise of any warrants that may be exercised by Swartz. Our common stock is quoted on the over-the-counter Electronic Bulletin Board under the symbol NMMI. On August 28, 2000, the average of the bid and asked prices of the common stock on the Bulletin Board was $0.70 per share. Investing in the common stock involves a high degree of risk. You should invest in the common stock only if you can afford to lose your entire investment See "Risk Factors" beginning on page 12 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities nor determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. 7 The date of this prospectus is August 28, 2000. Please read this prospectus carefully. It describes our company, finances, products and services. Federal and state securities laws require that we include in this prospectus all the important information that you will need to make an investment decision. You should rely only on the information contained or incorporated by reference in this prospectus to make your investment decision. We have not authorized anyone to provide you with different information. The selling shareholders are not offering these securities in any state where the 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 front page of this prospectus. The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus. Table of Contents Page Page Prospectus Summary.................. 7 Where You Can Find More Summary Financial Data..............11 Information.......................29 Risk Factors........................12 Description of Business.............30 Use of Proceeds.....................19 Management's Discussion and Price Range of Common Stock.........19 Analysis or Plan of Operation.....33 Dilution............................20 Description of Property.............34 Selling Security Holders............20 Certain Relationships and Plan of Distribution................22 Related Transactions..............34 Swartz Investment Agreement.........22 Market for Common Equity and Additional Securities Being Related Stockholder Matters.......35 Registered........................24 Executive Compensation..............36 Legal Proceedings...................26 Index to Financial Statements.......37 Directors and Officers..............26 Indemnification of Directors Security Ownership of Certain and Officers......................58 Beneficial Owners and Expenses of Issuance and Management........................27 Distribution......................58 Description of Securities...........28 Recent Sales of Unregistered Interest of Named Experts Securities........................59 and Counsel.......................29 Exhibits Index......................60 Disclosure of Commission Undertakings........................61 Position of Indemnification Signatures..........................63 For Securities Act Liabilities.......................30 8 ITEM 3. SUMMARY INFORMATION AND RISK FACTORS This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider before investing in the common stock. You should read the entire prospectus carefully, including the "Risk Factors" section. New Millennium Media International, Inc. was originally incorporated April 21, 1998 in Colorado under the name New Millennium Media International, Inc. On April 30, 1998 Progressive Mailer Corp., a Florida corporation, merged into NMMI. August 31, 1999 NMMI acquired Unergi, Inc., a Nevada corporation, by merging Unergi into New Millennium Media, Inc., a Colorado corporation, a wholly owned subsidiary of NMMI by way of a tax free reorganization. Our principal executive offices are located at 101 Philippe Parkway, Suite 300, Safety Harbor, Florida 34695, (727) 797-6664, fax (727) 797-7770. Some of the statements contained in this prospectus, including statements under "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operation" and "Business," are forward-looking and may involve a number of risks and uncertainties. Actual results and future events may differ significantly based upon a number of factors, including: o our significant historical losses and the expectation of continuing losses; o rapid technological change in the motion billboard industry; o our reliance on key strategic relationships and accounts; o the impact of competitive products, services and pricing; o uncertain protection of our intellectual property rights; and o uncertainty of our exclusivity in the United States regarding our purchase of "Eye Catcher" display boards. In this prospectus, we refer to New Millennium Media International, Inc. as "NMMI" or "we". We refer to Swartz Private Equity, LLC as "Swartz". OUR BUSINESS According to the Outdoor Advertising Association of America, Inc. the outdoor display advertising business reported earnings of 2.330 billion in 1998, an increase of 9.1% over the previous year and the first quarter of 1999 revenues were up 7.5% over the same period in 1998. This continued growth reflects the popularity and effectiveness of outdoor and indoor advertising from both existing and new advertisers. NMMI intends to capitalize on the demand for display advertising in two ways. NMMI plans to install LED outdoor displays in high traffic areas, and form joint ventures with strategic partners to place a large number of indoor "Illumisign-Eyecatcher" patented eye catcher boards. NMMI intends to secure highly visible sites throughout the United States and provide superior service within the industry. The new millennium will demand the highest digital quality and the most cost efficient LED advertising boards available. We believe NMMI already has the product available and subject to available financing we are ready to introduce the product to the consumer. NMMI has an 9 opportunity to become an industry leader in the indoor and outdoor advertising industry. NMMI has the exclusive U.S. rights to an indoor advertising board called the Illumisign-EyeCatcher Display. This is a patented product, which ranges in size from 11"x17" to 48"x72". These signs can display up to 24 advertisements on a rotating basis. Each rotation can be set to run from three seconds to one hour. Illumisigns can generate revenues up to $5,000 a month per display. NMMI has another product from a manufacturer of LED boards. NMMI has partnered with E-Vision LED, Inc., a U.S. based company whose affiliates manufacture LED displays. E-Vision will sell us the LED boards at manufacturer's cost and will be a limited partner in the revenues that the boards produce. This allows NMMI to purchase the highest quality product at a greatly reduced cost. This business arrangement should also enable us to deploy approximately 2 1/2 times the number of boards that we would otherwise have been able to. We also have teamed up with several advertising companies throughout the country. This enables us to sell advertisements on a national level that will benefit us in placing boards throughout the U.S. E-Vision's supplier has the capability to manufacture any size board including boards for sporting events. These LED boards can operate any commercial format on any size board. Management believes this gives NMMI a strong competitive advantage over other display boards for which the commercial must be reformatted which often takes weeks. E-Vision LED displays will run any format on any size board with consistent color quality and clarity. Color quality and clarity are very important to a national advertiser who wants their colors and logos the same on all boards. E-Vision will assist NMMI with training and support from the first board and will provide NMMI with ongoing assistance in all aspects of programming, technical and software support. As a manufacturing partner, E-Vision and its affiliates will supply NMMI, free of charge software upgrades as they become available. NMMI also has an agreement for the U.S. distribution rights from Multiadd, a Great Britain based company and its patent owner, Maurice Grosse. Multiadd manufactures a patented indoor display board, which is called the "Illumisign-Eyecatcher" display. This display is steel incased, front lighted, and displays poster type ads. The "Illumisign-Eyecatcher" is capable of displaying up to 24 advertisements from size 11"x17" to 48"x72." Each advertisement has the ability to rotate in cycles of two seconds to one hour. This is a significant advantage over other indoor boards, as the competitive boards only display one to ten poster ads at a time. OUR INVESTMENT AGREEMENT We have entered into an Investment Agreement with Swartz Private Equity, LLC ("Swartz") to raise up to $25 million over a term ending 36 months after the effective date of this registration statement through a series of sales of our common stock to Swartz. The dollar amount of each sale is limited by our common stock's trading volume. A minimum period of time must occur between sales. In turn, Swartz will either sell our stock in the open market, sell our stock to other investors through negotiated transactions or hold our stock in its own portfolio. This prospectus covers the resale of our stock by Swartz either in the open market or to other investors. 10 ADDITIONAL SHARES WE ARE REGISTERING On April 12, 2000 we designated 5,000,000 of the 10,000,000 authorized Preferred shares as Series A Convertible Preferred Stock, par value $0.001, and issued 3,000,000 shares as Series A Convertible Preferred Stock to Investment Management of America, Inc. A fund of 3,000,000 shares of Common Stock from which to convert the 3,000,000 shares of Series A Convertible Preferred Stock is included in this registration statement. Recently, we conveyed an aggregate of 2,160,000 shares of common stock to certain qualified private investors. This number includes options, see Item 26, Recent Sales of Unregistered Securities. The resale of these shares of common stock by the private investors is included in this registration statement. Key Facts Total shares outstanding prior 24,099,462(1) as of August 28, 2000 to this offering Shares being offered for resale 25,160,000(2) (Maximum) to the public Total shares outstanding after 52,259,462 this offering Price per share to the public Market price at time of resale Total proceeds raised by offering None; however, we have received proceeds from the sale of shares that are presently outstanding, we may receive up to $25 million from the sale to Swartz of shares issuable upon the exercise of any warrants issued to Swartz pursuant to the Investment Agreement. Use of proceeds from the sale We plan to use the proceeds for working of the shares to Swartz capital and general corporate purposes. OTC Bulletin Board Symbol NMMI (1) Does not include 3,000,000 shares of Series A Convertible Preferred Stock issued to Investment Management of America, Inc. (2) Includes (i) 2,160,000 shares that are presently outstanding to qualified investors, (ii) up to 17,181,818 shares that may be issued to Swartz pursuant to the Investment Agreement, (iii) 1,100,000 shares underlying warrants issued and issuable to Swartz in connection with the Investment Agreement, (iv) 3,000,000 shares as a pool from which to issue the ESOP shares as required from time to time, (v) 3,000,000 shares of Common Stock from which to convert the 3,000,000 shares of Class A Convertible Preferred Stock issued to Investment Management of America, Inc. 11 SUMMARY FINANCIAL DATA The information below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and notes thereto included elsewhere in this prospectus. Year Ended Six Months Ended December 31 June 30 ----------- ------- 1998 1999 1999 2000 ---- ---- ---- ---- (Unaudited) (Unaudited) Revenues 10,632 49,176 6,911 -- Operating Expenses 616,856 495,161 132,626 123,875 Net Loss 606,224 445,985 125,715 123,875 Loss per share 0.15 0.03 0.009 0.005 Weighted average number of common shares outstanding 3,662,500 14,704,940 13,968,333 23,589,672 March 31, 2000 -------------- (Unaudited) Balance Sheet Data: Working capital .............................. (942,445) Total assets ................................. 1,515,046 Total liabilities ............................ 1,795,138 Shareholders' deficit ........................ (280,098) RISK FACTORS An investment in the shares of Common Stock of New Millennium Media International, Inc. offered hereby involves a high degree of risk. The prospective investor should consider carefully the following risk factors, in addition to the other information obtained by the investor in evaluating an investment in shares of Common Stock offered hereby. The materials provided to the investor contain forward-looking statements that involve risks and uncertainties and address, among other things, the Company's acquisition and expansion strategy, use of proceeds, capital expenditures, liquidity, third-party contractual arrangements, cost-reduction strategy, integration of acquired companies, and product demand. Actual results may differ materially from those discussed in forward-looking statements as a result of various factors, including those set forth below. THE COMPANY HAS LIMITED OPERATING HISTORY AND FUTURE REVENUES ARE UNPREDICTABLE. In July 1999 NASD enacted an eligibility rule that requires any public company to be in full compliance with all of the financial reporting requirements of the Securities Act. On January 25, 2000 NMMI received a thirty-day eligibility symbol because of its failure to timely file the required certified financial reports. On February 24, 2000 NMMI was "delisted" and placed on the "pink sheets" National Quotation System. In lieu of filing form 10 and bring current the needed certified financial statements by certified audit, the Company elected to reverse merge with a compliant shell corporation. Thus, the Company completed the process of a reverse merger with Scovel Corporation wherein New Millennium Media International, Inc. was the surviving entity with the ultimate result of the Company's Common Stock being traded Bulletin Board. There can be no assurance that the intended 12 result will be achieved. It is not certain that the Company has the technical capability to support the potential that the Illumisign-Eyecatcher and LED boards could attract. The Company has just begun to actively sell its advertising product and it has no operating history available to evaluate its business and prospects. Potential investors should consider the Company's prospects in light of the following risks, expenses and uncertainties that may be encountered by development stage companies, which risks and uncertainties include: o an evolving and unproven business model; o management of an expanding business in a rapidly changing market; o attracting new advertising customers and maintaining customer satisfaction; o locating and leasing suitable site locations, indoor and outside, for the display boards; o introducing new and enhanced innovative display services, products and alliances; o attaining acceptable profit margins notwithstanding competition and rising wholesale prices; and o minimizing technical difficulties, display board downtime and the effect of competition from other media. As a result of the Company's lack of operating history and the emerging nature of the media in which it competes, it is unable to accurately forecast its revenues. The Company's current and future expense levels are based predominantly on its operating plans and estimates of future revenues. The Company may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues would likely have an immediate material adverse effect on its business, operating results and financial condition. Further, the Company currently intends to substantially increase its operating expenses to purchase additional display boards, indoor and outdoor, as well as develop additional site locations. It is intended the Company will be innovative in its choice of sites and the location within the sites. The Company expects to experience significant fluctuations in its future operating results due to numerous factors, many of which are outside the Company's control. Factors that may adversely affect the Company's operating results include, but are not limited to: o the Company's ability to attract and retain advertising customers at a steady rate and maintain customer satisfaction, o the continued availability of the various size and model display board, o the Company's ability to locate and lease suitable site locations for placement of the display boards, o the announcement or introduction of new sites, services and enhanced products by competitors, o general economic conditions and economic conditions specific to the advertising industry, o the level of response and consumer acceptance of the display boards for the purchase of consumer products and services, o the Company's ability to upgrade and develop its display systems and infrastructure and to attract and retain personnel in a timely and effective manner, 13 o many cities and states have regulations that prohibit LED signs on the basis that the signs may be distracting to passing drivers and may lead to an increase in the number of traffic accidents, o the amount and timing of operating costs and capital expenditures relating to expansion of the Company's business, operations and infrastructure. If the Company does not successfully manage these risks, its business, operating results and financial condition would be materially adversely affected. The Company cannot assure you that it will successfully address these risks or that its business strategy will be successful. If the Company does not become profitable, you may lose your entire investment. THE COMPANY HAS INCURRED LOSSES AND EXPECTS TO INCUR SUBSTANTIAL NET LOSSES FOR THE FORESEEABLE FUTURE. Since inception, the Company has been operating at a loss and expects that operating losses and negative cash flow will continue for the foreseeable future as it invests in marketing and promotional activities, technology and equipment systems. The Company believes that increasing its revenues will depend in large part on its ability to: o develop and lease suitable site locations; o generate innovative spots within the site locations that are best suited for effective marketing and other promotional activities; o develop consumer awareness and recognition for our advertisers o generate interest in advertisers for our brand display board product; o continued development of enhancing our existing display boards and development of newer innovative display boards to stay ahead of competitors in this market; o attract suitable talented personnel who are able to recognize potential customers, advertisers, locations and improvements of the display boards; o provide its customers, both advertisers and location owners, with a quality trouble-free product and quality courteous service; o develop strategic relationships. The Company's future profitability depends on generating and sustaining high revenue growth while maintaining reasonable expense levels. Slower revenue growth than the Company anticipated or operating expenses that exceed its expectations would adversely affect its business, operating results and financial condition. The Company cannot be certain when or if it will achieve sufficient revenues in relation to expenses to become profitable. If the Company is unable to become profitable, you will lose your entire investment. GOING CONCERN UNCERTAINTY The Company has incurred recurring operating losses and negative cash flows and has negative working capital. The Company has financed itself primarily through the sale of its stock and related party borrowings. These conditions raise substantial doubt about the Company's ability to continue as a going concern. As noted in our financial statement, the Company has initiated several actions to generate working capital for expected advertising growth. 14 There can be no assurance that the Company will be success in implementing its plans, or if such plans are implemented, that the Company will be successful. THE COMPANY WILL NEED ADDITIONAL CAPITAL TO FUND ITS BUSINESS. The Company requires substantial working capital to fund its business and may need more in the future to: o fund negative cash flow from operations for the foreseeable future, o complete additional acquisitions to expand the distribution system, o acquire additional equipment and to improve and enhance the functionality, capacity and performance of its display boards. Based on the its current operating plan, it anticipates that the net proceeds from this transaction with Swartz Private Equity, LLC, together with Company available funds, will be sufficient to satisfy its anticipated needs for working capital, capital expenditures and business expansion for the foreseeable future. Alternatively, it may need to raise additional funds sooner in order to fund more rapid expansion, to develop new or enhanced equipment (display boards, both indoor and outdoor), services, site locations or to respond to competitive pressures. If the Company raises additional funds by issuing equity or convertible debt securities, the percentage ownership of its stockholders will be diluted. Further, any new securities could have rights, preferences and privileges senior to those of the preferred stock and common stock. The Company currently does not have any commitments for additional financing. It cannot be certain that additional financing will be available in the future to the extent required or that, if available, it will be on acceptable terms. If adequate funds are not available on acceptable terms, the Company may not be able to fund its expansion, consummate acquisitions, develop or enhance its products or services or respond to competitive pressures. RELIANCE ON ADVERTISING SALES AND LOCATION LEASES; POTENTIAL ADVERSE CHANGES IN COMMISSION PAYMENTS. The Company is dependent on selecting the proper display boards in the most suitable location with the most dynamic advertising material for the particular needs of the advertiser in order to offer its customers the quality results that are necessary for a continuing lasting business relationship. The Company currently has agreements with its display board suppliers that obligate the Company to purchase display boards and products over an extended period of time. In addition, the Company currently has agreements with its advertisers and locations. Accordingly, advertisers could elect to display visual ads with the site locations directly or through other sales and distribution channels which could significantly decrease the amount of its business, operating results and financial condition. In addition, substantially all of the Company's sales are dependent on the commissions customarily paid by advertisers for ad placements. Consistent with industry practices, these advertising sales people are not obligated to direct their advertising customers to any particular 15 agency or media of advertising. Accordingly, advertisers can reduce current industry commission rates or eliminate such commissions entirely and deal directly with the locations, which would have a material adverse effect on Company business, operating results and financial condition. For example, there can be no assurance that advertisers will chose to deal through an agency with whom the Company has a relationship or deal directly with the owner of the site location for the placement of a static visual poster type ad. CURRENT CONTRACTS OF SIGNIFICANCE. MultiAdd is a Great Britain based company that manufactures and is patent licensee in the United States for the "Illumisign-Eyecatcher" indoor display boards. MultiAdd has signed an agreement giving NMMI the exclusive rights to operate, distribute and sell the "Illumisign-Eyecatcher" boards in the United States. Should this contract be terminated it could cause a material adverse affect to the company and its operations. THE COMPANY'S BRAND MAY NOT ATTAIN SUFFICIENT RECOGNITION. The Company believes that establishing, maintaining and enhancing its brand (NMMI brand) is a critical aspect of its efforts to attract and expand its advertising customer base. The number of visual billboard advertisers that offer competing services, many of which already have well-established brands generally, increase the importance of establishing and maintaining brand name recognition. Promotion of the Company's NMMI brand name will depend largely on its success in providing a high quality advertising experience supported by a high level of customer service, which cannot be assured. To attract and retain advertiser customers and to promote and maintain its quality site locations, the Company may find it necessary to increase substantially its financial commitment to creating and maintaining a strong brand loyalty among customers. This will require significant expenditures on advertising and marketing its own brand name. Each display board will display the Company's own brand name, address and phone number. If the Company is unable to provide high-quality advertisers, displays and locations and customer support, or otherwise fails to promote and maintain high quality advertising, or if it incurs excessive expenses in an attempt to promote and maintain high quality, its business, operating results and financial condition would be materially adversely affected. THE ADVERTISING INDUSTRY IS SUBJECT TO ECONOMIC CONDITIONS AND OTHER UNFORESEEN EVENTS. The advertising industry, especially visual display media, is dependent on personal spending levels and habits of the consuming public. It is also sensitive to changes in economic conditions and tends to increase during general economic downturns and recessions. The advertising industry is also highly susceptible to unforeseen events, such as new trend products, regional necessities, discretionary spending, price fluctuation, weather patterns and innovative advertising media. Any event that results in economic decline generally would likely have an ultimate material adverse effect on the advertising business, its operating results and financial condition. COMPETITION. For years the billboard industry has seen several consolidations with large corporate owners acquiring smaller (fewer than 50 billboards) 16 independent operators. The purpose of these consolidations is to provide a platform for the corporate owners to attract large regional and national advertisers. Billboard advertising has evolved from painted signs without lights, to lighted signs, to vinyl covered signs to prism boards (three sided boards which rotate three ads). Advertisers soon learned that rotating signs attract the attention of viewers much more effectively than static signs. Today, the prism sign is second only to LED display signs in popularity with advertisers. The most prominent LED display sign is in Times Square in New York City. Despite the effectiveness of LED outdoor advertising, the billboard industry is slowly moving to the LED display sign because most large companies have a substantial investment in static signs. The cost to change a traditional static board to an LED display approximately $1,000.000 to $2,000.000. Another reason is that LED signs may only be installed in certain traffic areas because many cities and states have regulations that prohibit LED and prism signs on the basis that the signs may be distracting to passing drivers and may lead to an increase in the number of traffic accidents. NMMI has targeted markets where this may not be an issue. There are two reasons for the changes in outdoor advertising. First, technological improvements have made the prism and LED boards affordable. Second, moving ads have a much greater impact on viewers than static ads. In a digital society there must be an effective way for advertisers to display their product in its true form. The competition in indoor advertising is limited. Most indoor companies sell single poster board advertisements, ranging from all different sizes and place them in theaters, malls, airports, etc. One competitor has a board similar to the Illumisign-Eyecatcher board, but it rolls paper ads form one end to the other. These boards are expensive to maintain and cost much more for ad production than the "Illumisign-Eyecatcher" board. The Company needs to keep up with rapid technological changes that affect movable visual billboard advertising. To remain competitive, the Company must continue to enhance and improve the customer service, responsiveness, quality of spot and site locations, visual functionality of the boards and the display ad and ultimate customer response. Indoor and outdoor billboard advertising are characterized by: o Rapid technological change; o Changes in advertiser requirements and preferences; o Changes in consumer requirements and preferences o Frequent new product and service introductions embodying new technologies; o The emergence of new industry standards and practices. The evolving nature of the Internet already has a major effect on the presently existing methods of advertising. This trend is destined to continue to affect not only visual advertising in general, but also proprietary technology and systems. The Company's success will depend, in part, on its ability to: o Stay abreast of leading technologies useful in the Company's business; o Enhance its existing services; 17 o Develop new services and technology that address the increasingly sophisticated and varied needs of its customers; and o Respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. The development of the Company's visual display board business entails significant business risks. The Company might not successfully use new technologies effectively or adapt its existing capabilities, high technology equipment and transaction producing efforts to customer requirements or emerging industry standards. If it is unable, for technical, legal, financial or other reasons to adapt in a timely manner, in response to changing market conditions or customer requirements, its business, financial condition and results of operations could be adversely affected. THE COMPANY'S PROPOSED GROWTH MAY ADVERSELY AFFECT ITS OPERATING RESULTS. The Company's proposed growth plan involves a number of special risks including: o failure of the Company to achieve the results it expects, o diversion of its management's attention from operational matters, o its inability to retain key personnel, o risks associated with unanticipated events or liabilities, o potential disruption of its business, o customer dissatisfaction or performance problems at the site locations, o vandalism or intentional destruction or theft of the display boards. PURCHASERS OF THE COMMON STOCK IN THIS TRANSACTION WILL EXPERIENCE SUBSTANTIAL DILUTION. Based upon the terms of the Investment agreement, purchasers of the common stock could experience a substantial dilution in net tangible book value of the Company's Common Stock purchased. The stock issued in connection with this transaction will be valued at the closing based upon the price per share as required in the fully executed Investment Agreement. The Company cannot presently ascertain the number of shares to be issued after the closing. Under the Investment Agreement this number may be up to 17,181,818 shares, plus any additional shares as may be registered in the future for SEC purposes. Consequently, purchasers of the Company's stock may experience substantial dilution in the future up to the number of shares registered. NO PUBLIC MARKET FOR STOCK. The Company's common stock may be deemed a penny stock. Penny stocks generally are equity securities with a price of less than $5.00 per share other than securities registered on certain national securities exchanges or quoted on the Nasdaq Stock Market, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The Company's securities may be subject to "penny stock rules" that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For 18 transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the "penny stock rules" require the delivery, prior to the transaction, of a disclosure schedule prescribed by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. Consequently, the "penny stock rules" may restrict the ability of broker-dealers to sell the Company's securities. The foregoing required penny stock restrictions will not apply to the Company's securities if such securities maintain a market price of $5.00 or greater. As of the date of this report, the trading price of New Millennium's common stock is in excess of $5.00 per share, although there can be no assurance that the price of the Company's securities will maintain such a level. ITEM 4. USE OF PROCEEDS The net proceeds from the sale of the shares of Common Stock of New Millennium Media International, Inc. to Swartz Private Equity, LLC at a total gross aggregate price of up to twenty five million dollars ($25,000,000) is intended to be used for the following purposes: o to fund anticipated operating losses, including sales and marketing expenses; o to purchase additional equipment and LED Display Boards and indoor Illumisign-Eyecatcher display boards; o for working capital and other general corporate purposes; and o and to fund payment obligations for contemplated acquisitions and corporate partnering arrangements. We reserve the right to vary the use of proceeds among the categories listed above because our ability to use the proceeds is dependent on a number of factors, including the extent of market acceptance of our variety of display boards, unexpected expenditures for further technical development, sales and marketing efforts and the effects of competition. From time to time we also expect to evaluate possible acquisitions of, or investment in businesses and technologies that are complementary to our business and technologies and may use net proceeds from the sale for such purposes. While we consider potential investments or acquisitions from time to time, we have no firm plans, commitments or agreements with respect to any such investment or acquisitions. Until we use the net proceeds of the offering, we will invest the funds in investment grade, interest-bearing securities. ITEM 5. PRICE RANGE OF COMMON STOCK Subsequent to our delisting on February 24, 2000 our common stock is presently trading on the "pink sheets"; prior to the delisting the common stock traded on the OTC. The following table sets forth the high and low bid prices of our common stock on the last day of each quarter beginning with the second quarter of 1998 when the company was incorporated, through the second quarter of 2000. 19 The quotations set forth below reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions. Year High Bid Low Bid - ---- -------- ------- 1998 - ---- Second Quarter .875 .875 Third Quarter 1.000 1.000 Fourth Quarter .437 .406 1999 - ---- First Quarter .313 .313 Second Quarter .406 .406 Third Quarter .125 .125 Fourth Quarter .120 .120 2000 - ---- First Quarter .875 .875 Second Quarter 1.000 1.000 Third quarter through August 11, 2000 .700 .700 ITEM 6. DILUTION At June 30, 2000, we had a net tangible book value of $(1,132,187) or approximately $(.05) per share of common stock. Net tangible book value per share represents the amount of our total tangible assets less our total liabilities, divided by the number of shares of common stock outstanding. After giving effect to the receipt of the estimated net proceeds from our sale of the offering price of $.90 per unit (after deducting underwriting discounts and estimated offering expenses payable by us) the net tangible book value as of June 30, 2000, would have been approximately $16,237,813 or $.37 per share of common stock. This would represent an immediate increase in the net tangible book value per share of common stock of $.42 to existing shareholders and an immediate dilution of $.63 per share to new investors purchasing our units in the offering. Dilution is determined by subtracting net tangible book value per share after the offering from the offering price to investors. The following table illustrates this per share dilution: Assumed offering price per share of class A common stock contained in our unit $ 1.00 Net tangible book value per share of common stock before the offering $ (.05) Increase attributable to new investors $ .42 Proforma net tangible book value after the offering $ .37 Dilution to new investors $ .63 Percentage of dilution to new investors 63% 20 The following table summarizes the number of shares of common stock newly issued under this Registration Statement. The table reflects 1,000,000 commitment warrants at $.30 a share and 19,000,000 shares at $1.00. The table, with respect to new investors, gives effect to 20,000,000 shares as if issued June 30, 2000. Share Purchased Consideration Paid Average Price Number Percentage Amount Percentage Per Share ------ ---------- ------ ---------- --------- Existing Shareholders 24,099,462 53.57 $ 963,978 .04 New Investors 20,000,000 46.43 $ 20,000,000 1.00 ---------- ----- ------------ Total 44,099,462 100.00% $ 20,963,978 .49 ITEM 7. SELLING SECURITY HOLDERS The following table provides certain information with respect to the selling shareholders' beneficial ownership of our common stock as of the date of this filing and as adjusted to give effect to the sale of all of the shares offered hereby except Investment Management of America, Inc. Other than Investment Management of America, Inc., none of the selling shareholders currently is an affiliate of ours and none of them has had a material relationship with us during the past three years. None of the selling shareholders are or were affiliated with registered broker-dealers. See "Plan of Distribution." The selling shareholders possess sole voting and investment power with respect to the securities shown. Shares Beneficially Owned Number of Shares After Offering -------------- Beneficially Owned Number of Number Name Before Offering Shares Offered of Shares Percentage ---- --------------- -------------- --------- ---------- Swartz Private Equity, LLC 1,000,000 0,000,000(1) -0-(2) -0- Investment Management of America, Inc. 6,632,080(3) 3,000,000 6,632,080 21% Raymond D. Benedict 20,000 20,000 20,000 Thomas H. Breiter 20,000 20,000 20,000 Alan D. Bridges 10,000 10,000 10,000 Thomas Daley 20,000 20,000 20,000 William L. Gaskins 4,000 4,000 4,000 Kirtinai Jeerapaet 30,000 30,000 30,000 Michael McEnany 30,000 30,000 30,000 John T. Puls 200,000 200,000 200,000 Richard Puls 8,000 8,000 8,000 Barry Rusche 5,000 5,000 5,000 Charles Saulino 100,000 100,000 100,000 Paul Skversky 10,000 10,000 10,000 Bonnie Sonnenfield 10,000 10,000 10,000 Rosalie Stall 5,000 5,000 5,000 HNC Associates, LLC 100,000 100,000 100,000 Gerry Ghini 500,000 500,000 500,000 Russell Wahl 400,000 400,000 400,000 Eric Kennedy 100,000 100,000 100,000 21 William H. Simon 500,000 500,000 500,000 William Acquaviva 10,000 10,000 10,000 Robert Colvin 10,000 10,000 10,000 William Long 10,000 10,000 10,000 Timothy Meenan 10,000 10,000 10,000 Randall Willis 3,000 3,000 3,000 Jack Wynn 5,000 5,000 5,000 Peter Jensen 40,000 40,000 40,000 (1) Represents the maximum number of shares of common stock that we may sell to Swartz pursuant to the Investment Agreement Puts and upon the exercise by Swartz of Warrants issued or issuable in connection with the Investment Agreement. It is expected that Swartz will not own beneficially more than 9.9% of our outstanding common stock at any time. (2) Assumes that Swartz shares will eventually be resold by Swartz and none will be held for its own account. (3) 3,000,000 shares of Series A Convertible Preferred that will convert to Common stock on a 1:1 ratio. Three of the officers and directors of Investment Management of America, Inc. serve on the board of directors of NMMI. ITEM 8. PLAN OF DISTRIBUTION SWARTZ INVESTMENT AGREEMENT On May 19, 2000, we entered into an Investment Agreement with Swartz. The Investment Agreement entitles us to issue and sell our common stock to Swartz for up to an aggregate of $25 million from time to time during the three-year period following the date of effectiveness of a registration statement covering the resale of the shares to be put to Swartz. Each election by us to sell stock to Swartz is referred to as a "put right". Put rights. In order to invoke a put right, we must have an effective registration statement on file with the SEC registering the resale of the shares of common stock that may be issued as a consequence of the exercise of that put right. We must also give at least 10, but not more than 20 business days' advance notice to Swartz of the date on which we intend to exercise a particular put right and we must indicate the maximum number of shares of common stock that we intend to sell to Swartz. At our option, we may also designate a maximum dollar amount of common stock (not to exceed $2 million) that we will sell under the put and/or a minimum purchase price per common share at which Swartz may purchase shares under the put. The number of shares of common stock sold to Swartz in a put may not exceed the lesser of: (i) 15% of the aggregate daily reported trading volume of our common shares, excluding certain block trades of our common stock during the twenty business days after the date of our put notice, excluding trading days in which the common stock trades below a minimum price, if any, that we specify in our put notice: (ii) 15% of the aggregate daily reported trading volume of our common shares during the twenty business days before the put date, excluding certain block trades; or (iii) a number of shares that, when added to the number of shares acquired by Swartz under the Investment Agreement during the thirty one days preceding the put date, would exceed 9.99% of our total number of shares of common stock outstanding (as calculated under Section 13(d) of the Securities Exchange Act of 1934). 22 For each share of common stock, Swartz will pay us the lesser of: o The market price for such share, minus $.10 or o 92% of the market price for the share; provided, however, that Swartz may not pay us less than the designated minimum per share price, if any, that we indicate in our notice. Market price is defined as the lowest closing bid price for the common stock on its principal market during the pricing period. The pricing period is defined as the 20 business days immediately following the day we exercise the put right. Warrants. Within five business days after the end of each pricing period, we are required to issue and deliver to Swartz a warrant to purchase a number of shares of common stock equal to 10% of the common shares issued to Swartz in the applicable put. Each warrant will be exercisable at a price that will initially equal 110% of the market price for that put and thereafter may be reset every six months. Each warrant will be immediately exercisable and have a term beginning on the date of issuance and ending five years thereafter. Limitations and conditions precedent to our put rights. Swartz is not required to acquire and pay for any shares of common stock with respect to any particular put for which, between the date we give advance notice of an intended put and the date the particular put closes: o we have announced or implemented a stock split or combination of our common stock; o we have paid a common stock dividend; o we have made a distribution of all or any portion of our assets or evidences of indebtedness to the holders of our common stock; or o we have consummated a major transaction, such as a sale of all or substantially all of our assets or a merger or tender or exchange offer that results in a change of control of NMMI. Short sales. Swartz and its affiliates are prohibited from engaging in short sales of our common stock unless Swartz has received a put notice and the amount of shares involved in the short sale does not exceed the number of shares specified in the put notice. Cancellation of puts. We must cancel a particular put between the date of the advance put notice and the last day of the pricing period if: o we discover an undisclosed material fact relevant to Swartz's investment decision; o the registration statement registering resales of the common shares becomes ineffective; or o our shares are delisted from the then primary exchange. If a put is canceled, it will continue to be effective, but the pricing period for the put will terminate on the date notice of cancellation of the put is given to Swartz. Because the pricing period will be shortened, the number of shares Swartz will be required to purchase in the canceled put will be smaller than it would have been had the put not been canceled. 23 Shareholder approval. Under the Investment Agreement, we may sell Swartz a number of shares that is more than 20% of our shares outstanding on the date of this prospectus. If we become listed on The NASDAQ Small Cap Market or Nasdaq National Market, we may be required to obtain shareholder approval to issue some or all of the shares to Swartz. As we are currently a Bulletin Board company, we do not need shareholder approval. Termination of Investment Agreement. We may terminate our right to initiate further puts or terminate the Investment Agreement at any time by providing Swartz with notice of such intention to terminate; however, any such termination will not affect any other rights or obligations we have concerning the Investment Agreement or any related agreement. Restrictive covenants. During the term of the Investment Agreement and for a period of 6 months after the Investment Agreement is terminated, we are prohibited from engaging in certain transactions. These include the issuance of any equity securities, or debt securities convertible into equity securities, for cash in a private transaction without obtaining the prior written approval of Swartz. We are also prohibited from entering into any private equity line type agreements similar to the Investment Agreement without obtaining Swartz's prior written approval. Right of first refusal. Swartz has a right of first refusal, subject to another first refusal obligation for which we are contractually obligated, to participate in any private capital raising transaction of equity securities that closes from the date of the Investment Agreement (July 9, 1999) through 6 months after the Investment Agreement is terminated. Swartz's right of indemnification. We have agreed to indemnify Swartz (including its stockholders, officers, directors, employees, investors and agents) from all liability and losses resulting from any misrepresentations or breaches we make in connection with the Investment Agreement, our registration rights agreement, other related agreements, or the registration statement. ADDITIONAL SECURITIES BEING REGISTERED NMMI needed three million shares of common stock to satisfy overdue contractual obligations of two individuals. NMMI did not have available sufficient shares of common stock to satisfy this requirement, but had available ten million shares of Preferred Stock. Investment Management of America, Inc. is the owner of approximately twelve million shares of NMMI Common Stock. The NMMI Board of Directors passed a resolution creating a Series A Convertible Preferred Stock as to five million shares of the Preferred Stock. On April 12, 2000 NMMI entered into an agreement with Investment Management of America, Inc. wherein Investment Management of America, Inc. traded three million shares of its Common Stock for three million shares of NMMI's Series A Convertible Preferred Stock with the contractual requirement that NMMI will authorize at least three million additional shares of Common Stock and include the three million shares of Common Stock in this SB-2 filing, thus creating the shares of Common Stock for 24 which Investment Management of America, Inc. can convert its Series A Convertible Preferred Stock. On July 17, 2000 the shareholders voted to amend the Articles of Incorporation to increase the number of authorized shares of common stock from 25,000,000 to 75,000,000 to fulfill the requirements of the Swartz Investment Agreement and to permit conversion of the preferred stock. The Company is obligated to register, along with the registration of the shares contemplated by this registration 2,160,000 shares that we sold to accredited investors. Each selling shareholder is free to offer and sell his or her common shares at such times, in such manner and at such prices as he or she may determine. The types of transactions in which the common shares are sold may include transactions in the over-the-counter market (including block transactions), negotiated transactions, the settlement of short sales of common shares or a combination of such methods of sale. The sales will be at market prices prevailing at the time of sale or at negotiated prices. Such transactions may or may not involve brokers or dealers. The selling shareholders have advised us that they have not entered into agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares. The selling shareholders do not have an underwriter or coordinating broker acting in connection with the proposed sale of the common shares. The selling shareholders may sell their shares directly to purchasers or to or through broker-dealers, which may act as agents or principals. These broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling shareholders. They may also receive compensation from the purchasers of common shares for whom such broker-dealers may act as agents or to whom they sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions). Swartz is, and each remaining selling shareholder and any broker-dealer that assists in the sale of the common stock may be deemed to be, an underwriter within the meaning of Section 2(a)(11) of the Securities Act. Any commissions received by such broker-dealers and any profit on the resale of the common shares sold by them while acting as principals might be deemed to be underwriting discounts or commissions. Because Swartz is and the remaining selling shareholders may be deemed to be "underwriters" within the meaning of Section 2(a)(11) of the Securities Act, the selling shareholders will be subject to prospectus delivery requirements. We have informed the selling shareholders that the anti-manipulation rules of the SEC, including Regulation M promulgated under the Securities and Exchange Act, may apply to their sales in the market and has provided the selling shareholders with a copy of such rules and regulations. Selling shareholders also may resell all or a portion of the common shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided they meet the criteria and conform to the requirements of such Rule. 25 We are responsible for all costs, expenses and fees incurred in registering the shares offered hereby. The selling shareholders are responsible for brokerage commissions, if any, attributable to the sale of such securities. ITEM 9. LEGAL PROCEEDINGS The Company is a defendant in a lawsuit filed on November 5, 1999 in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida, Case Number 99-26073 CA 10. The plaintiff, Joseph Maenza, is seeking to collect payment of a promissory note in the principal amount of $50,000 plus interest from February 1999 and attorney fees. The Company filed an Answer and Affirmative Defenses alleging, among other issues, that the interest stated in the promissory note is usurious. On August 3, 2000 this case was dismissed without prejudice. As of the filing of this report, the plaintiff has not refilled the suit. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following are officers and directors of the Company. Name Age Position ---- --- -------- Gerald Parker 58 Chairman of the Board John Thatch 38 Chief Executive Officer, President and Director Andrew Badolato 36 Chief Financial Officer, Vice President/Corporate Finance and Director Antonio P. Gomes 37 Vice President/Strategic Planning All directors hold office until the next annual meeting of shareholders of the Company and until their successors are elected and qualified. Officers hold office until the first meeting of directors following the annual meeting of shareholders and until their successors are elected and qualified, subject to earlier removal by the Board of Directors. GERALD C. PARKER, CHAIRMAN OF THE BOARD OF DIRECTORS Mr. Parker has been Chairman of the Board of the Company since May 1999. From 1997 to the present, Mr. Parker has served as President of Investment Management of America, Inc. From 1995 to 1997, Mr. Parker served as President of St. James Capital, Inc., a private real estate company. Mr. Parker is a founder of Inktomi, a publicly traded firm that develops scalable network applications. Mr. Parker is chairman of all Investment Management of America, Inc. portfolio companies. JOHN "JT" THATCH, PRESIDENT/CEO AND DIRECTOR John "JT" Thatch serves as Director, CEO and President of New Millennium Media International, Inc. He brings to the company over 15 years of entrepreneurial experience. He has successfully founded, operated and managed his own businesses and limited partnerships. He brings experience in the areas of management, retail sales and financing. J.T. has ties in the business community and brings solid 26 leadership and integrity to the company. His experience and enthusiasm will provide us with the ability to expand our growth within the outdoor/indoor advertising arena. ANDREW BADOLATO, CHIEF FINANCIAL OFFICER, VICE PRESIDENT/CORPORATE FINANCE AND DIRECTOR Mr. Badolato has been a director and Vice President of corporate finance of the company since May 1999 and has been its Chief Financial Officer since May 2000. Mr. Badolato is the founder and Chief Executive officer of Investment Management of America, Inc., a strategic advisor of the company. Mr. Badolato was the cofounder and president of Military Commercial Technologies, inc. (Milcom.net) and is the Vice President of Finance for Milcom.net, ByeByenow.com and Liquid Golf. Mr. Badolato is also a founder of Triton Network Systems. Mr. Badolato serves on the Board of Directors of all Investment Management of America, Inc. portfolio companies. Mr. Badolato attended St. Thomas of Villanova University. ANTONIO P. GOMES, VICE PRESIDENT/STRATEGIC PLANNING AND DIRECTOR Since May 1999, Mr. Gomes has served as the Vice President of Strategic Planning for the Company. Since 1998, Mr. Gomes has served as Chief Operating Officer of Investment Management of America, Inc. From April 1999 to the present, Mr. Gomes has served as a director of Marketing of ByeByeNOW.com, Inc. From 1993 to 1998, Mr. Gomes was the Director of Marketing for Tropicana Products, Inc. Mr. Gomes received a B.B.A. from the University of Massachusetts and a Masters in Business Administration from the University of Texas. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding beneficial ownership of our common stock as of the date of this filing by (i) each shareholder known by us to be the beneficial owner of 5% or more of the outstanding common stock, (ii) each of our directors and (iii) all directors and executive officers as a group. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Shares of common stock issuable upon exercise of options and warrants that are currently exercisable or exercisable within 60 days of August 28, 2000 have been included in the table. Name and Address Amount and Nature Percent of Class of Beneficial of Beneficial Owner Ownership Before Offering(1) After Offering - ------------------ ---------- ------------------ -------------- John Thatch 2,500,000 10% 5% President/CEO and Director Gerald Parker (2) -0- 0% 0% Chairman Andy Badolato (2) -0- 0% 0% Director & Vice President of Finance 27 Tony Gomes (2) -0- 0% 0% Director & Vice President Of Corporate Marketing Investment Management 9,632,080 38% 21% of America, Inc.(2)(3) Troy Lowrie 2,250,000 9% 5% (Resigned)(4) Less than 5% Officers and Directors 12,132,080 48% 27% as a Group (4 persons) (1) Based upon 24,099,462 outstanding shares of common stock. (2) Parker, Badolato and Gomes are officers, directors and majority shareholders in Investment Management of America, Inc. (3) Does not include 3,000,000 shares of Series A Preferred stock that will be traded with NMMI for 3,000,000 shares of common stock immediately after this SB-2 registration. (4) Mr. Troy Lowrie was the past president and director of PMC which was merged into New Millennium. ITEM 12. DESCRIPTION OF SECURITIES COMMON STOCK Our articles of incorporation authorize us to issue up to 75,000,000 shares of common stock, par value $.001 per share. Of the 75,000,000 shares of common stock authorized, 24,099,462 shares are issued and outstanding as of the date of this prospectus. Holders of common stock are entitled to receive such dividends as may be declared by the Board of Directors from funds legally available for such dividends. We may not pay any dividends on the common stock until cumulative dividends on the preferred stock have been paid in full. Upon liquidation, holders of shares of common stock are entitled to a pro rata share in any distribution available to holders of common stock. The holders of common stock have one vote per share on each matter to be voted on by stockholders, but are not entitled to vote cumulatively. Holders of common stock have no preemptive rights. All of the outstanding shares of common stock are, and all of the shares of common stock offered for resale in connection with this prospectus will be, validly issued, fully paid and non-assessable. PREFERRED STOCK Our articles of incorporation authorize us to issue up to 10,000,000 shares of Preferred stock, par value $.001 per share. Of these authorized 10,000,000 preferred shares, 5,000,000 have been classified as Series A Convertible Preferred Stock with voting and liquidation privileges of which 3,000,000 have been issued to Investment Management of America, Inc. in exchange for 3,000,000 shares of Common Stock owned by Investment Management of America, Inc. Each share of Series A Convertible Preferred Stock is convertible into 1 share of Common Stock at the option of the holder. Other than the 3,000,000 issued to Investment Management of America, Inc. no other Preferred shares have been issued. 28 WARRANTS There are outstanding warrants to purchase 1,000,000 shares of our common stock at a price of $0.30 per share and may be reset every 6 months thereafter. These warrants were issued to Swartz on May 25, 1999 in consideration of Swartz's commitment to enter into the Investment Agreement. The warrants expire on May 25, 2004. The holders of the warrants have the right to have the common stock issuable upon exercise of the warrants included on any registration statement we file, other than a registration statement covering an employee stock plan or a registration statement filed in connection with a business combination or reclassification of our securities. ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL The legality of the securities offered hereby has been passed upon by Atlas Pearlman, P. A., Attorneys at Law, Ft. Lauderdale, Florida. The balance sheet as of June 30, 2000, statement of operations and statement of cash flows for the period ended June 30, 2000 in this prospectus have been included herein in reliance on the report of Richard J. Fuller, C.P.A., P.A., independent accountants, given on the authority of that firm as experts in accounting and auditing. An opinion on the validity of the securities being registered will be given by Atlas Pearlman, Attorneys at Law, Ft. Lauderdale, Florida. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. We have filed herewith with the SEC a registration statement on Form SB-2 under the Securities Act with respect to the securities offered under this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, certain items of which are omitted in accordance with the rules and regulations of the SEC. Statements contained in this prospectus as to the contents of any contract or other documents are not necessarily complete and in each instance reference is made to the copy of such contract or documents filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference and the exhibits and schedules thereto. For further information regarding NMMI and the securities offered under this prospectus, we refer you to the registration statement and such exhibits and schedules which may be obtained from the SEC at its principal office in Washington, D.C. upon payment of the fees prescribed by the SEC. 29 ITEM 14. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Insofar as indemnification for liabilities arising under the federal securities laws as may be permitted to directors and controlling persons of the issuer, the issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the law and is, therefore, unenforceable. In the event a demand for indemnification is made, the issuer will, unless in the opinion of its counsel that 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 law and will be governed by the final adjudication of such issue. ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS None. ITEM 16. DESCRIPTION OF BUSINESS BRIEF HISTORY New Millennium Media International, Inc. is a Colorado corporation organized on April 21, 1998. NMMI's principal place of business is located at 101 Philippe Parkway, Suite 300, Safety Harbor, Florida 34695. NMMI is the successor to Progressive Mailer Corp., a corporation organized in Florida on February 5, l997. In March 1997 and April 1998, PMC conducted offerings of its common stock pursuant to the exemption from registration afforded by Rule 504 of Regulation D under the Securities Act of l933, as amended. As a result of these offerings, there is presently a total of 4,775,000 unrestricted shares of common stock of NMMI issued and outstanding. On November 3, l997, PMC received clearance from the NASD to have its common stock listed on the OTC Bulletin Board. The trading symbol on the OTC Bulletin Board for NMMI's common stock was NMMI. In February, l998, PMC's sole officer and director resigned and sold all of her share ownership in PMC, which represented 95% of the issued and outstanding shares of PMC, to Troy Lowrie who as elected President and Director of PMC. In connection with the transaction, the principal offices of PMC were relocated to Denver, Colorado. Effective, April 8, l998 PMC entered into an Asset Purchase Agreement with LuFam Technologies, Inc, a California corporation, in exchange for the issuance of shares of PMC's common stock to LuFam. Pursuant to the terms of the Asset Purchase Agreement, PMC acquired the exclusive rights to the IllumiSign-EyeCatcher display system, a special advertising display machine. NMMI intends to market and sell advertising space on these machines. Effective April 30, l998, PMC was merged into NMMI and the separate existence of PMC terminated pursuant to the merger agreement. In connection with the merger, each share of PMC outstanding on April 30, l998 was exchanged for a like number of shares of New Millennium. August 31, 1999 NMMI entered into an Amended and Restated Agreement and Plan of Merger among NMMI, New Millennium Media, Inc., a wholly owned 30 subsidiary of NMMI and Unergi, Inc. NMMI acquired all of the issued shares of stock of Unergi in exchange for 16,566,667 shares of NMMI common stock. Pursuant to an Agreement and Plan of Merger dated March 9, 2000 between Scovel Corporation, a Delaware corporation, all the outstanding shares of common stock of Scovel were exchanged for 500,000 shares of common stock of NMMI. By virtue of the merger, NMMI acquired 100% of the issued and outstanding common stock of Scovel. New Millennium's common stock was traded on the OTC Bulletin Board operated by Nasdaq under the symbol NMMI. New Millennium did not file a registration statement with the Securities and Exchange Commission and has not been a reporting company under the Securities Exchange Act of 1934. The Nasdaq Stock Market has implemented a change in its rules requiring all companies trading securities on the OTC Bulletin Board to be registered as a reporting company. The Company was required to become a reporting company by the close of business on February 25, 2000. New Millennium has effected the merger with Scovel and has become a successor issuer thereto in order to comply with the reporting company requirements implemented by the SEC. BUSINESS OVERVIEW NMMI provides two types of visual advertising: The Illumisign-Eyecatcher movable display boards and LED display boards. We retain ownership of both types of the machines and sell the advertising space on a monthly basis. NMMI has the exclusive United States distribution rights from the patent owner and Multiadd, a Great Britain based company that manufactures a patented indoor IllumiSign called the "Illumisign-Eyecatcher" board. This board is steel incased, front lighted, and displays poster type ads. These mechanical devises come in various sizes ranging from 11 inches by 17 inches to 4 feet by 6 feet. Each machine is capable of rotating up to 24 posters at preprogrammed intervals from 3 seconds to one hour. Because the poster material is critical to the functionality as well as the longevity of the poster, it is necessary for the advertisers to rely on our graphic arts department to develop and supply the necessary posters. These Mechanical Eyecatcher movable displays are then placed in various sites in stores, shopping malls, movie theaters and anywhere else where indoor poster type advertising is feasible. NMMI has filed the necessary documentation for registration of the trademark, "Illumisign-Eyecatcher" for electric sign products, which registration is presently pending by the United States Department of Commerce, Patent and Trademark Office. The LED display boards are generally placed out doors either freestanding or affixed onto the sides of buildings or located in athletic stadiums. The LED boards range in size from 8 feet by 10 feet to 20 feet by 30 feet and even larger in customized designs. They are capable of displaying a near infinite number of either stationary or motion images. Because the images need to be programmed into the LED boards, it is necessary that our graphic arts department be involved in both the design and set up of the intended displays. 31 NMMI has a strategic relationship with E-Vision LED, Inc., a U.S. based company whose affiliates manufacture these high quality LED units. E-Vision will sell the LED boards to NMMI at manufacturer's cost and will share in the revenues that the LED boards produce. This allows NMMI to procure the highest quality LED display boards at a greatly reduced cost. This business arrangement is designed to enable NMMI to deploy approximately 2 1/2 times the number of boards in the shortest period of time. Because these LED boards can run any commercial format on any sized board, we feel that NMMI has a strong competitive advantage over other display boards for which the visual display must be reformatted. Formatting often takes weeks. E-Vision LED displays will run any format on any size board with consistent color quality and clarity. These LED boards have the potential to display countless images in full color both static and full motion. Color quality and clarity are very important to national advertisers who want consistency of colors on all boards. E-Vision will assist NMMI with training and support from the first board and with ongoing assistance in all aspects of programming, technical and software support. As a manufacturing partner, E-Vision and its affiliates will supply NMMI, free of charge, software upgrades as they become available. In relation to these two types of display media, NMMI is capable of providing advertisers with visual communications and media services in both indoor and outdoor environments. We offer a comprehensive range of visual movable board solutions designed to improve clients' advertising needs and processes including professional services such as strategic site location, consulting and analysis as well as poster design and development. This enables us to locate boards and sell advertising on a national level that will benefit NMMI in placing boards throughout the U.S. NMMI signed a one-year with option for eight additional one year terms marketing agreement with Carson-Jensen-Anderson Enterprises, Inc. d/b/a EyeCatcher Marketing Company through which agreement the Illumisign-Eyecatcher display boards will be marketed throughout the 50 United States. EyeCatcher Marketing Company will locate and contract the site locations as well as sell the advertising for the display boards. NMMI will retain ownership of the display boards and will supply the graphic artwork to the advertisers' specifications. EMPLOYEES NMMI has five employees. None of our employees is represented by a labor union. We consider our relations with our employees to be good. Because a major portion of our business involves nationwide site location and procurement as well as sales and marketing of advertising space, it is advantageous for us to outsource this segment of our business through strategic partnering and subcontracting. We intend to utilize in-house employees and plan to add additional staff as needed to handle all other phases of our business including graphic arts, warehousing, distribution, purchasing, distribution, shipping, accounting and bookkeeping. 32 ITEM 17. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION GENERAL Management's discussion and analysis contains various "forward looking statements." Such statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as "may," "expect," "anticipate," "estimate," or "continue" or use of negative or other variations or comparable terminology. We caution that these statements are further qualified by important factors that could cause actual results to differ materially from those contained in the forward-looking statements, that these forward-looking statements are necessarily speculative, and there are certain risks and uncertainties that could cause actual events or results to differ materially from those referred to in such forward-looking statements. OVERVIEW The Company is a development stage company as defined in Statement of Financial Accounting Standards No. 7, "Accounting and Reporting by Development Stage Enterprises." We have generated out cash needs through equity financings and loans from officers and stockholders. As a development stage company, we have devoted substantially all of our efforts in securing and establishing new businesses. We have engaged in limited activities in the advertising business, but no significant revenues have been generated to date. The primary activity of the Company currently involves two types of visual advertising: The Illumisign-Eyecatcher movable display boards and LED display boards. We retain ownership of both types of the machines and sell the advertising space on a monthly basis. SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999 LIQUIDITY AND CAPITAL RESOURCES To date, our liquidity has been principally supplied by equity financing and loans from related parties. As of June 30, 2000 equity financing was $ 936,091 and loans was $1,611,012. On May 19, 2000, we entered into an investment agreement with Swartz Private Equity, LLC to provide an equity line maximum aggregate amount of $25,000,000 through a series of sales of common stock. In order to sell shares to Swartz, there must be an effective registration statement with the SEC covering the resale of the shares by Swartz and certain other conditions must be met. The agreement is for a period of three years from the effective date of a registration statement covering the resale of the shares to be put to Swartz. RESULTS OF OPERATIONS The discussion and financial statements contained herein are for the six months ended June 30, 1999 and 2000 and from inception through June 30, 2000. The following discussion regarding the financial statements of the Company should be read in conjunction with the financial statements of the Company included herewith. Gross revenues for the six months ended June 30, 2000 decreased $5,867 from six months ended June 30, 1999 from $6,911 to $1,044, a decrease 33 of approximately 85%. This is due primarily to our concentration on establishing new businesses and obtaining the necessary financings. GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for the six months ended June 30, 2000 increased $98,106 in comparison to the six months ended June 30, 1999 from $203,283 to $301,389, an increase of approximately 48%. This is the result of moving corporate headquarters and increasing administrative support for building operations. NET LOSS As a result of the above items, we incurred net loss for the six months ended June 30, 2000 of ($344,411) compared to ($242,696) for the six months ended June 30, 1999, an increased loss of $101,715 or approximately 42%. ITEM 18. DESCRIPTION OF PROPERTY NMMI owns no real estate. It has a one-year lease plus a two-year renewal option with St. James Properties, Inc. for property located in Safety Harbor, Florida that expires May 2, 2003 through which it leases office space in a building that contains sufficient storage space to warehouse, test and repair the machines prior to their site placement. It is intended that upon the various sites being contracted the machines will be shipped directly to the site location and for those machines that require more detailed installation such as the LED boards, the machines will be shipped directly to the installer. Machines that are in need of repair will be repaired on-site when ever possible. Those machines that are not repairable on-site will be repaired in-house at the Safety Harbor, Florida facility. ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS New Millennium Media International, Inc. ("NMMI") was originally incorporated April 21, 1998 in Colorado under the name New Millennium Media International, Inc. April 30, 1998 Progressive Mailer Corp., a Florida corporation, merged into NMMI. August 31, 1999 NMMI acquired Unergi, Inc., a Nevada corporation, ("Unergi") by merging Unergi into New Millennium Media, Inc., a Florida corporation, ("Media") a wholly owned subsidiary of NMMI by way of a tax free reorganization. As part of this merger 16,566,667 shares of NMMI common stock were to be distributed prorata among all of the shareholders of Unergi in exchange for all of the shares of stock of Unergi. As a part of this merger, two founders and major shareholders of Unergi, Mark Western and Cole Leary, were each to receive 1,656,672 shares of NMMI common stock. In anticipation of purchasing these the shares from the two individuals, NMMI conveyed the shares to another individual. NMMI failed to consummate the purchase contract and consequently found it necessary to acquire 3,000,000 shares of common stock to satisfy the obligation to the two individuals. Toward this objective NMMI exchanged with Investment Management of America, Inc. (hereafter "IMA") 3,000,000 shares of NMMI's Preferred stock for 3,000,000 shares of common stock owned by IMA with the understanding that the 3,000,000 shares of Preferred stock will be granted voting rights and be convertible on a 1:1 ratio for shares of common stock which common stock will be included in the next registration. 34 On November 2, 1999 NMMI signed an executive employment contract with John Thatch employing that individual as President and Chief Executive Officer for three years with a salary of $140,000 for the first year and $120,000 for the second and third years. As an inducement to encourage the executive to become employed with NMMI, it was in the best interest of NMMI to include in the employment package a provision in the executive employment contract giving John Thatch the option to purchase, at a price of par value, 10% of any and all additionally authorized and issued shares of stock. To date John Thatch has not exercised any rights under this option. ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock is traded on the "pink sheets". The table in ITEM 5., PRICE RANGE OF COMMON STOCK sets forth the high and low bid prices of our common stock for each quarter for the second, third and fourth quarters of 1998, 1999 and the first and second quarters of 2000. As of May 19, 2000 there are approximately 67 beneficial holders of record of our common stock. DIVIDEND POLICY We have not paid any dividends on our common stock since inception. We expect to continue to retain all earnings generated by our operations for the development and growth of our business and do not anticipate paying any cash dividends to our shareholders in the foreseeable future. The payment of future dividends on the common stock and the rate of such dividends, if any, will be determined by our Board of Directors in light of our earnings, financial condition, capital requirements and other factors. ITEM 21. EXECUTIVE COMPENSATION The following table lists the cash remuneration paid or accrued during 1999 and 2000 to John Thatch, president and CEO. Except for John Thatch, none of our executive officers and directors received compensation of $100,000 or more in 1999 and 2000.
- ---------------------------------------------------------------------------------------------------------- SUMMARY COMPENSATION TABLE - ---------------------------------------------------------------------------------------------------------- Long Term Compensation - ---------------------------------------------------------------------------------------------------------- Annual Compensation Awards Payouts - ---------------------------------------------------------------------------------------------------------- (a) (b) (c) (d) (e) (f) (g) (h) (i) - ---------------------------------------------------------------------------------------------------------- Restricted Securities Name and Other Annual Stock Underlying LTIP All Other Principle Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation Position Year ($) ($) ($) ($) (#) ($) ($) - ---------------------------------------------------------------------------------------------------------- John Thatch, 10% of all Stock option Per month: Pres./CEO 2000 140,000 10,000 issued to be 500 medical expenses common determined 500 car stock by Board 250 celphone - ----------------------------------------------------------------------------------------------------------
DIRECTOR COMPENSATION The NMMI directors receive no compensation. 35 EMPLOYMENT AGREEMENTS NMMI has one written employment agreement, John Thatch, President and CEO, see Item 19, above. ITEM 22. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS REVIEWED FINANCIAL STATEMENTS Report of Richard J. Fuller, C.P.A., P.A. F-38 Condensed Balance Sheet for December 31, 1999 and June 30,2000. F-39 Condensed Statements of Operations for six months June 30, 1999, six months June 30, 2000 and from inception through June 30, 2000. F-40 Condensed Statements of Cash Flows for six months June 30, 1999, six months June 30, 2000 and from inception through June 30, 2000. F-41 Notes to the Condensed Financial Statements, for six months June 30, 1999, six months June 30, 2000 and from inception through June 30, 2000. F-42 AUDITED FINANCIAL STATEMENTS Report of Richard J. Fuller, C.P.A., P.A. F-43 Balance Sheet for December 31, 1998 and December 31, 1999. F-44 Statements of Operations for year ended December 31, 1998, year ended December 31, 1999 and from inception through December 31, 1999. F-46 Statement of Stockholders' Deficit for period from January 1, 1998 through December 31, 1999. F-47 Statements of Cash Flows for year ended December 31, 1998, year ended December 31, 1999 and from inception through December 31, 1999. F-48 Notes to Financial Statements, December 31, 1998 and 1999. F-49 36 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors and Shareholders New Millennium Media International, Inc. (formerly Progressive Mailer Corp.) Safety Harbor, Florida We have reviewed the condensed balance sheets of New Millennium Media International, Inc. (formerly Progressive Mailer Corp.) (a development stage company) as of December 31, 1999 and June 30, 2000, and the related statements of operations and cash flows for the six months ended June 30, 1999 and 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial statements consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, conducted in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1998 and 1999, and the related statements of operations, stockholders' deficit and cash flows for the years then ended (not presented herein), and in our report dated June 1, 2000, we expressed a qualified report because of going concern uncertainty on those consolidated financial statements. In our opinion the information set forth in the accompanying condensed balance sheet as of December 31, 1999, is fairly stated in all material respects in relation to the condensed balance sheet from which it has been derived. Richard J. Fuller, CPA, PA Clearwater, Florida August 9, 2000 37 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY) CONDENSED BALANCE SHEET December 31, June 30, 1999 2000 (Unaudited) ------------ ------------ ASSETS Current Assets: Cash $ 2,063 $ 129,544 Inventories 548,862 567,612 ------------ ------------ Total Current Assets 550,925 697,156 ------------ ------------ Furniture and Equipment-Net 3,964 8,567 ------------ ------------ Other Assets Prepaid expenses-net 417 6,340 Goodwill, net of accumulated amortization of $22,587and $33,881, respectively 655,007 644,213 ------------ ------------ Total Other Assets 655,424 650,553 ------------ ------------ $ 1,210,313 $ 1,356,276 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Notes payable - related $ 1,596,012 $ 1,611,012 Accounts payable 85,235 65,609 Accrued expenses payable 129,289 161,289 ------------ ------------ Total Current Liabilities 1,810,536 1,837,910 ------------ ------------ Long-term Liabilities -- -- Stockholders' Deficit Common stock, par value $.001; shares authorized, 25,000,000 shares issued and outstanding, 24,099,881 and 23,079,462 respectively 24,100 23,080 Preferred stock, par value $.001; shares authorized, 10,000,000 no shares issued and outstanding -- -- Additional paid in capital 448,991 452,511 Common stock subscribed, (1,420,000 shares) -- 460,500 Deficit accumulated during the development stage (1,073,314) (1,417,725) ------------ ------------ Total Stockholders' Deficit (600,223) (481,634) ------------ ------------ $ 1,210,313 $ 1,356,276 ============ ============ 38 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY) CONDENSED STATEMENT OF OPERATIONS (Unaudited) For the For the From Inception six months six months through 06/30/99 06/30/00 06/30/00 ------------ ------------ ------------ Income $ 6,911 $ 1,044 $ 60,852 Costs and Expenses: General and administrative $ 203,283 $ 301,389 $ 1,286,016 Interest expense 45,724 32,000 155,921 Depreciation and amortization 600 12,066 36,640 ------------ ------------ ------------ Total costs and expenses 249,607 345,455 1,478,577 ------------ ------------ ------------ Loss from Operations (242,696) (344,411) (1,417,725) Net Loss $ (242,696) $ (344,411) $ 1,417,725 ============ ============ ============ Basic Loss Per Common Share $ (0.017) $ (0.015) $ (0.061) ============ ============ ============ 39 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF CASH FLOWS (Unaudited) For the For the From Inception six months six months through 06/30/99 06/30/00 06/30/00 ------------ ------------ ------------ Cash Flows from Operating Activities: Net loss $ (242,696) $ (344,411) $ 1,417,725 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 600 12,066 36,840 Common stock issued for services 775 -- 24,838 Increase in inventories 198,383 (18,750) (567,612) Increase in prepaid expenses -- (6,215) (6,215) Increase (decrease) in accounts payable and accrued expenses (83,188) 12,374 226,898 ------------ ------------ ------------ Total adjustments 116,570 (525) (285,251) ------------ ------------ ------------ Net Cash Used in Operating Activities (126,126) (344,936) 1,702,976 ------------ ------------ ------------ Cash Flows from Investing Activities Purchase of goodwill -- (500) (678,094) Purchase of fixed assets -- (5,083) (16,542) ------------ ------------ ------------ Net Cash Used in Investing Activities -- (5,583) (694,636) ------------ ------------ ------------ Cash Flows from Financing Activities Proceeds from notes payable - Related 121,000 15,000 1,611,012 Proceeds from common stock transactions -- 463,000 916,144 ------------ ------------ ------------ Net Cash provided by Financing Activities 121,000 478,000 2,527,156 ------------ ------------ ------------ Increase in cash and cash equivalents $ (5,126) $ 127,481 $ 129,544 Cash and cash equivalents at beginning of period $ 6,811 $ 2,063 $ -- ------------ ------------ ------------ Cash and cash equivalents at end of period $ 1,685 $ 129,544 $ 129,544 ============ ============ ============ Supplemental disclosure of cash flow information: Cash paid during the year for interest -- -- -- Cash paid during the year for income taxes -- -- --
40 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY) NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Basis of Presentation -------------------------------------- New Millennium Media International, Inc. (formerly Progressive Mailer Corp.) (NMMI or the Company) is in the business of marketing advertising space in special advertising display machines. The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with rules and regulations of the Securities and Exchange Commission, in particular, Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Company's Annual Report (Form 10-KSB) for the years ended December 31, 1998 and 1999. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 2. Development Stage Enterprise ---------------------------- The Company is a development stage enterprise, as defined in Financial Accounting Standards Board Statement No. 7 (SFAS No. 7). The Company is devoting substantially all of its efforts in securing and establishing a new business, and has engaged in limited activities in the advertising business, but no significant revenues have been generated to date. 3. Going Concern Uncertainty ------------------------- The Company has incurred recurring operating losses and negative cash flows and has negative working capital. The Company has financed itself primarily through the sale of its stock and related party borrowings. These conditions raise substantial doubt about the Company's ability to continue as a going concern. There can be no assurance that the Company will be success in implementing its plans, or if such plans are implemented, that the Company will be successful. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amount and classification of liabilities that might result from the outcome of this uncertainty. 41 4. Equity ------ On April 12, 2000, the Company entered into an agreement with Investment Management of America, Inc. (a major stockholder and financial consultant) to exchange 3,000,000 shares of Common Stock for 3,000,000 shares of Series A Convertible Preferred Stock of the 5,000,000 shares created under resolution of the Board of Directors of the 10,000,000 Preferred Stock. 5. Subsequent Events ----------------- The Company increased the number of Common Stock authorized to 75,000,000 at a special Meeting of Stockholders on July 17, 2000. In addition, the Company has secured an agreement with a financial institution to provide an equity line of $25,000,000 and Plans to file an SB-2 Registration Statement with the SEC. 42 REPORT OF RICHARD J. FULLER, C.P.A., P.A. Board of Directors and Shareholders New Millennium Media International, Inc. (formerly Progressive Mailer Corp.) Safety Harbor, Florida We have audited the balance sheets of New Millennium Media International, Inc. (formerly Progressive Mailer Corp.) (a development stage company) as of December 31, 1998 and 1999, and the related statements of operations, stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Progressive Mailer Corp. as of December 31, 1997, were audited by other auditors whose report dated July 16, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The Company is a development stage enterprise, as defined in Financial Accounting Standards Board No. 7. The Company is devoting all of its present efforts in securing and establishing a new business, and its planned principal operations have not commenced, and, accordingly, minimal revenue has been derived during the organizational period. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of New Millennium Media International, Inc. (formerly Progressive Mailer Corp.) at December 31, 1998 and 1999 and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses for the years ended December 31, 1998 and 1999. This condition raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Richard J. Fuller Richard J. Fuller, CPA, PA Clearwater, Florida June 1, 2000 43 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET December 31, 1998 and December 31, 1999 1998 1999 ------------ ------------ ASSETS Current Assets: Cash $ 6,811 $ 2,063 Inventories 481,916 548,862 ------------ ------------ Total Current Assets 488,727 550,925 ------------ ------------ Furniture and Equipment Office furniture and equipment 7,210 4,249 Less accumulated depreciation (1,319) (285) ------------ ------------ Furniture and Equipment-Net 5,891 3,964 ------------ ------------ Other Assets Organizational costs, net of accumulated amortization of $383 and $583 617 417 Goodwill, net of accumulated amortization of $22,587 -- 655,007 ------------ ------------ Total Other Assets 617 655,424 ------------ ------------ $ 495,235 $ 1,210,313 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Notes payable - related $ 638,952 $ 1,596,012 Accounts payable 42,119 85,235 Accrued expenses payable 33,068 129,289 ------------ ------------ Total Current Liabilities 714,139 1,810,536 ------------ ------------ Long-term Liabilities -- -- Stockholders' Deficit Common stock, par value $.001; shares authorized, 25,000,000 shares issued and outstanding, 5,310,000 and 24,099,881 respectively, 1998 and 1999 5,310 24,100 Preferred stock, par value $.001; shares authorized, 10,000,000 no shares issued and outstanding -- -- Additional paid in capital 403,115 448,991 Deficit accumulated during the development stage (627,329) (1,073,314) ------------ ------------ Total Stockholders' Deficit (218,904) (600,223) ------------ ------------ $ 495,235 $ 1,210,313 ============ ============ 44 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS For the For the From Inception Year Ended Year Ended through 12/31/98 12/31/99 12/31/99 ------------ ------------ ------------ Income $ 10,632 $ 49,176 $ 59,808 Costs and Expenses: General and administrative $ 586,998 $ 376,707 $ 984,627 Interest expense 28,539 95,382 123,921 Depreciation and amortization 1,319 23,072 24,574 ------------ ------------ ------------ Total costs and expenses 616,856 495,161 1,133,122 ------------ ------------ ------------ Loss from Operations (606,224) (445,985) (1,073,314) Net Loss $ (606,224) $ (445,985) $ (1,073,314) ============ ============ ============ Basic and Diluted Loss Per Common Share $ (0.15) $ (0.03) $ (0.08) ============ ============ ============
45 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT For the Period from January 1, 1998 through December 31, 1999 Deficit Accumulated Common Stock Additional during the Total -------------------------- Paid - in development stockholders' Shares Amount Capital period equity ------------------------------------------------------------------------------- Balance January 1, 1998 2,015,000 $ 2,015 $ 19,907 $ (21,105) $ 817 Shares issued for cash Pursuant to a private placement at $.05 per share 1,725,000 1,725 84,525 86,250 Shares issued to a shareholder as compensation for providing a $60,000 unsecured loan 775,000 775 -- 775 Shares issued for cash Pursuant to a private placement at $.05 per share 795,000 795 116,045 116,840 Shares issued to purchase all assets of Lufam Technologies, Inc. (Purchase made in 1998 and stock issued in 1999) -- -- 182,638 182,638 Net loss for the period ended December 31, 1998 (606,224) (606,224) ------------------------------------------------------------------------------- Balance, December 31, 1998 5,310,000 5,310 403,115 (627,329) (218,904) ------------------------------------------------------------------------------- Shares issued to purchase all assets of Lufam Technologies, Inc. (Purchase made in 1998 and stock issued in 1999) 1,710,000 1,710 -- 1,710 Shares issued to purchase all of Unergi, Inc. 16,566,667 16,567 -- 16,567 Shares issued for cash 2,223,214 513 45,876 46,389 Net loss for the period ended December 31, 1999 (445,985) (445,985) -------------------------------------------------------------------------------
46 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS For the For the From Inception Year Ended Year Ended through 12/31/98 12/31/99 12/31/99 ------------ ------------ ------------ Cash Flows from Operating Activities: Net loss $ (606,224) $ (445,985) $ (1,073,314) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,519 23,072 24,774 Common stock issued for services 775 5,891 24,838 Increase in inventories (481,916) (66,946) (548,862) Increase in accounts payable 42,119 43,116 85,235 Increase in accrued expenses 33,068 96,221 129,289 ------------ ------------ ------------ Total adjustments (404,435) 101,354 (284,726) ------------ ------------ ------------ Net Cash Used in Operating Activities (1,010,659) (344,631) (1,358,040) ------------ ------------ ------------ Cash Flows from Investing Activities Purchase of goodwill -- (677,594) (677,594) Purchase of fixed assets (7,210) (4,249) (11,459) ------------ ------------ ------------ Net Cash Used in Operating Activities (7,210) (681,843) (689,053) ------------ ------------ ------------ Cash Flows from Financing Activities Proceeds from notes payable - Related 638,952 957,060 1,596,012 Proceeds from common stock issued 385,728 64,666 453,144 ------------ ------------ ------------ Net Cash provided by Financing Activities 1,024,680 1,021,726 2,049,156 ------------ ------------ ------------ Increase in cash and cash equivalents $ 6,811 $ (4,748) $ 2,063 Cash and cash equivalents at beginning of period $ -- $ 6,811 $ -- ------------ ------------ ------------ Cash and cash equivalents at end of period $ 6,811 $ 2,063 $ 2,063 ============ ============ ============ Supplemental disclosure of cash flow information: Cash paid during the year for interest -- -- -- Cash paid during the year for income taxes -- -- --
47 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS December 31, 1998 and 1999 1. Organization and summary of significant accounting policies ----------------------------------------------------------- New Millennium Media International, Inc. (formerly Progressive Mailer Corp.) (NMMI or the Company) was incorporated under the laws of the State of Florida on February 5, 1997. On April 30, 1998, as part of a plan or reorganization, the Company became New Millennium Media International, Inc., a Colorado company. On April 14, 1998, all the assets of Lufam Technologies, Inc. were acquired in exchange for 1,710,000 shares of the Company's $.001 par value common stock. On August 31, 1999, pursuant to an Agreement and Plan of merger, the Company acquired all the issued and outstanding stock of Unergi, Inc. in exchange for 16,566,667 shares of the Company's $.001 par value common stock. The Company is in the business of marketing advertising space in special advertising display machines. Development Stage Enterprise ---------------------------- The Company is a development stage enterprise, as defined in Financial Accounting Standards Board Statement No. 7(SFAS No. 7). The Company is devoting substantially all of its efforts in securing and establishing a new business, and has engaged in limited activities in the advertising business, but no significant revenues have been generated to date. Basis of presentation --------------------- The financial statements have been prepared using the accrual method of accounting. Revenues are recognized when earned and expenses when incurred. Fixed assets are stated at cost. Depreciation and amortization using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes. The financial statements have been prepared on a going concern basis that contemplates the realization of assets and liquidation of liabilities in the ordinary course of business. As shown in the accompanying financial statements, the Company has incurred significant losses and at December 31, 1998 and 1999, the Company has a stockholders' deficit of $627,329 and $1,073,314 respectively. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. 48 Use of estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Going Concern Uncertainty ------------------------- The Company has incurred recurring operating losses and negative cash flows and has negative working capital. The Company has financed itself primarily through the sale of its stock and related party borrowings. These conditions raise substantial doubt about the Company's ability to continue as a going concern. As noted in Note 5, the Company has initiated several actions to generate working capital for expected advertising growth. There can be no assurance that the Company will be success in implementing its plans, or if such plans are implemented, that the Company will be successful. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amount and classification of liabilities that might result from the outcome of this uncertainty. Comprehensive Income -------------------- Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS No. 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The Company does not have any assets requiring disclosure of comprehensive income. Segments of Business Reporting ------------------------------ Statement of Financial Accounting Standards (SFAS) No. 131 establishes standards for the way that public companies report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customer. SFAS 131 defines operating segments as components of a company about which separate financial information is available that is 49 evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has evaluated this SFAS and does not believe it is applicable at this time. Intangible assets ----------------- Organization costs are amortized using the straight-line method over their estimated useful lives of five years and are stated at cost less accumulated amortization. The Company reviews for the impairment of long-lived assets and certain identifiable intangibles annually. No such impairment losses have been identified by the Company for the years presented. Under the purchase method of accounting, tangible and identifiable intangible assets acquired and liabilities assumed are recorded at their estimated fair values. The excess of the purchase price, including estimated fees and expenses related to the merger, over the net assets acquired is classified as goodwill by the Company. The estimated fair values and useful lives of assets acquired and liabilities assumed are based on a preliminary valuation and are subject to final valuation adjustments which may cause some of the intangibles to be amortized over a shorter life than the goodwill amortization period of 15 years Inventories ----------- Inventories consist primarily of advertising machines acquired substantially from one vendor. These machines are intended to generate income from revenue for placement of these machines at various locations and are carried at the lower of cost (first-in, first-out) or market. Once the machines are placed in service, depreciation is to be recognized. No depreciation has been recognized for the years ended 1998 and 1999 because no significant rental activity has yet occurred. Furniture and equipment ----------------------- Furniture and equipment is stated at cost and depreciated using the straight-line method, over the estimated useful lives of five to seven years. Advertising Costs ----------------- The Company expenses the cost of advertising as incurred. Income Taxes ------------ The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (SFAS No. 109). Under SFAS No. 109, deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using currently enacted tax rates. SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. 50 Basic and Diluted Loss Per Common Share --------------------------------------- Basic loss per common share is based on the weighted average number of shares outstanding during the period. The computation of diluted loss per common share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. Diluted loss per common share is the same as basic loss per common share. Cash Equivalents ---------------- For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Fair Value of Financial Instruments ----------------------------------- All financial instruments are held for purposes other than trading. The following methods and assumptions were used to estimate the fair value of each financial instrument for which it is practicable to estimate that value: For cash, cash equivalents and notes payable, the carrying amount is assumed to approximate fair value due to the short-term maturities of these instruments. Concentrations of Credit Risk ----------------------------- Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality financial institutions. At times during the year, the balance at any one financial institution may exceed FDIC limits. Also, the Company relies principally on one vendor to supply inventory. Because the vendor is the major manufacturer of this inventory, and located in the United Kingdom, abrupt changes in economic conditions including scheduling and shipping disruptions could cause a delay or have an adverse affect on management's ability to meet rental commitments. 2. Notes Payable - Related ----------------------- The Company issued notes to related parties. These notes are due on demand. 1998 1999 ---- ---- Note due stockholder former officer $ 638,952 $ 641,152 At 10% interest secured by inventories Notes due stockholders, non-interest bearing 954,860 $ 638,952 $1,596,012 ========== ========== 51 3. Acquisition ----------- On August 31, 1999 the Company acquired all the outstanding stock of Unergi, Inc. The acquisition was accounted for as a purchase. Consideration for the purchase was the issuance of 16,566,667 shares of $.001 par value stock of the Company. The purchase price exceeded the fair value of the net assets acquired by $677,594, which has been recorded as goodwill. The unaudited pro forma consolidated balance sheet at December 31, 1998 and the unaudited pro forma consolidated statements of operations for December 31, 1998 and 1999 have been presented as if the business combinations of New Millennium Media International, Inc. and Unergi, Inc. had been made at the beginning of the periods presented. The unaudited pro forma results have been prepared for comparative purposes only and do no purport to be indicative of the results of operations which would have actually resulted had the combinations been in effect on January 1, 1998, or of future results of operations. 52 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS December 31, 1998 and 1999 3. Acquisition - Contd. PRO FORMA COMBINED BALANCE SHEET December 31, 1998 New Millennium Pro Forma Historical Unergi, Inc. Adjustments Pro Forma -------- -------- -------- -------- ASSETS Current Assets: Cash $ 6,811 $ 1,691 $ $ 8,502 Inventories 481,916 481,916 Stock Subscription Receivable 800 (800) -- Employee Advance 1,000 (1,000) -- -------- -------- -------- -------- Total Current Assets 488,727 3,491 (1,800) 490,418 -------- -------- -------- -------- Furniture and Equipment Office furniture and equipment 7,210 7,210 Less accumulated depreciation (1,319) (1,319) -------- -------- -------- -------- Furniture and Equipment-Net 5,891 5,891 -------- -------- -------- -------- Other Assets Organizational costs, net of accumulated amortization of $383 617 617 -------- -------- -------- -------- Total Other Assets 617 617 -------- -------- -------- -------- $495,235 $ 3,491 $ $496,926 ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Notes payable - related $638,952 $115,000 $ $753,952 Accounts payable 42,119 -- 42,119 Accrued expenses payable 33,068 39,281 72,349 -------- -------- -------- -------- Total Current Liabilities 714,139 154,281 868,420 -------- -------- -------- -------- Long-term Liabilities -- -- Stockholders' Deficit Common stock, par value $.001; shares authorized, 25,000,000 shares issued and outstanding, 5,310,000 5,310 1,000 (1,000) 5,310 Preferred stock, par value $.001; shares authorized, 10,000,000 no shares issued and outstanding -- -- Additional paid in capital 403,115 403,115 Deficit accumulated during the development stage (627,329) (151,790) (800) (779,919) -------- -------- -------- -------- Total Stockholders' Deficit (218,904) (150,790) (1,800) (371,494) -------- -------- -------- -------- $495,235 $ 3,491 $ (1,800) $496,926 ======== ======== ======== ========
53 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS December 31, 1998 and 1999 3. Acquisition - Contd. PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 Pro Forma From Inception New Millennium Pro Forma through Historical Unergi, Inc. Adjustments Pro Forma 12/31/98 ---------- ---------- ---------- ---------- ---------- Income $ 10,632 $ 23 $ $ 10,655 $ 10,655 Costs and Expenses: General and administrative $ 586,998 $ 149,796 $ (800) $ 735,994 $ 757,716 Interest expense 28,539 2,017 30,556 30,556 Depreciation and amortization 1,319 -- 1,319 1,502 ---------- ---------- ---------- ---------- ---------- Total costs and expenses 616,856 151,813 (800) 767,869 789,774 ---------- ---------- ---------- ---------- ---------- Loss from Operations (606,224) (151,790) (800) (758,814) (779,119) Net Loss $ (606,224) $ (151,790) $ (800) $ (758,814) $ (779,119) ========== ========== ========== ========== ========== Basic and Diluted Loss $ (0.15) $ (0.18) (0.19) ========== ========== ========== ========== ========== Per Common Share
54 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS December 31, 1998 and 1999 3. Acquisition - Contd. PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
Pro Forma From Inception New Millennium Pro Forma through Historical Unergi, Inc. Adjustments Pro Forma 12/31/98 ---------- ---------- ---------- ---------- ---------- Income $ 49,176 $ 2 $ $ 49,178 59,833 Costs and Expenses: General and administrative $ 376,707 $ 140,596 $ $ 517,303 1,275,019 Interest expense 95,382 -- 95,382 125,938 Depreciation and amortization 23,072 -- 23,072 24,574 ---------- ---------- ---------- ---------- ---------- Total costs and expenses 495,161 140,596 635,757 1,425,531 ---------- ---------- ---------- ---------- ---------- Loss from Operations (445,985) (140,594) (586,579) (1,365,698) Net Loss $ (445,985) $ (140,594) $ $ (586,579) (1,365,698) ========== ========== ========== ========== ========== Basic and Diluted Loss $ (0.03) $ (0.05) $ (0.11) ========== ========== ========== ========== ========== Per Common Share
55 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (FORMERLY PROGRESSIVE MAILER CORP.) (A DEVELOPMENT STAGE COMPANY) NOTES TO THE FINANCIAL STATEMENTS December 31, 1998 and 1999 4. Income Taxes ------------ The Company has available net operating loss carryforwards of $870,000, which expire through 2014. After consideration of all the evidence, both positive and negative, management has determined that a full valuation allowance is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. Accordingly, components of the Company's net deferred income taxes are as follows: 1998 1999 ---- ---- Deferred tax assets: Net operating loss carryforwards $570,000 $870,000 Valuation allowance for deferred tax asset (570,000) (870,000) -------- -------- $ - $ - ======== ======== 5. Subsequent Events ----------------- On March 9, 2000, the Company acquired 100% of the issued and outstanding common stock of Scovel Corporation in exchange for 500,000 shares of the Company. As part of the merger, the Company is considered a successor issuer in order to comply with reporting requirements implemented by the NASDAQ stock market. Further, the Company is securing an agreement with a financial institution to provide an equity line of $25,000,000. Management's intention is, in part, to provide the necessary capital needed for the expected growth in the advertising business. Also, subsequent to year-end, the Company entered into a two year operating lease, effective April 1, 2000, for its corporate offices with rent expense of $16,094 and $16,899 annually. The lease has a renewal option and requires the Company to pay certain common area costs. On April 12, 2000, the Company entered into an agreement with Investment Management of America, Inc. (a major stockholder and financial consultant) to exchange 3,000,000 shares of Common Stock for 3,000,000 shares of Series A Convertible Preferred Stock. In connection with this agreement, the Company passed a resolution creating a Series A Convertible Preferred Stock as to 5,000,000 shares of its Preferred Stock. In addition, the Company entered into a three-year employment agreement with its President, as amended June 1, 2000, providing 56 for compensation of $140,000 in the first year and $120,000 in the subsequent two years. The President is to receive 10 percent of all issued and outstanding Company common stock plus stock options, which shall be determined by the Board of Directors. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS Sections 7-109-101 et seq. of the Colorado Business Corporation Act, as amended from time to time provides that a corporation may indemnify directors, officers, employees or agents of the corporation against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement in connection with threatened, pending or completed actions, suits or proceedings brought against them by reason of their service in such capacity, including, under certain circumstances, actions brought by or in the right of the corporation, and may purchase insurance or make other financial arrangements on behalf of any such persons for any such liability. The Company's By-laws are silent regarding the issue of corporate indemnification of NMMI officers, directors, agents and employees. Article VIII of the Company's Articles of Incorporation provides for indemnification and advance expenses to a director or officer in connection with a proceeding to the fullest extent permitted or required by and in accordance with the Colorado Business Corporation Act. This Article permits the Corporation, as determined by the Board of Directors, in a specific instance or by resolution of general application to indemnify and advance expenses to an employee, fiduciary or agent in connection with a proceeding to the extent permitted or required by and in accordance with the Colorado Business Corporation Act. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an itemized statement of the estimated amounts of all expenses payable by the registrant in connection with the registration of the common stock offered hereby: SEC filing fee ............................................. $ 4,649.57 Legal fees ................................................. 50,000.00 Accounting fees and expenses ............................... 20,000.00 Miscellaneous .............................................. 3,866.00 ---------- Total ................................................. $78,515.57 ========== 57 ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES In December 1998 the company sold to HNC Associates (an accredited investor) 100,000 shares of common stock at a price of $0.40 per share. The company relied on Section 4(2) of the Securities Act of 1933 as the basis for an exemption from registration because the transaction did not involve a public offering. In February 2000 the company issued an option to purchase 500,000 shares of common stock, exercisable for two years at a price of $1.00 per share to William H. Simon in connection with consulting services and negotiations involving E-Vision LED, Inc. The company relied on Section 4 (2) of the Securities Act of 1933 as the basis for an exemption from registration because the transaction did not involve a public offering. In February 2000 the Company sold 400,000 shares of common stock at a price of $.50 per share to one individual who is an accredited investor. The Company relied on Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933 as the basis for an exemption from registration because the transactions did not involve any public offering. In March 2000 the company issued 500,000 shares of common stock to Gerry Ghini in connection with the merger of Scovel Corporation. The company relied on Section 4 (2) of the Securities Act of 1933 as the basis for an exemption from registration because the transaction did not involve a public offering. In March 2000 the company issued an option to purchase 100,000 shares of common stock, exercisable for two years at a price of $2.25 per share to Eric Kennedy in connection with consulting services provided to the company. The company relied on Section 4 (2) of the Securities Act of 1933 as the basis for an exemption from registration because the transaction did not involve a public offering. In March 2000 the Company issued warrants to purchase 1,000,000 shares of common stock, exercisable for five years at a per share price equal to the lowest closing bid price for the five trading days immediately preceding March 6, 2000 with reset adjustments to Swartz Private Equity, LLC in consideration for Swartz's commitment to enter into an investment agreement for the purchase of up to $25,000,000 of common stock of the Company. In March, April and May 2000 the Company sold an aggregate of 560,000 shares of common stock at a price of $.50 per share to twenty individuals, all of whom were accredited investors. The Company relied on Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933 as the basis for an exemption from registration because the transactions did not involve any public offering. 58 ITEM 27. EXHIBITS INDEX 3.1 Articles of Incorporation of NMMI as amended. 3.1(a) Designation of Preferred Stock. 3.2 Bylaws of NMMI. 4.1 Investment Agreement dated May 19, 2000 by and between the Registrant and Swartz Private Equity, LLC. 4.2 Form of "Commitment Warrant" to Swartz Private Equity, LLC for the purchase of 1,000,000 shares common stock in connection with the offering of securities. 4.3 Form of "Purchase Warrant" to purchase common stock issued to Swartz Private Equity, LLC from time to time in connection with the offering of securities. 4.4 Warrant Side-Agreement by and between the Registrant and Swartz Private Equity, LLC. 4.5 Registration Rights Agreement between NMMI and Swartz Private Equity, LLC related to the registration of the common stock to be sold pursuant to the Swartz Investment Agreement. 4.6 Letter Agreement between NMMI and Swartz Institutional Finance relating to the private placement of up to two million dollars of common stock. 4.7 Employees Stock Option Plan adopted by board of Directors resolution dated June 26, 2000. 5.1 Legal Opinion of Atlas Pearlman, P.A., Suite 1700, 350 East Las Olas Boulevard, Ft. Lauderdale, Florida 33301; to be filed with amendment. 10.1 Investment Management of America, Inc. contract with NMMI regarding the 3,000,000 shares of Preferred stock. 10.2 Agreement of Merger effective April 30, 1998 between Progressive Mailer Corporation and NMMI in which NMMI was the survivor corporation. 10.3 Asset Purchase Agreement dated April 8, 1998 whereby PMC acquired the assets of LuFam Technologies, Inc. 10.4 Amended and Restated Agreement and Plan of Merger dated August 31, 1999 between NMMI and Unergi, Inc. in which NMMI was the survivor corporation. 10.5 Agreement and Plan of Merger dated March 9, 2000 between NMMI and Scovel Corporation wherein NMMI acquired all of the shares of stock of Scovel. 10.6 Exclusive Distribution Contract with Multiadd. 59 10.7 Marketing Agreement dated May 10, 2000 wherein NMMI grants to Carson-Jensen-Anderson Enterprises, Inc. marketing rights for the Illumisign-Eyecatcher display boards. 10.8 Office Lease Agreement between St. James Properties, Inc. and NMMI. 21.1 List of Subsidiaries. 23.1 Consent of Legal Counsel (included in Exhibit 5.1). 23.2 Consent of Independent Auditors. 99.1 Trademark "registration pending" documentation by the United States Department of Commerce, Patent and Trademark Office for the name "Illumisign-EyeCatcher" for electric sign products. 99.2 Employment Agreement between Registrant and John Thatch, President/CEO. ITEM 28. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes that it will: (1) File, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information 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)To include any additional or changed material information on the plan of distribution; (2) For determining liability under the Securities Act of 1933, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. 60 (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy expressed in the Act and is, therefore, unenforceable. In the event that a 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 Act and will be governed by the final adjudication of such issue. (c) The undersigned registrant hereby undertakes that it will: (1) For determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497 (h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective. (2) For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities. SIGNATURES In accordance with 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 of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned in the City of Safety Harbor, Florida on August 28, 2000. New Millennium Media International, Inc. By: /s/ John Thatch ------------------- John Thatch, President/CEO 61 Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and as of the dates indicated. Signature Title Date - -------------------- -------------------- -------------------- /s/ John Thatch President and Chief August 28, 2000 - ------------------ Executive Officer John Thatch (Principal Executive Officer) /s/ Gerald C. Parker Chairman of Board August 28, 2000 - --------------------- of Directors Gerald C. Parker /s/ Andrew M. Badolato Director and Treasurer August 28, 2000 - ---------------------- (Principal Financial) Andrew M. Badolato /s/ Tony Gomes Director August 28, 2000 - -------------- Tony Gomes 62 EX-3.1 2 0002.txt ARTICLES OF INCORPORATION FILED COPY ARTICLES OF INCORPORATION OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. KNOW ALL MEN BY THESE PRESENTS: That the undersigned incorporator, being a natural person of the age of eighteen (18) years or more, and desiring to form a corporation under the laws of the State of Colorado, does hereby sign, verify and deliver in duplicate to the Secretary of State of the State of Colorado these ARTICLES OF INCORPORATION. ARTICLE I NAME The name of the corporation shall be New Millennium International, Inc. ARTICLE II CAPITAL The aggregate number of shares which the corporation shall have authority to issue is thirty-five million (35,000,000) shares of which a portion shall be common stock and a portion shall be preferred stock, all as described below. A. Common Stock. The aggregate number of common shares which the corporation shall have the authority to issue is twenty-five million (25,000,000), each with $.001 par value, which shares shall be designated "Common Stock." Subject to all the rights of the Preferred Stock as expressly provided herein, by law or by the Board of Directors pursuant to this Article, the Common Stock of the corporation shall possess all such rights and privileges as are afforded to capital stock by applicable law in the absence of any express grant of rights or privileges in these Articles of Incorporation, including, but not limited to, the following rights and privileges: (i) dividends may be declared and paid or set apart for payment on the Common Stock out of any assets or funds of the corporation legally available for the payment of dividends; (ii) the holders of Common Stock shall have unlimited voting rights, including the right to vote for the election of directors and on all other matters requiring stockholder action. Each holder of Common Stock shall have one vote for each share of Common Stock standing in his name on the books of the corporation and entitled to vote, except that in the election of directors each holder of Common Stock shall have as many votes for each share of Common Stock held by him as there are directors to be elected and for whose election the holder of Common Stock has a right to vote. Cumulative voting shall not be permitted in the election of directors or otherwise. (iii) on the voluntary or involuntary liquidation, dissolution or winding up of the corporation, and after paying or adequately providing for the payment of all of its obligations and amounts payable in liquidation, dissolution or winding up, and subject to the rights of the holders of Preferred Stock, if any, the net assets of the corporation shall be distributed pro rata to the holders of the Common Stock. B. Preferred Stock. The aggregate number of preferred shares which this corporation shall have the authority to issue is ten million (10,000,000) shares, each with $.001 par value, which shares shall be designated "Preferred Stock." Shares of Preferred Stock may be issued from time to time in one or more series as determined by the Board of Directors. The Board of Directors is hereby authorized, by resolution or resolutions, to provide from time to time, out of the unissued shares of Preferred Stock not then allocated to any series of Preferred Stock, for a series of the Preferred Stock. Each such series shall have distinctive serial designations. Before any shares of any such series of Preferred Stock are issued, the Board of Directors shall fix and determine, and is hereby expressly empowered to fix and determine, by resolution or resolutions, the voting powers, full or limited, or no voting powers, and the designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof as provided by Colorado law. Before issuing any shares of a class or series, the corporation shall deliver to the secretary of state for filing articles of amendment to these articles of incorporation that set forth information required by Colorado law, including but not limited to, the designations, preferences, limitations, and relative rights of the class or series of shares. C. Voting. Unless otherwise ordered by a court of competent jurisdiction, at all meetings of shareholders one-third of the shares of a voting group entitled to vote at such meeting, represented in person or by proxy, shall constitute a quorum of that voting group. ARTICLE III PREEMPTIVE RIGHTS A shareholder of the corporation shall not be entitled to a preemptive right to purchase, subscribe for, or otherwise acquire any unissued shares of stock of the corporation, or any options or warrants to purchase, subscribe for or otherwise acquire any such unissued shares, or any 2 shares, bonds, notes, debentures, or other securities convertible into or carrying options or warrants to purchase, subscribe for or otherwise acquire any such unissued shares. ARTICLE IV CUMULATIVE VOTING The shareholders shall not be entitled to use cumulative voting in the election of directors. ARTICLE V REGISTERED OFFICE AND AGENT The initial registered office of the corporation shall be at 1601 West Evans, Denver, Colorado 80223, and the name of the initial registered agent at such address is Troy H. Lowrie. Either the registered office or the registered agent may be changed in the manner provided by law. ARTICLE VI PRINCIPAL OFFICE The address of the initial principal office of the corporation in this state is 1601 West Evans, Denver, Colorado 80223. ARTICLE VII INITIAL BOARD OF DIRECTORS The initial board of directors of the corporation shall consist of one (1) director, and the name and address of the person who shall serve as a director until the first annual meeting of shareholders or until his successor is elected and qualified is as follows: Name Address ---- ------- Troy H. Lowrie 1601 West Evans Denver, Colorado 80223 3 The number of directors shall be fixed in accordance with the bylaws, or if the bylaws fail to fix such number, then by resolution adopted from time to time by the board of directors, provided that the number of directors shall not be less than one (1). ARTICLE VIII INDEMNIFICATION 1. As used in this Article VIII, any word or words that are defined in Sections 7-109-101 et seq. of the Colorado Business Corporation Act, as amended from time to time (the "Indemnification Sections"), shall have the same meaning as provided in the Indemnification Sections. 2. The Corporation shall indemnify and advance expenses to a director or officer in connection with a proceeding to the fullest extent permitted or required by and in accordance with the Indemnification Sections. 3. The Corporation may, as determined by the Board of Directors of the Corporation in a specific instance or by resolution of general application, indemnify and advance expenses to an employee, fiduciary or agent in connection with a proceeding to the extent permitted or required by and in accordance with the Indemnification Sections. 4. This Article VIII shall not be deemed exclusive of any other rights to which those indemnified may be entitled under these Articles of Incorporation, any Bylaw, agreement, vote of shareholders or disinterested directors or otherwise. The rights provided under this Article shall continue as to a person who has ceased to be in the position which entitled him to such indemnification and shall inure to the benefit of the heirs, estate or personal representative of such a person. This Article shall not be deemed to preclude the Corporation from indemnifying other persons from similar or other expenses and liabilities as the Board of Directors of the Corporation may determine in a specific instance or by resolution of general application. ARTICLE IX DIRECTORS' CONFLICTING INTERESTS TRANSACTIONS 1. Conflicting Interest Transaction. As used in this section, "conflicting interest transaction" means any of the following: (a) A loan or other assistance by the corporation to a director of the corporation or to an entity in which a director of the corporation is a director or officer or has a financial interest; 4 (b) A guaranty by the corporation of an obligation of a director of the corporation or of an obligation of an entity in which a director of the corporation is a director or officer or has a financial interest; or (c) A contract or transaction between the corporation and a director of the corporation or between the corporation and an entity in which a director of the corporation is a director or officer or has a financial interest. "Conflicting interest transaction" shall not include any transactions which are deemed not to be conflicting interest transactions under the Colorado Business Corporation Act, as amended. 2. Effect of Conflicting Interest Transaction. No conflicting interest transaction shall be void or voidable or be enjoined, set aside, or give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, solely because the conflicting interest transaction involves a director of the corporation or an entity in which a director of the corporation is a director or officer or has a financial interest or solely because the director is present at or participates in the meeting of the corporation's board of directors or of the committee of the board of directors which authorizes, approves, or ratifies the conflicting interest transaction or solely because the director's vote is counted for such purpose if: (a) The material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the board of directors of the committee, and the board of directors or committee in good faith authorizes, approves, or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or (b) The material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the shareholders entitled to vote thereon, and the conflicting interest transaction is specifically authorized, approved, or ratified in good faith by a vote of the shareholders; or (c) The conflicting interest transaction is fair as to the corporation. 3. Common or Interested Directors. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes, approves, or ratifies the conflicting interest transaction. 4. Notice to Shareholders. The board of directors of the corporation or a committee thereof shall not authorize a loan, by the corporation to a director of the corporation or to an entity in which a director of the corporation is a director or officer or has a financial interest, or a guaranty, by the corporation of an obligation of a director of the corporation or of an obligation of an entity in which a director of the corporation is a director or officer or has a financial interest, as provided in paragraph (a) of section (2) of this Article until at least ten (10) days after written 5 notice of the proposed authorization of the loan or guaranty has been given to the shareholders who would be entitled to vote thereon if the issue of the loan or guaranty were submitted to a vote of the shareholders. ARTICLE X DISTRIBUTIONS TO SHAREHOLDERS The corporation may pay distributions on its shares without considering the amount that would be needed if the corporation were to be dissolved at the time of the distribution to satisfy the preferential rights upon dissolution to shareholders whose preferential rights are superior to those receiving the distributions. ARTICLE XI DIRECTOR LIABILITY To the fullest extent permitted by the Colorado Business Corporation Act as the same exists or may hereafter be amended, a director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. ARTICLE XII INCORPORATOR The name and address of the incorporator is as follows: Kathy L. Waterman Brenman Bromberg & Tenenbaum P.C. 1775 Sherman Street, Suite 1001 Denver, Colorado 80203 IN WITNESS WHEREOF, the above named incorporator signed these ARTICLES OF INCORPORATION on 21st day of April, 1998. /s/ Kathy L. Waterman ------------------------------ Kathy L. Waterman 6 CONSENT OF REGISTERED AGENT I hereby consent to my appointment as initial Registered Agent of the Corporation in the foregoing Articles of Incorporation. /s/ Troy H. Lowrie ---------------------------- Troy H. Lowrie, Registered Agent 7 Mail to: Secretary of State For office use only Corporations Section 1560 Broadway, Suite 200 Denver, CO 80202 STOCK CHANGE (303) 894-2251 Fax (303) 894-2242 MUST BE TYPED FILING FEE: $25.00 MUST SUBMIT TWO COPIES ARTICLES OF AMENDMENT Please include a typed TO THE self-addressed envelope ARTICLES OF INCORPORATION Pursuant to the provisions of the Colorado Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment to its Articles of Incorporation: Increase the Company's authorized common stock from 25,000,000 to 75,000,000 shares and Designate 5,000.000 shares of the company's Series A Preferred Stock. FIRST: The name of the corporation is New Millennium Media International, Inc. SECOND: The following amendment to the Articles of Incorporation was adopted on July 17th, 2000, as prescribed. by the Colorado Business Corporation Act, in the manner marked with an X below; No shares have been issued or Directors Elected - Action by Incorporators No shares have been issued but Directors Elected - Action by Directors Such amendment was adopted by the board of directors where shares have been issued and shareholder action was not required. [X] Such amendment was adopted by a vote of the shareholders. The number of shares voted for the amendment was sufficient for approval. THIRD: If changing corporate name, the new name of the corporation is N/A FOURTH: The manner, if not set forth in such amendment, in which any exchange, reclassification, or cancellation of issued shares provided for in the amendment shall be effected, is as follows: N/A If these amendments are to have a delayed effective date, please list that date. N/A (Not to exceed ninety (90) days from the date of filing) EX-3.1.A 3 0003.txt DESIGNATION OF PREFERRED STOCK CERTIFICATE OF DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SERIES A PREFERRED STOCK OF NEW MILLENNIUM MEDIA INTERNATIONAL INC. Pursuant to Section 7-106-102 of the Colorado Business Corporation Act, NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (the "Corporation"), a corporation organized and existing under and by virtue of the provisions of the Colorado Business Corporation Act, certifies as follows: FIRST: The Articles of Incorporation of the Corporation authorizes the issuance of 10,000,000 shares of Preferred Stock, par value $0.001 per share (the "Preferred Stock"), and, further, authorizes the Board of Directors of the Corporation, by resolution or resolutions, at any time and from time to time, to divide and establish any or all of the unissued shares of Preferred Stock not then allocated to any series of Preferred Stock into one or more series and, without limiting the generality of the foregoing, to fix and determine the designation of each such share, the number of shares which shall constitute such series and certain preferences, limitations and relative rights of the shares of each series so established. SECOND: By unanimous written consent of the Board of Directors of the Corporation dated April 12th 2000, the following resolution was adopted setting forth the designations, preferences, limitations and relative rights of a certain series of said Preferred Stock: RESOLVED pursuant to Section 7-106-102 of the Colorado Business Corporation Act, the Board of Directors designates Five Million (5,000,000) shares of the Preferred Stock as Series A Convertible Preferred Stock (the "Series A Preferred Stock"). The designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of the Series A Preferred Stock shall be as follows: 1. Definitions. As used herein, the following terms shall have the respective meanings ascribed to them: "BCA" shall mean the Colorado Business Corporation Act, as amended. "Board" shall mean the Board of Directors of the Corporation "Business Day" shall mean any day which is not a Saturday or a Sunday of a day on which banks are permitted to close in Denver, Colorado. If any action otherwise required hereunder is scheduled for a day other than a Business Day, then such action may be taken on the next successive Business Day. "Common Stock" shall mean the common stock of the Corporation; par value of $0.001 per share. "Corporation" shall mean New Millennium Media International, Inc., a Colorado corporation "Person" shall mean any individual, partnership, limited partnership, corporation, trust, joint venture unincorporated organization and a government or any department or agency thereof. "Preferred Stock" shall mean the Preferred Stock, par value $0.001 per share, authorized to be issued by the Corporation pursuant to its Articles of Incorporation. "Stated Value" of any share of Series A Preferred Stock shall mean $_______. 2. Preference on Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of the Series A Preferred stock shall not be entitled to any preference upon liquidation. 3. Status of Shares. Shares of Series A Preferred Stock redeemed, purchased or otherwise acquired for value by the Corporation, shall, after such acquisition, have the status of authorized and unissued shares of Preferred Stock and may be reissued by the Corporation at any time as shares of any series of Preferred Stock. 4. Convertibility Rights. (a) Mandatory Conversion. Each share of Series A Preferred Stock shall be automatically converted into one (1) share of Common Stock of the Corporation, taking into account any appropriate adjustments under paragraph 4(c) below, upon the filing of the amendment to the company's Articles of Incorporation increasing its authorized common stock to 75,000,000 shares. (b) Mechanics of Conversion. Upon notification by the Corporation of the amendment to its Articles described in Section 4(a), above each holder shall (i) surrender his or her certificates of Series A Preferred Stock being converted by such holder, duly endorsed and with signatures guaranteed, at the principal office of the Corporation in the State of Colorado (or at such other place - the Corporation reasonably designates), and (ii) pay any transfer tax if the shares of Common Stock are to be issued in any name other than the name of the holder of the Series A Preferred Stock being converted. The 2 Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series A Preferred Stock (or his or her nominee) one or more certificates for the number of shares of Common Stock to which such holder is entitled. Upon filing of the amendment to the Corporation's Articles, each certificate representing Series A Preferred Stock shall represent the right only to receive the Corporation's Common Stock issuable upon surrender of the Series A Preferred Stock certificates. (c) Adjustments for Changes in Capitalization. In the event of any increase or decrease in the number of the issued and outstanding shares of the Corporation's Common stock by reason of a stock dividend, stock split-reverse stock split or consolidation or combination of shares and the like at any time or from time to time after the date hereof such that the holders of Common Stock shall have had an adjustment made, without payment therefore, in the number of shares of Common Stock owned by them or, on or after the record date fixed for the determination of eligible shareholders, shall have become entitled or required to have had an adjustment made in the number of shares of Common Stock owned by them, without payment therefor, there shall be a corresponding adjustment as to the number of shares of Common Stock receivable upon conversion of each share of Series A Preferred Stock with the result that the holder's proportionate interest in the Common Stock shall be maintained as before the occurrence of such event. If the Corporation shall effect a plan of recapitalization, reclassification, reorganization or other like capital transaction or shall merge or consolidate with or into any other corporation or convey all or substantially all of its assets to another corporation at any time or from time to time on or after the date hereof, then in each such case the holder, upon the conversion of Series A Preferred Stock at any time after the consummation of such recapitalization, reclassification, reorganization or other like capital transaction or of such merger, consolidation or conveyance, shall be entitled to receive (in lieu of the securities or other property to which such holder would have been entitled to receive upon conversion prior to such consummation), the securities or other property to which such holder would have been entitled to have received upon consummation of the subject transaction if the holder hereof had converted the Series A Preferred Stock immediately prior to such consummation, but subject to further adjustment pursuant to the immediately preceding sentence. (d) Liquidation Value. Upon the conversion of any share of Series A Preferred Stock, the holder thereof shall forfeit his right to receive the Stated Value of such share, and the Corporation thereafter shall not be required to pay at any time, nor shall the holder of such converted share of Series A Preferred Stock have any claim to, the Stated Value of such share. (e) No Dividends. Holders of shares of Series A Preferred Stock shall not be entitled to receive dividends with respect to such shares. 3 5. Voting Rights. (a) The holders of shares of Series A Preferred Stock shall be entitled to vote on matters coming before the shareholders of the corporation, with each share of Series A Preferred Stock having a number of votes from time to time equal to the number of shares of Common Stock into which such share then is convertible (i.e., initially each share of Series A preferred Stock shall be entitled to one (1) vote), voting by holders of Series A Preferred Stock shall be together with the holders of the Common Stock, and the holders of Series A Preferred Stock shall have no right to vote as a class except to the extent a class vote is required under the BCA. (b) No vote or consent of the holders of the Series A Preferred Stock shall be required for the authorization or issuance of any securities of the Corporation. 6. Closing of Books. The Corporation will not close its books against the transfer of any share of Series A Preferred Stock. 7. Registration of Transfer. The Corporation shall keep at its principal office in the State of Colorado (or at such other place as the Corporation reasonably designates) a register for the registration of shares of Series A Preferred Stock. Upon the surrender, of any certificate representing shares of Series A Preferred Stock at such place, the Corporation shall, at the request of the registered holder of such certificate, execute and deliver a new certificate or certificates in exchange therefore representing in the aggregate the number of shares of Series A Preferred Stock represented by the surrendered certificate (and the corporation forthwith shall cancel such surrendered certificate subject to the requirements of applicable securities laws. Each such new certificate shall be registered in such name and shall represent such number of shares of Series A Preferred Stock as shall be requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate. The issuance of new certificates shall be made without charge to the holders of the surrendered certificates or any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such issuance; provided that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of the surrendered certificate. 8. Replacement. (a) Upon receipt of evidence reasonably satisfactory to the Corporation of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing one or more shares of Series A Preferred Stock and, in the case of any such loss, theft or destruction, upon receipt of indemnity and/or a bond reasonably satisfactory to the Corporation, or, in the case of any such mutilation, upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of Series A Preferred Stock 4 represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, on which dividends shall be calculated cumulatively on a daily basis from the date to which dividends have been fully paid on such lost, stolen, destroyed or mutilated certificate at the rate and in the manner applicable to such certificate. (b) The term "outstanding" when used herein with reference to shares of Series A Preferred Stock as of any particular time shall not include any such shares represented by any certificate in lieu of which a new certificate has been executed and delivered by the Corporation in accordance with paragraph 7 or this paragraph 8, but shall include only those shares represented by such new certificate. 9. Amendment and Waiver. No amendment, modification or waiver of any provision hereof shall extend to or affect any obligation not expressly amended, modified or waived or impair any right consequent thereon. No course of dealing, and no failure to exercise or delay in exercising any right, remedy, power or privilege granted hereby shall operate as a waiver, amendment or modification of any provision hereof. IN WITNESS WHEREOF, New Millennium Media International, Inc. has caused this Certificate to be signed by its President this 12th day of April, 2000. New Millennium Media International, Inc. By: /s/ John Thatch --------------------------- John Thatch, President 5 EX-3.2 4 0004.txt BYLAWS OF NEW MILLENNIUM BYLAWS OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. INDEX TO BYLAWS OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. ARTICLE I-OFFICES .............................................................1 Section 1.1 PRINCIPAL OFFICE ...........................................1 Section 1.2 REGISTERED OFFICE ..........................................1 ARTICLE II - SHAREHOLDERS......................................................1 Section 2.1 ANNUAL MEETING .............................................1 Section 2.2 SPECIAL MEETINGS ...........................................1 Section 2.3 COURT ORDERED MEETINGS .....................................1 Section 2.4 PLACE OF MEETINGS ..........................................2 Section 2.5 NOTICE OF MEETING ..........................................2 Section 2.6 MEETING OF ALL SHAREHOLDERS ................................3 Section 2.7 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE ................................................3 Section 2.8 VOTING LISTS ...............................................3 Section 2.9 QUORUM .....................................................4 Section 2.10 MANNER OF ACTING ...........................................4 Section 2.11 PROXIES ....................................................5 Section 2.12 VOTING OF SHARES ...........................................5 Section 2.13 VOTING OF SHARES BY CERTAIN SHAREHOLDERS ...................6 Section 2.14 ACTION BY SHAREHOLDERS WITHOUT A MEETING ...................7 Section 2.15 VOTING BY BALLOT .......................................... 8 Section 2.16 NO CUMULATIVE VOTING .......................................8 Section 2.17 WAIVER OF NOTICE ...........................................8 Section 2.18 PARTICIPATION BY ELECTRONIC MEANS ..........................8 ARTICLE III - BOARD OF DIRECTORS ..............................................8 Section 3.1 GENERAL POWERS .............................................8 Section 3.2 PERFORMANCE OF DUTIES ......................................8 Section 3.3 NUMBER, TENURE AND QUALIFICATIONS ..........................9 Section 3.4 REGULAR MEETINGS ...........................................9 Section 3.5 SPECIAL MEETINGS ...........................................9 Section 3.6 NOTICE .....................................................9 Section 3.7 QUORUM ....................................................10 Section 3.8 MANNER OF ACTING ..........................................10 Section 3.9 INFORMAL ACTION BY DIRECTORS OR COMMITTEE MEMBERS....................................................10 Section 3.10 PARTICIPATION BY ELECTRONIC MEANS .........................10 Section 3.11 VACANCIES .................................................11 Section 3.12 RESIGNATION ...............................................11 Section 3.13 REMOVAL ...................................................11 Section 3.14 COMMITTEES.................................................11 Section 3.15 COMPENSATION ..............................................11 Section 3.16 PRESUMPTION OF ASSENT .....................................12 ARTICLE IV - OFFICERS ........................................................12 Section 4.1 NUMBER ....................................................12 Section 4.2 ELECTION AND TERM OF OFFICE ...............................12 Section 4.3 REMOVAL ...................................................12 Section 4.4 VACANCIES .................................................13 Section 4.5 PRESIDENT .................................................13 Section 4.6 VICE PRESIDENT ............................................13 Section 4.7 SECRETARY .................................................13 Section 4.8 TREASURER .................................................14 Section 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS ................................................14 Section 4.10 BONDS .................................................... 14 Section 4.11 SALARIES ..................................................14 ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS ............................15 Section 5.1 CONTRACTS .................................................15 Section 5.2 LOANS .....................................................15 Section 5.3 CHECKS, DRAFTS, ETC .......................................15 Section 5.4 DEPOSITS ..................................................15 ARTICLE VI - SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES ...............................................................15 Section 6.1 REGULATION ................................................15 Section 6.2 SHARES WITHOUT CERTIFICATES ...............................15 Section 6.3 CERTIFICATES FOR SHARES ...................................16 Section 6.4 CANCELLATION OF CERTIFICATES ..............................16 Section 6.5 CONSIDERATION FOR SHARES ..................................16 Section 6.6 LOST, STOLEN OR DESTROYED CERTIFICATES ....................16 Section 6.7 TRANSFER OF SHARES ........................................17 ARTICLE VII - FISCAL YEAR ....................................................17 ARTICLE VIII - DISTRIBUTIONS .................................................17 ARTICLE IX - CORPORATE SEAL ..................................................18 ARTICLE X - AMENDMENTS .......................................................18 ARTICLE XI - EXECUTIVE COMMITTEE .............................................18 Section 11.1 APPOINTMENT ...............................................18 Section 11.2 AUTHORITY .................................................18 Section 11.3 TENURE AND QUALIFICATIONS .................................18 Section 11.4 MEETINGS ..................................................19 Section 11.5 QUORUM ....................................................19 Section 11.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE ....................19 Section 11.7 VACANCIES .................................................19 Section 11.8 RESIGNATIONS AND REMOVAL ..................................19 Section 11.9 PROCEDURE .................................................19 ARTICLE XII - EMERGENCY BYLAWS ...............................................20 BYLAWS OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. ARTICLE I OFFICES SECTION 1.1 PRINCIPAL OFFICE. The principal office of the corporation in the State of Colorado shall be located in the City and County of Denver. The corporation may have such other offices, either within or outside of the State of Colorado as the Board of Directors may designate, or as the business of the corporation may require from time to time. SECTION 1.2 REGISTERED OFFICE. The registered office of the corporation, required by the Colorado Business Corporation Act to be maintained in the State of Colorado, may be, but need not be, identical with the principal office in the State of Colorado, and the address of the registered office may be changed from time to time by the Board of Directors. ARTICLE II SHAREHOLDERS SECTION 2.1 ANNUAL MEETING. The annual meeting of the shareholders shall be held at such time on such day as shall be fixed by the Board of Directors, commencing with the year 1999, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Colorado, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as may be convenient. SECTION 2.2 SPECIAL MEETINGS. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the President or by the Board of Directors, and shall be called by the President upon the receipt of one or more written demands for a special meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the meeting. SECTION 2.3 COURT ORDERED MEETINGS. A shareholder may apply to the district court in the county in Colorado where the corporation's principal office is located or, if the corporation has no principal office in Colorado, to the district court of the county in which the corporation's registered office is located to seek an order that a shareholder meeting be held (i) if an annual meeting was not held within six months after the close of the corporation's most recently ended fiscal year or fifteen months after its last annual meeting, whichever is earlier, or (ii) if a shareholder participated in a proper call of or demand for a special meeting and notice of the special meeting was not given within thirty days after the date of the call or the date of the last of the demands necessary to require the calling of the meeting was received by the corporation pursuant to the Colorado Business Corporation Act, or the special meeting was not held in accordance with the notice. SECTION 2.4 PLACE OF MEETINGS. The Board of Directors may designate any place, either within or outside of the State of Colorado, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation in the State of Colorado. SECTION 2.5 NOTICE OF MEETING. Written notice stating the place, day and hour of the meeting of shareholders shall be delivered not less than ten nor more than sixty days before the date of the meeting, except that (i) if the number of authorized shares is to be increased, at least thirty days' notice shall be given, or (ii) any other longer notice period is required by the Colorado Business Corporation Act. Notice of a special meeting shall include a description of the purpose or purposes of the meeting. Notice of an annual meeting need not include a description of the purpose or purposes of the meeting except the purpose or purposes shall be stated with respect to (i) an amendment to the Articles of Incorporation of the corporation, (ii) a merger or share exchange in which the corporation is a party and, with respect to a share exchange, in which the corporation's shares will be acquired, (iii) a sale, lease, exchange or other disposition, other than in the usual and regular course of business, of all or substantially all of the property of the corporation or of another entity which this corporation controls, in each case with or without the goodwill, (iv) a dissolution of the corporation, or (v) any other purpose for which a statement of purpose is required by the Colorado Business Corporation Act. Notice shall be given personally or by mail, private carrier, telegraph, teletype, electronically transmitted facsimile or other form of wire or wireless communication, by or at the direction of the President, or the Secretary, or the officer or other persons calling the meeting, to each shareholder entitled to vote at such meeting. If mailed and in a comprehensible form, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. If notice is given other than by mail, and provided such notice is in a comprehensible form, the notice is given and effective on the date received by the shareholder. If three successive letters mailed to the last-known address of any shareholder of record are returned as undeliverable, no further notices to such shareholder shall be necessary until another address for such shareholder is made known to the corporation. 2 When a meeting is adjourned to another date, time or place, notice need not be given of the new date, time or place if the new date, time or place of such meeting is announced before adjournment at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which may have been transacted at the original meeting. If the adjournment is for more than 120 days, or if a new record date is fixed for the adjourned meeting, a new notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting as of the new record date. SECTION 2.6 MEETING OF ALL SHAREHOLDERS. If all of the shareholders shall meet at any time and place, either within or outside of the State of Colorado, and consent in writing to the holding of a meeting at such time and place, such meeting shall be valid without call or notice, and at such meeting any shareholder action may be taken. SECTION 2.7 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of determining shareholders entitled to (i) notice of or to vote at any meeting of shareholders or any adjournment thereof, (ii) to receive distributions or share dividends, (iii) demand a special meeting, or (iv) in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the share transfer books shall be closed for a stated period but not to exceed, in any case, seventy days. If the share transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the share transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the share transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a distribution, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such distribution is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting, in which case the Board of Directors shall make a new determination as provided in this section. SECTION 2.8 VOTING LISTS. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at the earlier of ten days before such meeting of shareholders or two business days after notice of the meeting, a complete list of the shareholders entitled to vote at each meeting of shareholders or any adjournment thereof. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be arranged in alphabetical order, within each class or series, and shall show the address of and 3 the number of shares of each class or series held by each shareholder. For the period beginning the earlier of ten days prior to such meeting or two business days after notice of the meeting is given and continuing through the meeting and any adjournment thereof, this list shall be kept on file at the principal office of the corporation, or at a place (which shall be identified in the notice) in the city where the meeting will be held. Such list shall be available for inspection on written demand by any shareholder (including for the purpose of this Section any holder of voting trust certificates) or his or her agent or attorney during regular business hours and during the period available for inspection. The original stock transfer books shall be prima facie evidence as to the shareholders entitled to examine such list or to vote at any meeting of shareholders. Any shareholder, his or her agent or attorney, may copy the list during regular business hours and during the period it is available for inspection, provided (i) the shareholder has been a shareholder for at least three months immediately preceding the demand or is a shareholder of at least five percent of all of the outstanding shares of any class of shares as of the date of the demand, (ii) the demand is made in good faith and for a purpose reasonably related to the demanding shareholder's interest as a shareholder, (iii) the shareholder describes with reasonable particularity the purpose and the list the shareholder desires to inspect, (iv) the list is directly connected with the described purpose; and (v) the shareholder pays a reasonable charge covering the cost of labor and material for such copies. SECTION 2.9 QUORUM. One-third of the votes entitled to be cast on the matter by a voting group, represented in person or by proxy, constitutes a quorum of that voting group for the action on the matter. If no specific voting group is designated in the Articles of Incorporation or under the Colorado Business Corporation Act for a particular matter, all outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a voting group. In the absence of a quorum at any such meeting, a majority of the shares so represented may adjourn the meeting from time to time for a period not to exceed one hundred twenty days without further notice. However, if the adjournment is for more than one hundred twenty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal during such meeting of that number of shareholders whose absence would cause there to be less than a quorum. SECTION 2.10 MANNER OF ACTING. If a quorum is present, an action is approved if the votes cast within the voting group favoring the action exceeds the votes cast against the action, and the action so approved shall be the act of the shareholders, unless the vote 4 of a greater proportion or number or voting by groups or classes is otherwise required by the Colorado Business Corporation Act or by the Articles of Incorporation or these Bylaws. SECTION 2.11 PROXIES. At all meetings of shareholders, a shareholder may vote by proxy by signing an appointment form or similar writing, either personally or by his or her duly authorized attorney-in-fact. A shareholder may also appoint a proxy by transmitting or authorizing the transmission of a telegram, teletype, or other electronic transmission providing a written statement of the appointment to the proxy, a proxy solicitor, proxy support service organization, or other person duly authorized by the proxy to receive appointments as agent for the proxy, or to the corporation. The transmitted appointment shall set forth or be transmitted with written evidence from which it can be determined that the shareholder transmitted or authorized the transmission of the appointment. The proxy appointment form or similar writing shall be filed with the Secretary of the corporation before or at the time of the meeting. The appointment of a proxy is effective when received by the corporation and is valid for eleven months unless a different period is expressly provided in the appointment form or similar writing. Any complete copy, including an electronically transmitted facsimile, of an appointment of a proxy may be substituted for or used in lieu of the original appointment for any purpose for which the original appointment could be used. Revocation of a proxy does not affect the right of the corporation to accept the proxy's authority unless (i) the corporation had notice that the appointment was coupled with an interest and notice that such interest is extinguished is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment, or (ii) other notice of the revocation of the appointment is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment. Other notice of revocation may, in the discretion of the corporation, be deemed to include the appearance at a shareholders' meeting of the shareholder who granted the proxy and his or her voting in person on any matter subject to a vote at such meeting. The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment. The corporation shall not be required to recognize an appointment made irrevocably if it has received a writing revoking the appointment signed by the shareholder (including a shareholder who is a successor to the shareholder who granted the proxy) either personally or by his or her attorney-in-fact, notwithstanding that the revocation may be a breach of an obligation of the shareholder to another person not to revoke the appointment. 5 SECTION 2.12 VOTING OF SHARES. Unless otherwise provided by these Bylaws or the Articles of Incorporation, each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted- to a vote at a meeting of shareholders, and each fractional share shall be entitled to a corresponding fractional vote on each such matter. Only shares are entitled to vote. SECTION 2.13 VOTING OF SHARES BY CERTAIN SHAREHOLDERS. If the name on a vote, consent, waiver, proxy appointment, or proxy appointment revocation corresponds to the name of a shareholder, the corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and give it effect as the act of the shareholder. If the name signed on a vote, consent, waiver, proxy appointment or proxy appointment revocation does not correspond to the name of a shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver, proxy appointment or proxy appointment revocation and to give it effect as the act of the shareholder if: (i) the shareholder is an entity and the name signed purports to be that of an officer or agent of the entity; (ii) the name signed purports to be that of an administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (iii) the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (iv) the name signed purports to be that of a pledgee, beneficial owner or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, proxy appointment or proxy appointment revocation; (v) two or more persons are the shareholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-tenants or fiduciaries, and the person signing appears to be acting on behalf of all the co-tenants or fiduciaries; or 6 (vi) the acceptance of the vote, consent, waiver, proxy appointment or proxy appointment revocation is otherwise proper under rules established by the corporation that are not inconsistent with this Section 2.14. The corporation is entitled to reject a vote, consent, waiver, proxy appointment or proxy appointment revocation if the Secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. Neither the corporation nor any of its directors, officers, employees or agents who accepts or rejects a vote, consent, waiver, proxy appointment or proxy appointment revocation in good faith and in accordance with the standards of this Section is liable in damages for the consequences of the acceptance or rejection. Redeemable shares are not entitled to be voted after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company or other financial institution under an irrevocable obligation to pay the holders of the redemption price on surrender of the shares. SECTION 2.14 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Unless the Articles of Incorporation or these Bylaws provide otherwise, any action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by each shareholder entitled to vote and delivered to the Secretary of the corporation for inclusion in the minutes or for filing with the corporate records. Action taken by consent is effective as of the date the written consent is received by the corporation unless the writings specify a different effective date, in which case such specified date shall be the effective date for such action. If any shareholder revokes his or her consent as provided for herein prior to what otherwise would be the effective date, the action proposed in the consent shall be invalid. Any such writing may be received by the corporation by electronically transmitted facsimile or other form of wire or wireless communication providing the corporation with a complete copy thereof, including a copy of the signature thereto. The shareholder so transmitting such a writing shall furnish an original of such writing to the corporation for the permanent record of the corporation, but the failure of the corporation to receive for record such original writing shall not affect the action so taken. In addition, such writings shall be deemed to be received by the corporation if such writings are received by an officer or director of the corporation, or an attorney representing the corporation, wherever such persons may be found. The record date for determining shareholders entitled to take action without a meeting shall be the date the corporation first receives a writing upon which the action is taken. 7 Any shareholder who has signed a writing describing and consenting to action taken pursuant to this Section 2.14 may revoke such consent by a writing signed and dated by the shareholder describing the action and stating that the shareholder's prior consent thereto is revoked, if such writing is received by the corporation prior to the date the last writing necessary to effect the action is received by the corporation. SECTION 2.15 VOTING BY BALLOT. Voting on any question or in any election may be by voice vote unless the presiding officer shall order or any shareholder shall demand that voting be by ballot. SECTION 2.16 NO CUMULATIVE VOTING. No shareholder shall be permitted to cumulate his or her votes in the election for directors or otherwise. SECTION 2.17 WAIVER OF NOTICE. When any notice is required to be given to any shareholder, a waiver thereof in writing signed by the person entitled to such notice, whether before, at, or after the time stated therein, shall be equivalent to the giving of such notice. Such waiver shall be delivered to the corporation for filing with the corporate records. The attendance of a shareholder at any meeting shall constitute a waiver of notice, waiver of objection to defective notice of such meeting, or a waiver of objection to the consideration of a particular matter at the shareholder meeting unless the shareholder, at the beginning of the meeting, objects to the holding of the meeting, the transaction of business at the meeting, or the consideration of a particular matter at the time it is presented at the meeting. SECTION 2.18 PARTICIPATION BY ELECTRONIC MEANS. Any shareholder may participate in any meeting of the shareholders by means of telephone conference or similar communications equipment by which all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at such meeting. ARTICLE III BOARD OF DIRECTORS SECTION 3.1 GENERAL POWERS. The business and affairs of the corporation shall be managed by its Board of Directors. SECTION 3.2 PERFORMANCE OF DUTIES. A director of the corporation shall perform his or her duties as a director, including his or her duties as a member of any committee of the board upon which he or she may serve, in good faith, in a manner he or she reasonably believes to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. In performing his or her duties, 8 a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by persons and groups listed in paragraphs (a), (b), and (c) of this Section 3.2; but he or she shall not be considered to be acting in good faith if he or she has knowledge concerning the matter in question that would cause such reliance to be unwarranted. A person who so performs his or her duties shall not have any liability by reason of being or having been a director of the corporation. Those persons and groups on whose information, opinions, reports, and statements a director is entitled to rely upon are: (a) One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented; (b) Counsel, public accountants, or other persons as to matters which the director reasonably believes to be within such persons' professional or expert competence; or (c) A committee of the board upon which he or she does not serve, duly designated in accordance with the provision of the Articles of Incorporation or these Bylaws, as to matters within its designated authority, which committee the director reasonably believes to merit confidence. SECTION 3.3 NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the corporation shall be fixed from time to time by resolution of the Board of Directors, but in no instance shall there be less than one director. Each director shall hold office until the next annual meeting of shareholders or until his or her successor shall have been elected and qualified. Directors need not be residents of the State of Colorado or shareholders of the corporation. SECTION 3.4 REGULAR MEETINGS. A regular meeting of the Board of Directors shall be held without notice other than this bylaw immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Colorado, for the holding of additional regular meetings without notice other than such resolution. SECTION 3.5 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the Chair of the Board, if any, the President or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Colorado, as the place for holding any special meeting of the Board of Directors called by them. SECTION 3.6 NOTICE. Written notice of any special meeting of directors shall be given as follows: 9 By mail to each director at his or her business address at least four days prior to the meeting; or By personal delivery, facsimile or telegram at least twenty-four hours prior to the meeting to the business address of each director, or in the event such notice is given on a Saturday, Sunday or holiday, to the residence address of each director. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, so addressed, with postage thereon prepaid. If notice is given by facsimile, such notice shall be deemed to be delivered when a confirmation of the transmission of the facsimile has been received by the sender. If notice is given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting before or after the time and date of the meeting stated in the notice. The waiver shall be in writing and signed by the director entitled to the notice. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. SECTION 3.7 QUORUM. A majority of the number of directors fixed by or pursuant to Section 3.3 of this Article III, or if no such number is fixed, a majority of the number of directors in office immediately before the meeting begins, shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 3.8 MANNER OF ACTING. Except as otherwise required by the Colorado Business Corporation Act or by the Articles of Incorporation, the act of the majority of the directors present at a meeting at which a quorum is present when a vote is taken shall be the act of the Board of Directors. SECTION 3.9 INFORMAL ACTION BY DIRECTORS OR COMMITTEE MEMBERS. Unless the Articles of Incorporation or these Bylaws provide otherwise, any action required or permitted to be taken at a meeting of the Board of Directors or any committee designated by said board may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by each director or committee member, and delivered to the Secretary for inclusion in the minutes or for filing with the corporate records. Action taken under this section is effective when all directors or committee members have signed the consent, unless the consent specifies a different effective date. Such consent has the same 10 force and effect as an unanimous vote of the directors or committee members and may be stated as such in any document. SECTION 3.10 PARTICIPATION BY ELECTRONIC MEANS. Any members of the Board of Directors or any committee designated by such Board may participate in a meeting of the Board of Directors or committee by means of telephone conference or similar communications equipment by which all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at the meeting. SECTION 3.11 VACANCIES. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the shareholders or the Board of Directors. If the directors remaining in office constitute fewer than a quorum of the board, the directors may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. If elected by the directors, the director filling the vacancy shall hold office until the next annual shareholders' meeting at which directors are elected. If elected by the shareholders, the director filling the vacancy shall hold office for the unexpired term of his or her predecessor in office; except that, if the director's predecessor was elected by the directors to fill a vacancy, the director elected by the shareholders shall hold the office for the unexpired term of the last predecessor elected by the shareholders. If the vacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders, and, if one or more of the remaining directors were elected by the same voting group, only such directors so elected by the same voting group are entitled to vote to fill the vacancy if it is filled by the directors. SECTION 3.12 RESIGNATION. Any director of the corporation may resign at any time by giving written notice to the Secretary of the corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective. SECTION 3.13 REMOVAL. Subject to any limitations contained in the Articles of Incorporation, any director or directors of the corporation may be removed at any time, with or without cause, in the manner provided in the Colorado Business Corporation Act. SECTION 3.14 COMMITTEES. By resolution adopted by a majority of the Board of Directors, the directors may designate two or more directors to constitute a committee, any of 11 which shall have such authority in the management of the corporation as the Board of Directors shall designate and as shall be prescribed by or limited by the Colorado Business Corporation Act and Article XI of these Bylaws. SECTION 3.15 COMPENSATION. By resolution of the Board of Directors and irrespective of any personal interest of any of the directors, each director may be paid his or her expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the Board of Directors or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. SECTION 3.16 PRESUMPTION OF ASSENT. A director of the corporation who is present at a meeting of the Board of Directors or committee of the board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless (i) the director objects at the beginning of the meeting, or promptly upon his or her arrival, to the holding of the meeting or the transaction of business at the meeting and does not thereafter vote for or assent to any action taken at the meeting, (ii) the director contemporaneously requests that his or her dissent or abstention as to any specific action taken be entered in the minutes of the meeting, or (iii) the director causes written notice of his or her dissent or abstention as to any specific action to be received by the presiding officer or the meeting before its adjournment or by the corporation promptly after the adjournment of the meeting. A director may dissent to a specific action at a meeting, while assenting to others. The right to dissent to a specific action taken at a meeting of the Board of Directors or a committee of the board shall not be available to a director who voted in favor of such action. ARTICLE IV OFFICERS SECTION 4.1 NUMBER. The officers of the corporation shall be a President, a Secretary, and a Treasurer, each of whom must be a natural person who is eighteen years or older and shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person. SECTION 4.2 ELECTION AND TERM OF OFFICE. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after the annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as practicable. Each officer shall hold office until his or her successor 12 shall have been duly elected and shall have qualified or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided. SECTION 4.3 REMOVAL. Any officer or agent may be removed by the Board of Directors at any time, with or without cause, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. An officer may resign at any time by giving written notice of the resignation to the Secretary of the corporation. The resignation is effective when the notice is received by the corporation unless the notice specifies a later effective date. SECTION 4.4 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 4.5 PRESIDENT. The President shall be the chief executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He or she shall, when present, and in the absence of a Chair of the Board, preside at all meetings of the shareholders and of the Board of Directors. He or she may sign certificates for shares of the corporation and deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. The President or his or her designees may sell, lease, exchange, or otherwise dispose of any or all of the corporation's property in the usual and regular course of business. SECTION 4.6 VICE PRESIDENT. If elected or appointed by the Board of Directors, the Vice President (or in the event there is more than one Vice President, the Vice Presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall, in the absence of the President or in the event of his or her death, inability or refusal to act, perform all duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign certificates for shares of the corporation; and shall perform such other duties as from time to time may be assigned to him or her by the President or by the Board of Directors. SECTION 4.7 SECRETARY. The Secretary shall (a) prepare and maintain as permanent records the minutes of the proceedings of the shareholders and the Board of Directors, 13 a record of all actions taken by the shareholders or Board of Directors without a meeting, a record of all actions taken by a committee of the Board in place of the Board of Directors on behalf of the corporation, and a record of all waivers of notice and meetings of shareholders and of the Board of Directors or any committee thereof, (b) ensure that all notices are duly given in accordance with the provisions of these Bylaws and as required by law, (c) serve as custodian of the corporate records and of the seal of the corporation and affix the seal to all documents when authorized by the Board of Directors, (d) keep at the corporation's registered office or principal place of business a record containing the names and addresses of all shareholders in a form that permits preparation of a list of shareholders arranged by voting group and by class or series of shares within each voting group, that is alphabetical within each class or series and that shows the address of, and the number of shares of each class or series held by, each shareholder, unless such a record shall be kept at the office of the corporation's transfer agent or registrar, (e) maintain at the corporation's principal office the originals or copies of the corporation's Articles of Incorporation, Bylaws, minutes of all shareholders' meetings and records of all action taken by shareholders without a meeting for the past three years, all written communications within the past three years to shareholders as a group or to the holders of any class or series of shares as a group, a list of the names and business addresses of the current directors and officers, a copy of the corporation's most recent corporate report filed with the Secretary of State, and financial statements showing in reasonable detail the corporation's assets and liabilities and results of operations for the last three years, (f) have general charge of the stock transfer books of the corporation, unless the corporation has a transfer agent, (g) authenticate records of the corporation, and (h) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the president or by the Board of Directors. Assistant Secretaries, if any, shall have the same duties and powers, subject to supervision by the Secretary. The directors or shareholders may respectively designate a person other than the Secretary or Assistant Secretary to keep the minutes of their respective meetings. Any books, records, or minutes of the corporation may be in written form or in any form capable of being converted into written form within a reasonable time. SECTION 4.8 TREASURER. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article V of these Bylaws; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the President or by the Board of Directors. SECTION 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. 14 SECTION 4.10 BONDS. If the Board of Directors by resolution shall so require, any officer or agent of the corporation shall give bond to the corporation in such amount and with such surety as the Board of Directors may deem sufficient, conditioned upon the faithful performance of his or her respective duties and offices. SECTION 4.11 SALARIES. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the corporation. ARTICLE V CONTRACTS, LOANS, CHECKS AND DEPOSITS SECTION 5.1 CONTRACTS. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 5.2 LOANS. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. SECTION 5.3 CHECKS, DRAFTS ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 5.4 DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select. ARTICLE VI SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES SECTION 6.1 REGULATION. The Board of Directors may make such rules and regulations as it may deem appropriate concerning the issuance, transfer and registration of certificates for shares of the corporation, including the appointment of transfer agents and registrars. 15 SECTION 6.2 SHARES WITHOUT CERTIFICATES. Unless otherwise provided by the Articles of Incorporation or these Bylaws, the Board of Directors may authorize the issuance of any of its classes or series of shares without certificates. Such authorization shall not affect shares already represented by certificates until they are surrendered to the corporation. Within a reasonable time following the issue or transfer of shares without certificates, the corporation shall send the shareholder a complete written statement of the information required on certificates by the Colorado Business Corporation Act. SECTION 6.3 CERTIFICATES FOR SHARES. If shares of the corporation are represented by certificates, the certificates shall be respectively numbered serially for each class of shares, or series thereof, as they are issued, and shall be signed by an officer of the corporation authorized by these Bylaws or a resolution of the Board of Directors; provided that such signatures may be facsimile. Each certificate shall state the name of the corporation, the fact that the corporation is organized or incorporated under the laws of the State of Colorado, the name of the person to whom issued, the date of issue, the class (or series of any class), the number of shares represented thereby. A statement of the designations, preferences, qualifications, limitations, restrictions and special or relative rights of the shares of each class shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue, or in lieu thereof, the certificate may set forth that such a statement or summary will be furnished to any shareholder upon request without charge. Each certificate shall be otherwise in such form as may be prescribed by the Board of Directors and as shall conform to the rules of any stock exchange on which the shares may be listed. The corporation shall not issue certificates representing fractional shares and shall not be obligated to make any transfers creating a fractional interest in a share of stock. The corporation may, but shall not be obligated to, issue scrip in lieu of any fractional shares, such scrip to have terms and conditions specified by the Board of Directors. SECTION 6.4 CANCELLATION OF CERTIFICATES. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificates shall be issued in lieu thereof until the former certificate for a like number of shares shall have been surrendered and cancelled, except as herein provided with respect to lost, stolen or destroyed certificates. SECTION 6.5 CONSIDERATION FOR SHARES. Certificated or uncertificated shares shall not be issued until the shares represented thereby are fully paid. The Board of Directors may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed or other securities of the corporation. Future services shall not constitute payment or partial payment for shares of the corporation. The promissory note of a subscriber or an affiliate of a subscriber shall not constitute payment or partial payment for shares of the corporation unless 16 the note is negotiable, recourse and is secured by collateral, other than the shares being purchased, having a fair market value of at least equal to the principal amount of the note. SECTION 6.6 LOST, STOLEN OR DESTROYED CERTIFICATES. Any shareholder claiming that his or her certificate for shares is lost, stolen or destroyed may make an affidavit or affirmation of that fact and lodge the same with the Secretary of the corporation, accompanied by a signed application for a new certificate. Thereupon, and upon the giving of a satisfactory bond of indemnity to the corporation not exceeding an amount double the value of the shares as represented by such certificate (the necessity for such bend and the amount required to be determined by the President and Treasurer of the corporation), a new certificate may be issued of the same tenor and representing the same number, class and series of shares as were represented by the certificate alleged to be lost, stolen or destroyed. SECTION 6.7 TRANSFER OF SHARES. Subject to the terms of any shareholder agreement relating to the transfer of shares or other transfer restrictions contained in the Articles of Incorporation or authorized therein, shares of the corporation shall be transferable on the books of the corporation by the holder thereof in person or by his or her duly authorized attorney, upon the surrender and cancellation of a certificate or certificates for a like number of shares. Upon presentation and surrender of a certificate for shares properly endorsed and payment of all taxes therefor, the transferee shall be entitled to a new certificate or certificates in lieu thereof. As against the corporation, a transfer of shares can be made only on the books of the corporation and in the manner hereinabove provided, and the corporation shall be entitled to treat the holder of record of any share as the owner thereof and shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided by the Colorado Business Corporation Act. ARTICLE VII FISCAL YEAR The fiscal year of the corporation shall end on the last day of December in each calendar year. 17 ARTICLE VIII DISTRIBUTIONS The Board of Directors may from time to time declare, and the corporation may pay, distributions on its outstanding shares in the manner and upon the terms and conditions provided by the Colorado Business Corporation Act and its Articles of Incorporation. ARTICLE IX CORPORATE SEAL The Board of Directors may authorize the use of a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words "CORPORATE SEAL." ARTICLE X AMENDMENTS These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by a majority of the directors present at any meeting of the Board of Directors of the corporation at which a quorum is present when a vote is taken. ARTICLE XI EXECUTIVE COMMITTEE SECTION 11.1 APPOINTMENT. The Board of Directors by resolution adopted by a majority of all directors in office, may designate two or more of its members to constitute an Executive Committee. The designation of such Committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed by law. SECTION 11.2 AUTHORITY. The Executive Committee, when the Board of Directors is not in session shall have and may exercise all of the authority of the Board of Directors except to the extent, if any, that such authority shall be limited by the resolution appointing the Executive Committee and except also that the Executive Committee shall not have the authority of the Board of Directors in reference to authorizing distributions, filling vacancies 18 on the Board of Directors, authorizing reacquisition of shares, authorizing and determining rights for shares, amending the Articles of Incorporation, adopting a plan of merger or share exchange, recommending to the shareholders the sale, lease or other disposition of all or substantially all of the property and assets of the corporation otherwise than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof, or amending the Bylaws of the corporation. SECTION 11.3 TENURE AND QUALIFICATIONS. Each member of the Executive Committee shall hold office until the next regular annual meeting of the Board of Directors following his or her designation and until his or her successor is designated as a member of the Executive Committee and is elected and qualified. SECTION 11.4 MEETINGS. Regular meetings of the Executive Committee may be held without notice at such time and places as the Executive Committee may fix from time to time by resolution. Special meetings of the Executive Committee may be called by any member thereof upon not less than one day's notice stating the place, date and hour of the meeting, which notice may be written or oral. Any member of the Executive Committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the Executive Committee need not state the business proposed to be transacted at the meeting. SECTION 11.5 QUORUM. A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the Executive Committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present when a vote is taken. SECTION 11.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE. Any action required or permitted to be taken by the Executive Committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the Executive Committee entitled to vote with respect to the subject matter thereof. SECTION 11.7 VACANCIES. Any vacancy in the Executive Committee may be filled by a resolution adopted by a majority of all directors in office. SECTION 11.8 RESIGNATIONS AND REMOVAL. Any member of the Executive Committee may be removed at any time with or without cause by resolution adopted by a majority of all directors in office. Any member of the Executive Committee may resign from the Executive Committee at any time by giving written notice to the President or Secretary of the corporation, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 19 SECTION 11.9 PROCEDURE. The Executive Committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these Bylaws. It shall keep regular minutes of its proceedings and report the same to the Board of Directors for its information at the meeting thereof held next after the proceedings shall have been taken. ARTICLE XII EMERGENCY BYLAWS The Emergency Bylaws provided m this Article XII shall be operative during any emergency in the conduct of the business of the corporation resulting from a catastrophic event causing a quorum of directors to be not readily obtained as a result thereof, notwithstanding any different provision in the preceding articles of the Bylaws or in the Articles of Incorporation of the corporation or in the Colorado Business Corporation Act. To the extent not inconsistent with the provisions of this Article, the Bylaws provided in the preceding articles shall remain in effect during such emergency and upon its termination the Emergency Bylaws shall cease to be operative. During any such emergency: (a) A meeting of the Board of Directors may be called by any officer or director of the corporation. Notice of the time and place of the meeting shall be given by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting. (b) At any such meeting of the Board of Directors, a quorum shall consist of the number of directors in attendance at such meeting. (c) The Board of Directors, either before or during any such emergency, may, effective in the emergency, change the principal office or designate several alternative principal offices or regional offices, or authorize the officers so to do. (d) The Board of Directors, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the corporation shall for any reason be rendered incapable of discharging their duties. (e) No officer, director or employee acting in accordance with these Emergency Bylaws shall be liable except for willful misconduct. 20 (f) These Emergency Bylaws shall be subject to repeal or change by further action of the Board of Directors or by action of the shareholders, but no such repeal or change shall modify the provisions of the next preceding paragraph with regard to action taken prior to the time of such repeal or change. Any amendment of these Emergency Bylaws may make any further or different provision that may be practical and necessary for the circumstances of the emergency. CERTIFICATE I hereby certify that the foregoing Bylaws, consisting of twenty-one (21) pages, including this page, constitute the Bylaws of New Millennium Media International, Inc., adopted by the Board of Directors of the corporation as of April 21, 1998. ---------------------------------------- Troy H. Lowrie, President, Secretary and Treasurer 21 EX-4.1 5 0005.txt INVESTMENT AGREEMENT WITH SWARTZ NEW MILLENNIUM MEDIA INTERNATIONAL, INC. INVESTMENT AGREEMENT THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES AUTHORITIES. THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE FEDERAL AND STATE SECURITIES LAWS. THIS INVESTMENT AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED HEREIN BY OR TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES AUTHORITIES, NOR HAVE SUCH AUTHORITIES CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. THE INVESTOR MUST RELY ON ITS OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET FORTH IN THE ATTACHED DISCLOSURE DOCUMENTS AS EXHIBIT J. SEE ADDITIONAL LEGENDS AT SECTIONS 4.7. THIS INVESTMENT AGREEMENT (this "Agreement" or "Investment Agreement") is made as of the 19th day of May, 2000, by and between New Millennium Media International, Inc., a corporation duly organized and existing under the laws of the State of Colorado (the "Company"), and the undersigned Investor executing this Agreement ("Investor"). RECITALS: WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall issue to the Investor, and the Investor shall purchase from the Company, from time to time as provided herein, shares of the Company's Common Stock, as part of an offering of Common Stock by the Company to Investor, for a maximum aggregate offering amount of Twenty Five Million Dollars ($25,000,000) (the "Maximum Offering Amount"); and WHEREAS, the solicitation of this Investment Agreement and, if accepted by the Company, the offer and sale of the Common Stock are being made in reliance upon the provisions of Regulation D ("Regulation D") promulgated under the Act, Section 4(2) of the Act, and/or upon such other exemption from the registration requirements of the Act as may be available with respect to any or all of the purchases of Common Stock to be made hereunder. 1 TERMS: NOW, THEREFORE, the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement (including the recitals above), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "20% Approval" shall have the meaning set forth in Section 5.25. "9.9% Limitation" shall have the meaning set forth in Section 2.3.1(f). "Accredited Investor" shall have the meaning set forth in Section 3.1. "Act" shall mean the Securities Act of 1933, as amended. "Advance Put Notice" shall have the meaning set forth in Section 2.3.1(a), the form of which is attached hereto as Exhibit E. "Advance Put Notice Confirmation" shall have the meaning set forth in Section 2.3.1(a), the form of which is attached hereto as Exhibit F. "Advance Put Notice Date" shall have the meaning set forth in Section 2.3.1(a). "Affiliate" shall have the meaning as set forth Section 6.4. "Aggregate Issued Shares" equals the aggregate number of shares of Common Stock issued to, Investor pursuant to the terms of this Agreement or the Registration Rights Agreement as of a given date, including Put Shares and Warrant Shares. "Agreed Upon Procedures Report" shall have the meaning set forth in Section 2.5.3 (b). "Agreement" shall mean this Investment Agreement. "Automatic Termination" shall have the meaning set forth in Section 2.3.2. "Bring Down Cold Comfort Letters" shall have the meaning set forth in Section 2.3.6(b). "Business Day" shall mean any day during which the Principal Market is open for trading. "Calendar Month" shall mean the period of time beginning on the numeric day in question in a calendar month and for Calendar Months thereafter, beginning on the earlier of (i) the same numeric day of the next calendar month or (ii) the last day of the next calendar month. Each Calendar Month shall end on the day immediately preceding the beginning of the next succeeding Calendar Month. "Cap Amount" shall have the meaning set forth in Section 2.3.10. "Capital Raising Limitations" shall have the meaning set forth in Section 6.5.1. "Capitalization Schedule" shall have the meaning set forth in Section 3.2.4, attached hereto as Exhibit K. 2 "Closing" shall mean one of (i) the Investment Commitment Closing and (ii) each closing of a purchase and sale of Common Stock pursuant to Section 2. "Closing Bid Price" means, for any security as of any date, the last closing bid price for such security during Normal Trading on the O.T.C. Bulletin Board, or, if the O.T.C. Bulletin Board is not the principal securities exchange or trading market for such security, the last closing bid price during Normal Trading of such security on the principal securities exchange or trading market where such security is listed or traded as reported by such principal securities exchange or trading market, or if the foregoing do not apply, the last closing bid price during Normal Trading of such security in the over-the-counter market on the electronic bulletin board for such security, or, if no closing bid price is reported for such security, the average of the bid prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as mutually determined by the Company and the Investor in this Offering. If the Company and the Investor in this Offering are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved by an investment banking firm mutually acceptable to the Company and the Investor in this offering and any fees and costs associated therewith shall be paid by the Company. "Commitment Evaluation Period" shall have the meaning set forth in Section 2.6. "Commitment Warrants" shall have the meaning set forth in Section 2.4.1, the form of which is attached hereto as Exhibit U. " Commitment Warrant Exercise Price" shall have the meaning set forth in Section 2.4.1. "Common Shares" shall mean the shares of Common Stock of the Company. "Common Stock" shall mean the common stock of the Company. "Company" shall mean New Millennium Media International, Inc., a corporation duly organized and existing under the laws of the State of Colorado. "Company Designated Maximum Put Dollar Amount" shall have the meaning set forth in Section 2.3.1(a). "Company Designated Minimum Put Share Price" shall have the meaning set forth in Section 2.3.1(a). "Company Termination" shall have the meaning set forth in Section 2.3.12. "Conditions to Investor's Obligations" shall have the meaning as set forth in Section 2.2.2. "Delisting Event" shall mean any time during the term of this Investment Agreement, that the Company's Common Stock is not listed for and actively trading on the O.T.C. Bulletin Board, the Nasdaq Small Cap Market, the Nasdaq National Market, the American Stock Exchange, or the New York Stock Exchange or is suspended or delisted with respect to the trading of the shares of Common Stock on such market or exchange. "Disclosure Documents" shall have the meaning as set forth in Section 3.2.4. "Due Diligence Review" shall have the meaning as set forth in Section 2.5. 3 "Effective Date" shall have the meaning set forth in Section 2.3.1. "Equity Securities" shall have the meaning set forth in Section 6.5.1. "Evaluation Day" shall have the meaning set forth in Section 2.3.1(b). "Exchange Act" shall mean the Securities Exchange Act of 1934, as. amended. "Excluded Day" shall have the meaning set forth in Section 2.3.1(b). "Extended Put Period" shall mean the period of time between the Advance Put Notice Date until the Pricing Period End Date. "Impermissible Put Cancellation" shall have the meaning set forth in Section 2.3.1(e). "Indemnified Liabilities" shall have the meaning set forth in Section 9. "Indemnities" shall have the meaning set forth in Section 9. "Indemnitor" shall have the meaning set forth in Section 9. "Individual Put Limit" shall have the meaning set forth in Section 2.3.1 (b). "Ineffective Period" shall mean any period of time that the Registration Statement or any Supplemental Registration Statement (each as defined in the Registration Rights Agreement) becomes ineffective or unavailable for use for the sale or resale, as applicable, of any or all of the Registrable Securities (as defined in the Registration Rights Agreement) for any reason (or in the event the prospectus under either of the above is not current and deliverable) during any time period required under the Registration Rights Agreement. "Initial Exercise Price" shall have the meaning set forth in Section 2.4.1. "Intended Put Share Amount" shall have the meaning set forth in Section 2.3.1(a). "Investment Commitment Closing" shall have the meaning set forth in Section 2.2.1. "Investment Agreement" shall mean this Investment Agreement. "Investment Commitment Opinion of Counsel" shall mean an opinion from Company's independent counsel, substantially in the form attached as Exhibit B, or such other form as agreed upon by the parties, as to the Investment Commitment Closing. "Investment Date" shall mean the date of the Investment Commitment Closing. "Investor" shall have the meaning set forth in the preamble hereto. "Key Employee" shall have the meaning set forth in Section 5.17, as set forth in Exhibit N. "Late Payment Amount" shall have the meaning set forth in Section 2.3.8. "Legend" shall have the meaning set forth in Section 4.7. 4 "Major Transaction" shall mean and shall be deemed to have occurred at such time upon any of the following events: (i) a consolidation, merger or other business combination or event or transaction following which the holders of Common Stock of the Company immediately preceding such consolidation, merger, combination or event either (i) no longer hold a majority of the shares of Common Stock of the Company or (ii) no longer have the ability to elect the board of directors of the Company (a " Change of Control"); provided, however, that if the other entity involved in such consolidation, merger, combination or event is a publicly traded company with "Substantially Similar Trading Characteristics" (as defined below) as the Company and the holders of Common Stock are to receive solely Common Stock or no consideration (if the Company is the surviving entity) or solely common stock of such other entity (if such other entity is the surviving entity), such transaction shall not be deemed to be a Major Transaction (provided the surviving entity, if other than the Company, shall have agreed to assume all obligations of the Company under this Agreement and the Registration Rights Agreement). For purposes hereof, an entity shall have Substantially Similar Trading Characteristics as the Company if the average daily dollar Trading Volume of the common stock of such entity is equal to or in excess of $500,000 for the 90th through the 31st day prior to the public announcement of such transaction; (ii) the sale or transfer of all or substantially all of the Company's assets; or (iii) a purchase, tender or exchange offer made to the holders of outstanding shares of Common Stock, such that following such purchase, tender or exchange offer a Change of Control shall have occurred. "Market Price" shall equal the lowest Closing Bid Price for the Common Stock on the Principal Market during the Pricing Period for the applicable Put. "Material Facts" shall have the meaning set forth in Section 2.3.6(a). "Maximum Put Dollar Amount" shall mean the lesser of (i) the Company Designated Maximum Put Dollar Amount, if any, specified by the Company in a Put- Notice, and (ii) $2 million. "Maximum Offering Amount" shall mean Twenty Five Million Dollars ($25,000,000). "Nasdaq 20% Rule" shall have the meaning set forth in Section 2.3.10. "NASD" shall have the meaning set forth in Section 6.9. "Normal Trading" shall mean trading that occurs between 9:30 AM and 4:00 PM, New York, New York Time, on any Business Day, and shall expressly exclude "after hours" trading. "NYSE" shall have the meaning set forth in Section 6.9. "Numeric Day" shall mean the numerical day of the month of the Investment Date or the last day of the calendar month in question, whichever is less. "Offering" shall mean the Company's offering of Common Stock and Warrants issued under this Investment Agreement. "Officer's Certificate" shall mean a certificate, signed by an officer of the Company, to the effect that the representations and warranties of the Company in this Agreement required to 5 be true for the applicable Closing are true and correct in all material respects and all of the conditions and limitations set forth in this Agreement for the applicable Closing are satisfied. "Opinion of Counsel" shall mean, as applicable, the Investment Commitment Opinion of Counsel, the Put Opinion of Counsel, and the Registration Opinion. "Payment Due Date" shall have the meaning set forth in Section 2.3.8. "Pricing Period" shall mean, unless otherwise shortened under the terms of this Agreement, the period beginning on the Business Day immediately following the Put Date and ending on and including the date which is 20 Business Days after such Put Date. "Pricing Period End Date" shall mean the last Business Day of any Pricing Period. "Principal Market" shall mean the O.T.C. Bulletin Board, the Nasdaq Small Cap Market, the Nasdaq National Market, the American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. "Proceeding" shall have the meaning as set forth Section 5.1. "Purchase" shall have the meaning set forth in Section 2.3.7. "Purchase Warrants" shall have the meaning set forth in Section 2.4.2, the form of which is attached hereto as Exhibit D. "Purchase Warrant Exercise Price" shall have the meaning set forth in Section 2.4.2. "Put" shall have the meaning set forth in Section 2.3.1(d). "Put Cancellation" shall have the meaning set forth in Section 2.3.11(a). "Put Cancellation Notice Confirmation" shall have the meaning set forth in Section 2.3.11(c), the form of which is attached hereto as Exhibit S. "Put Cancellation Date" shall have the meaning set forth in Section 2.3.11(a). "Put Cancellation Notice" shall have the meaning set forth in Section 2.3.11(a), the form of which is attached hereto as Exhibit Q. "Put Closing" shall have the meaning set forth in Section 2.3.8. "Put Closing Date" shall have the meaning set forth in Section 2.3.8. "Put Date" shall mean the date that is specified by the Company in any Put Notice for which the Company intends to exercise a Put under Section 2.3.1, unless the Put Date is postponed pursuant to the terms hereof, in which case the "Put Date" is such postponed date. "Put Dollar Amount" shall be determined by multiplying the Put Share Amount by the respective Put Share Prices with respect to such Put Shares, subject to the limitations herein. "Put Notice" shall have the meaning set forth in Section 2.3.1(d), the form of which is attached hereto as Exhibit G. 6 "Put Notice Confirmation" shall have the meaning set forth in Section 2.3.1(d), the form of which is attached hereto as Exhibit H. "Put Opinion of Counsel" shall mean an opinion from Company's independent counsel, in the form attached as Exhibit 1, or such other form as agreed upon by the parties, as to any Put Closing. "Put Share Amount" shall have the meaning as set forth Section 2.3.1(b). "Put Share Price" shall have the meaning set forth in Section 2.3.1(c). "Put Shares" shall mean shares of Common Stock that are purchased by the Investor pursuant to a Put. "Registrable Securities" shall have the meaning as set forth in the Registration Rights Agreement. "Registration Opinion" shall have the meaning set forth in Section 2.3.6(a), the form of which is attached hereto as Exhibit R. "Registration Opinion Deadline" shall have the meaning set forth in Section 2.3.6(a). "Registration Rights Agreement" shall mean that certain registration rights agreement entered into by the Company and Investor on even date herewith, in the form attached hereto as Exhibit A, or such other form as agreed upon by the parties. "Registration Statement" shall have the meaning as set forth in the Registration Rights Agreement. "Regulation D" shall mean Regulation D promulgated under the Act. "Reporting Issuer" shall have the meaning set forth in Section 6.2. "Required Put Documents" shall have the meaning set forth in Section 2.3.5. "Risk Factors" shall have the meaning set forth in Section 3.2.4, attached hereto as Exhibit J. "Schedule of Exceptions" shall have the meaning set forth in Section 5, and is attached hereto as Exhibit C. "SEC" shall mean the Securities and Exchange Commission. "Securities" shall mean this Investment Agreement, together with the Common Stock of the Company, the Warrants and the Warrant Shares issuable pursuant to this Investment Agreement. "Semi-Annual Non-Usage Fee" shall have the meaning set forth in Section 2.6. "Share Authorization Increase Approval" shall have the meaning set forth in Section 5.25. "Six Month Anniversary" shall mean the date that is the same Numeric Day of the sixth (6th) calendar month after the Investment Date, and the date that is the same Numeric Day of 7 each sixth (6th) calendar month thereafter, provided that if such date is not a Business Day, the next Business Day thereafter. "Stockholder 20% Approval" shall have the meaning set forth in Section 6.11. "Supplemental Registration Statement" shall have the meaning set forth in the Registration Rights Agreement. "Term" shall mean the term of this Agreement, which shall be a period of time beginning on the date of this Agreement and ending on the Termination Date. "Termination Date" shall mean the earlier of (i) the date that is three (3) years after the Effective Date, or (ii) the date that is thirty (30) Business Days after the later of (a) the Put Closing Date on which the sum of the aggregate Put Share Price for all Put Shares equal the Maximum Offering Amount, (b) the date that the' Company has delivered a Termination Notice to the Investor, (c) the date of an Automatic Termination, and (d) the date that all of the Warrants have been exercised. "Termination Fee" shall have the meaning as set forth in Section 2.6. "Termination Notice" shall have the meaning as set forth in Section 2.3.12. "Third Party Report" shall have the meaning set forth in Section 3.2.4. "Trading Volume " shall mean the volume of shares of the Company's Common Stock that trade between 9:30 AM and 4:00 PM, New York, New York Time, on any Business Day, and shall expressly exclude any shares trading during "after hours" trading. "Transaction Documents" shall have the meaning set forth in Section 9. "Transfer Agent Instructions" shall mean the Company's instructions to its transfer agent, substantially in the form attached as Exhibit T, or such other form as agreed upon by the parties. "Trigger Price" shall have the meaning set forth in Section 2.3.1(b). "Truncated Pricing Period" shall have the meaning set forth in Section 2.3.11(d). "Truncated Put Share Amount" shall have the meaning set forth in Section 2.3.11(b). "Unlegended Share Certificates" shall mean a certificate or certificates (or electronically delivered shares, as appropriate) (in denominations as instructed by Investor) representing the shares of Common Stock to which the Investor is then entitled to receive, registered in the name of Investor or its nominee (as instructed by Investor) and not containing a restrictive legend or stop transfer order, including but not limited to the Put Shares for the applicable Put and Warrant Shares. "Use of Proceeds Schedule" shall have the meaning as set forth in Section 3.2.4, attached hereto as Exhibit L. "Volume Limitations" shall have the meaning set forth in Section 2.3.1(b). "Warrant Shares" shall mean the Common Stock issued or issuable upon exercise of the Warrants. 8 "Warrants" shall mean Purchase Warrants and Commitment Warrants. 2. Purchase and Sale of Common Stock.. 2.1 Offer to Subscribe. Subject to the terms and conditions herein and the satisfaction of the conditions to closing set forth in Sections 2.2 and 2.3 below, Investor hereby agrees to purchase such amounts of Common Stock and accompanying Warrants as the Company may, in its sole and absolute discretion, from time to time elect to issue and sell to Investor according to one or more Puts pursuant to Section 2:3 below. 2.2 Investment Commitment. 2.2.1 Investment Commitment Closing. The closing of this Agreement (the "Investment Commitment Closing") shall be deemed to occur when this Agreement and the Registration Rights Agreement have been executed by both Investor and the Company, the Transfer Agent Instructions have been executed by both the Company and the Transfer Agent, and the other Conditions to Investor's Obligations set forth in Section 2.2.2 below have been met. 2.2.2 Conditions to Investor's Obligations. As a prerequisite to the Investment Commitment Closing and the Investor's obligations hereunder, all of the following (the "Conditions to Investor's Obligations") shall have been satisfied prior to or concurrently with the Company's execution and delivery of this Agreement: (a) the following documents shall have been delivered to the Investor: (i) the Registration Rights Agreement (executed by the Company and Investor), (ii) the Investment Commitment Opinion of Counsel (signed by the Company's counsel), (iii) the Transfer Agent Instructions (executed by the Company and the Transfer Agent), and (iv) a Secretary's Certificate as to (A) the resolutions of the Company's board of directors authorizing this transaction, (B) the Company's Certificate of Incorporation, and (C) the Company's Bylaws; (b) this Investment Agreement, accepted by the Company, shall have been received by the Investor; (c) the Company's Common Stock shall be listed for trading and actually trading on the O.T.C. Bulletin Board, the Nasdaq Small Cap Market, the Nasdaq National Market, the American Stock Exchange or the New York Stock Exchange; (d) other than continuing losses described in the Risk Factors set forth in the Disclosure Documents (provided for in Section 3.2.4), as of the Closing there have been no material adverse changes in the Company's business prospects or financial condition since the date of the last balance sheet included in the Disclosure Documents, including but not limited to incurring material liabilities; and (e) the representations and warranties of the Company in this Agreement shall be true and correct in all material respects and the conditions to Investor's obligations set forth in this Section 2.2.2 shall have been satisfied as of 9 such Closing; and the Company shall deliver an Officer's Certificate, signed by an officer of the Company, to such effect to the Investor. 2.3 Puts of Common Shares to the Investor. 2.3.1 Procedure to Exercise a Put. Subject to the Individual Put Limit, the Maximum Offering Amount and the Cap Amount (if applicable), and the other conditions and limitations set forth in this Agreement, at any time beginning on the date on which the Registration Statement is declared effective by the SEC (the "Effective Date"), the Company may, in its sole and absolute discretion, elect to exercise one or more Puts according to the following procedure, provided that each subsequent Put Date after the first Put Date shall be no sooner than five (5) Business Days following the preceding Pricing Period End Date: (a) Delivery of Advance Put Notice. At least ten (10) Business Days but not more than twenty (20) Business 'Days prior to any intended Put Date (unless otherwise agreed in writing by the Investor), the Company shall deliver advance written notice (the "Advance Put Notice," the form of which is attached hereto as Exhibit E, the date of such Advance Put Notice being the "Advance Put Notice Date") to Investor stating the Put Date for which the Company shall, subject to the limitations and restrictions contained herein, exercise a Put and stating the number of shares of Common Stock (subject to the Individual Put Limit and the Maximum Put Dollar Amount) which the Company intends to sell to the Investor for the Put (the "Intended Put Share Amount" ). The Company may, at its option, also designate in any Advance Put Notice (i) a maximum dollar amount of Common Stock, not to exceed 52,000,000, which it shall sell to Investor during the Put (the "Company Designated Maximum Put Dollar Amount") and/or (ii) a minimum purchase price per Put Share at which the Investor may purchase Shares pursuant to such Put Notice (a "Company Designated Minimum Put Share Price"). The Company Designated Minimum Put Share Price, if applicable, shall be no greater than 80% of the Closing Bid Price of the Company's common stock on the Advance Put Notice Date. The Company may decrease (but not increase) the Company Designated Minimum Put Share Price for a Put at any time by giving the Investor written notice of such decrease not later than 12:00 Noon, New York, New York time, on the Business Day immediately preceding the Business Day that such decrease is to take effect. A decrease in the Company Designated Minimum Put Share Price shall have no retroactive effect on the determination of Trigger Prices and Excluded Days for days preceding the Business Day that such decrease takes effect. Notwithstanding the above, if, at the time of delivery of an Advance Put Notice, more than two (2) Calendar Months have passed since the date of the previous Put Closing, such Advance Put Notice shall provide at least twenty (20) Business Days notice of the intended Put Date, unless waived in writing by the Investor. In order to effect delivery of the Advance Put Notice, the Company shall (i) send the Advance Put Notice by facsimile on such date so that such notice is received by the Investor by 6:00 p.m., New York, NY time, and (ii) surrender such notice on such date to a courier for overnight delivery to the Investor (or two (2) day delivery in the case of an Investor residing outside of the US). Upon receipt by the Investor of a facsimile copy of the Advance Put Notice, the Investor shall, within two (2) Business Days, send, via facsimile, a confirmation of receipt (the "Advance Put Notice Confirmation," the form of which is attached hereto as Exhibit F) of the .Advance Put Notice to the Company specifying that the Advance Put Notice has been received and affirming the intended Put Date and the Intended Put Share Amount. (b) Put Share Amount. The "Put Share Amount" is the number of shares of Common Stock that the Investor shall be obligated to purchase in a given Put, and shall 10 equal the lesser of (i) the Intended Put Share Amount, and (ii) the Individual Put Limit. The "Individual Put Limit" shall equal the lesser of (i) 15% of the sum of the aggregate daily reported Trading Volumes in the outstanding Common Stock on the Company's Principal Market, excluding any block trades of 25,000 or more shares of Common Stock, for all Evaluation Days (as defined below) in the Pricing Period, (ii) the number of Put Shares which, when multiplied by their respective Put Share Prices, equals the Maximum Put Dollar Amount, and (iii) the 9.9% Limitation, but in no event shall the Individual Put Limit exceed 15% of the sum of the aggregate daily reported Trading Volumes in the outstanding Common Stock on the Company's Principal Market, excluding any block trades of 25,000 or more shares of Common Stock, for the twenty (20) Business Days immediately preceding the Put Date (this limitation, together with the limitation in (i) immediately above, are collectively referred to herein as the "Volume Limitations"). Company agrees not to trade Common Stock or arrange fur Common Stock to be traded for the purpose of artificially increasing the Volume Limitations. For purposes of this Agreement: "Trigger Price" for any Pricing Period shall mean the greater of (i) the Company Designated Minimum Put Share Price, plus $.10. or (ii) the Company Designated Minimum Put Share Price divided by .92. An "Excluded Day" shall mean each Business Day during a Pricing Period where the lowest intra-day trading price of the Common Stock is less than the Trigger Price. An "Evaluation Day" shall mean each Business Day during a Pricing Period that is not an Excluded Day. (c) Put Share Price. The purchase price for the Put Shares (the "Put Share Price") shall equal the lesser of (i) the Market Price for such Put, minus $.10, or (ii) 92% of the Market Price for such Put, but shall in no event be less than the Company Designated Minimum Put Share Price for such Put, if applicable. (d) Delivery of Put Notice. After delivery of an Advance Put Notice, on the Put Date specified in the Advance Put Notice the Company shall deliver written notice (the "Put Notice," the form of which is attached hereto as Exhibit G) to Investor stating (i) the Put Date, (ii) the Intended Put Share Amount as specified in the Advance Put Notice (such exercise a "Put"), (iii) the Company Designated Maximum Put Dollar Amount (if applicable), and (iv) the Company Designated Minimum Put Share Price (if applicable). In order to effect delivery of the Put Notice, the Company shall (i) send the Put Notice by facsimile on the Put Date so that such notice is received by the Investor by 6:00 p.m., New York, NY time, and (ii) surrender such notice on the Put Date to a courier for overnight delivery to the Investor (or two (2) day delivery in the case of an Investor residing outside of the U.S.). Upon receipt by the Investor of a facsimile copy of the Put Notice, the Investor shall, within two (2) Business Days, send, via facsimile, a confirmation of receipt (the "Put Notice Confirmation." the form of which is attached hereto as Exhibit H) of the Put Notice to Company specifying that the Put Notice has been received and affirming the Put Date and the Intended Put Share Amount. (e) Delivery of Required Put Documents. On or before the Put Date for such Put, the Company shall deliver the Required Put Documents (as defined in Section 2.3.5 below) to the Investor (or to an agent of Investor, if Investor so directs). Unless otherwise specified by the Investor, the Put Shares of Common Stock shall be transmitted electronically pursuant to such electronic delivery system as the Investor shall request; otherwise delivery shall 11 be by physical certificates. If the Company has not delivered all of the Required Put Documents to the Investor on or before the Put Date, the Put shall be automatically cancelled, unless the Investor agrees to delay the Put Date by up to three (3) Business Days, in which case the Pricing Period begins on the Business Day following such new Put Date. If the Company has not delivered all of the Required Put Documents to the Investor on or before the Put Date (or new Put Date, if applicable), and the Investor has not agreed in writing to delay the Put Date, the Put is automatically canceled (an "Impermissible Put Cancellation") and, unless the Put was otherwise canceled in accordance with the terms of Section 2.3.11, the Company shall pay the Investor $3,000 for its reasonable due diligence expenses incurred in preparation for the canceled Put and the Company may deliver an Advance Put Notice for the subsequent Put no sooner than ten (10) Business Days after the date that such Put was canceled, unless otherwise agreed by the Investor. (f) Limitation on Investor's Obligation to Purchase Shares. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be required to purchase, and an Intended Put Share Amount may not include, an amount of Put Shares, which when added to the number of Put Shares acquired by the Investor pursuant to this Agreement during the 31 days preceding the Put Date with respect to which this determination of the permitted Intended Put Share Amount is being made, would exceed 9.99% of the number of shares of Common Stock outstanding (on a fully diluted basis, to the extent that inclusion of unissued shares is mandated by Section 13(d) of the Exchange Act) on the Put Date for such Pricing Period, as determined in accordance with Section 13(d) of the Exchange Act (the "Section 13(d) Outstanding Share Amount"). Each Put Notice shall include a representation of the Company as to the Section 13(d) Outstanding Share Amount on the related Put Date. In the event that the Section 13(d) Outstanding Share Amount is different on any date during a Pricing Period than on the Put Date associated with such Pricing Period, then the number of shares of Common Stock outstanding on such date during such Pricing Period shall govern for purposes of determining whether the Investor, when aggregating all purchases of Shares made pursuant to this Agreement in the 31 calendar days preceding such date, would have acquired more than 9.99% of the Section 13(d) Outstanding Share Amount. The limitation set forth in this Section 2.3.1 (f) is referred to as the "9.9% Limitation." 2.3.2 Termination of Right to Put. The Company's right to require the Investor to purchase any subsequent Put Shares shall terminate permanently (each, an "Automatic Termination") upon the occurrence of any of the following: (a) the Company shall not exercise a Put or any Put thereafter if, at any time, either the Company or any director or executive officer of the Company has engaged in a transaction or conduct related to the Company that has resulted in (i) a Securities and Exchange Commission enforcement action, or (ii) a civil judgment or criminal conviction for fraud or misrepresentation, or for any other offense that. if prosecuted criminally, would constitute a felony under applicable law; (b) the Company shall not exercise a Put or any Put thereafter, on any date after a cumulative time period or series of time periods, including both Ineffective Periods and Delisting Events, that lasts for an aggregate of four (4) months; (c) the Company shall not exercise a Put or any Put thereafter if at any time the Company has filed for and/or is subject to any bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors instituted by or against the Company or any subsidiary of the Company; 12 (d) the Company shall not exercise a Put after the sooner of (i) the date that is three (3) years after the Effective Date, or (ii) the Put Closing Date on which the aggregate of the Put Dollar Amounts for all Puts equal the Maximum Offering Amount; and (e) the Company shall not exercise a Put after the Company has breached any covenant in Section 2.6, Section 6, or Section 9 hereof. (f) if no Registration Statement has been declared effective by the date that is nine (9) months after the date of this Agreement, the Automatic Termination shall occur on the date that is nine (9) months after the date of this Agreement. 2.3.3 Put Limitations. The Company's right to exercise a Put shall be limited as follows: (a) notwithstanding the amount of any Put, the Investor shall not be obligated to purchase any additional Put Shares once the aggregate Put Dollar Amount paid by Investor equals the Maximum Offering Amount; (b) the Investor shall not be obligated to acquire and pay for the Put Shares with respect to any Put for which the Company has announced a subdivision or combination, including a reverse split, of its Common Stock or has subdivided or combined its Common Stock during the Extended Put Period for that Put; (c) the Investor shall not be obligated to acquire and pay for the Put Shares with respect to any Put for which the Company has paid a dividend of its Common Stock or has made any other distribution of its Common Stock during the Extended Put Period for that Put; (d) the Investor shall not be obligated to acquire and pay for the Put Shares with respect to any Put for which the Company has made, during the Extended Put Period. a distribution of all or any portion of its assets or evidences of indebtedness to the holders of its Common Stock; (e) the Investor shall not be obligated to acquire and pay for the Put Shares with respect to any Put for which a Major Transaction has occurred during the Extended Put Period. 2.3.4 Conditions Precedent to the Right of the Company to Deliver an Advance Put Notice or a Put Notice and the Obligation of the Investor to Purchase Put Shares. The right of the Company to deliver an Advance Put Notice or a Put Notice and the obligation of the Investor hereunder to acquire and pay for the Put Shares incident to a Closing is subject to the satisfaction, on (i) the date of delivery of such Advance Put Notice or Put Notice and (ii) the applicable Put Closing Date, of each of the following conditions: (a) the Company's Common Stock shall be listed for and actively trading on the O.T.C. Bulletin Board, the Nasdaq Small Cap Market, the Nasdaq National Market or the New York Stock Exchange and the Put Shares shall be so listed, and to the Company's knowledge there is no notice of any suspension or delisting with respect to the trading of the shares of Common Stock on such market or exchange; (b) the Company shall have satisfied any and all obligations pursuant to the Registration Rights Agreement, including, but not limited to, the filing of 13 the Registration Statement with the SEC with respect to the resale of all Registrable Securities and the requirement that the Registration Statement shall have been declared effective by the SEC for the resale of all Registrable Securities and the Company shall have satisfied and shall be in compliance with any and all obligations pursuant to this Agreement and the Warrants; (c) the representations and warranties of the Company are true and correct in all material respects as if made on such date and the conditions to Investor's obligations set forth in this Section 2.3.4 are satisfied as of such Closing, and the Company shall deliver a certificate, signed by an officer of the Company, to such effect to the Investor; (d) the Company shall have reserved for issuance a sufficient number of Common Shares for the purpose of enabling the Company to satisfy any obligation to issue Common Shares pursuant to any Put and to effect exercise of the Warrants; (e) the Registration Statement is not subject to an Ineffective Period as defined in the Registration Rights Agreement, the prospectus included therein is current and deliverable, and to the Company's knowledge there is no notice of any investigation or inquiry concerning any stop order with respect to the Registration Statement; and (f) if the Aggregate Issued Shares after the Closing of the Put would exceed the Cap Amount, the Company shall have obtained the Stockholder 20% Approval as specified in Section 6.11, if the Company's Common Stock is listed on the NASDAQ Small Cap Market or NMS, and such approval is required by the rules of the NASDAQ. 2.3.5 Documents Required to be Delivered on the Put Date as Conditions to Closing of any Put. The Closing of any Put and Investor's obligations hereunder shall additionally be conditioned upon the delivery to the Investor of each of the following (the "Required Put Documents") on or before the applicable Put Date: (a) a number of Unlegended Share Certificates (or freely tradeable electronically delivered shares, as appropriate) equal to the Intended Put Share Amount, in denominations of not more than 50,000 shares per certificate; (b) the following documents: Put Opinion of Counsel, Officer's Certificate, Put Notice, Registration Opinion, and any report or disclosure required under Section 2.3.6 or Section 2.5; (c) all documents, instruments and other writings required to be delivered on or before the Put Date pursuant to any provision of this Agreement in order to implement and effect the transactions contemplated herein. 2.3.6 Accountant's Letter and Registration Opinion. (a) The Company shall have caused to be delivered to the Investor, (i) whenever required by Section 2.3.6(b) or by Section 2.5.3, and (ii) on the date that is three (3) Business Days prior to each Put Date (the "Registration Opinion Deadline"), an opinion of the Company's independent counsel, in substantially the form of Exhibit R (the "Registration Opinion'), addressed to the Investor stating, inter alia, that no facts ("Material Facts") have 14 come to such counsel's attention that have caused it to believe that the Registration Statement is subject to an Ineffective Period or to believe that the Registration Statement, any Supplemental Registration Statement (as each may be amended, if applicable), and any related prospectuses, contain an untrue statement of material fact or omits a material fact required to make the statements contained therein, in light of the circumstances under which they were made, not misleading. If a Registration Opinion cannot be delivered by the Company's independent counsel to the Investor on the Registration Opinion Deadline due to the existence of Material Facts or an Ineffective Period, the Company shall promptly notify the Investor and as promptly as possible amend each of the Registration Statement and any Supplemental Registration Statements, as applicable, and any related prospectus or use its reasonable best efforts to cause such Ineffective Period to terminate, as the case may be, and deliver such Registration Opinion and updated prospectus as soon as possible thereafter. If at any time after a Put Notice shall have been delivered to Investor but before the related Pricing Period End Date, the Company acquires knowledge of such Material Facts or any Ineffective Period occurs, the Company shall promptly notify the Investor and shall deliver a Put Cancellation Notice to the Investor pursuant to Section 2.3.11 by facsimile and overnight courier by the end of that Business Day. (b) (i) the Company shall engage its independent auditors to perform the procedures in accordance with the provisions of Statement on Auditing Standards No. 71, as amended, as agreed to by the parties hereto, and reports thereon (the "Bring Down Cold Comfort Letters") as shall have been reasonably requested by the Investor with respect to certain financial information contained in the Registration Statement and shall have delivered to the Investor such a report addressed to the Investor, on the date that is three (3) Business Days prior to each Put Date. (ii) in the event that the Investor shall have requested delivery of an Agreed Upon Procedures Report pursuant to Section 2.5.3, the Company shall engage its independent auditors to perform certain agreed upon procedures and report thereon as shall have been reasonably requested by the Investor with respect to certain financial information of the Company and the Company shall deliver to the Investor a copy of such report addressed to the Investor. In the event that the report required by this Section 2.3.6(b) cannot be delivered by the Company's independent auditors, the Company shall, if necessary, promptly revise the Registration Statement and the Company shall not deliver a Put Notice until such report is delivered. 2.3.7 Investor's Obligation and Right to Purchase Shares. Subject to the conditions set forth in this Agreement. following the Investor's receipt of a validly delivered Put Notice, the Investor shall be required to purchase (each a "Purchase") from the Company a number of Put Shares equal to the Put Share Amount, in the manner described below. 2.3.8 Mechanics of Put Closing. Each of the Company and the Investor shall deliver all documents, instruments and writings required to be delivered by either of them pursuant to this Agreement at or prior to each Closing. Subject to such delivery and the satisfaction of the conditions set forth in Sections 2.3.4 and 2.3.5, the closing of the purchase by the Investor of Shares shall occur by 5:00 PM. New York City Time, on the date which is five (5) Business Days following the applicable Pricing Period End Date (or such other time or later date as is mutually agreed to by the Company and the Investor) (the "Payment Due Date") at the offices of Investor. On each or before each Payment Due Date, the Investor shall deliver to the Company, in the manner specified in Section 8 below, the Put Dollar Amount to be paid for such Put Shares, determined as aforesaid. The closing (each a "Put Closing") for each Put shall occur on the date that both (i) the Company has delivered to the Investor all Required Put Documents, and (ii) the Investor has delivered to the Company such Put Dollar Amount and any Late Payment Amount, if applicable (each a "Put Closing Date"). 15 If the Investor does not deliver to the Company the Put Dollar Amount for such Put Closing on or before the Payment Due Date. then the Investor shall pay to the Company, in addition to the Put Dollar Amount, an amount (the "Late Payment Amount") at a rate of X% per month, accruing daily, multiplied .by such Put Dollar Amount, where "X" equals one percent (1%) for the first month following the date in question, and increases by an additional one percent (1%) for each month that passes after the date in question, up to a maximum of five percent (5%) per month; provided, however, that in no event shall the amount of interest that shall become due and payable hereunder exceed the maximum amount permissible under applicable law. 2.3.9 Limitation on Short Sales. The Investor and its Affiliates shall not engage in short sales of the Company's Common Stock; provided, however, that the Investor may enter into any short exempt sale or any short sale or other hedging or similar arrangement it deems appropriate with respect to Put Shares after it receives a Put Notice with respect to such Put Shares so long as such sales or arrangements' do not involve more than the number of such Put Shares specified in the Put Notice. 2.3.10 Cap Amount. If the Company becomes listed on the Nasdaq Small Cap Market or the Nasdaq National Market, then, unless the Company has obtained Stockholder 20% Approval as set forth in Section 6.11 or unless otherwise permitted by Nasdaq, in no event shall the Aggregate Issued Shares exceed the maximum number of shares of Common Stock (the "Cap Amount'") that the Company can, without stockholder approval, so issue pursuant to Nasdaq Rule 4460(i)(1)(d)(ii) (or any other applicable Nasdaq Rules or any successor rule) (the "Nasdaq 20% Rule"). 2.3.11 Put Cancellation. (a) Mechanics of Put Cancellation. If at any time during a Pricing Period the Company discovers the existence of Material Facts or any Ineffective Period or Delisting Event occurs, the Company shall cancel the Put (a "Put Cancellation"), by delivering written notice to the Investor (the "Put Cancellation Notice"), attached as Exhibit Q, by facsimile and overnight courier. The "Put Cancellation Date" shall be the date that the Put Cancellation Notice is first received by the Investor, if such notice is received by the Investor by 6:00 p.m., New York, NY time, and shall be the following date, if such notice is received by the Investor after 6:00 p.m., New York, NY time. (b) Effect of Put Cancellation. Anytime a Put Cancellation Notice is delivered to Investor after the Put Date, the Put, shall remain effective with respect to a number of Put Shares (the "Truncated Put Share Amount") equal to the Individual Put Limit for the Truncated Pricing Period. (c) Put Cancellation Notice Confirmation. Upon receipt by the Investor of a facsimile copy of the Put Cancellation Notice, the Investor shall promptly send, via facsimile, a confirmation of receipt (the "Put Cancellation Notice Confirmation," a form of which is attached as Exhibit S) of the Put Cancellation Notice to the Company specifying that the Put Cancellation Notice has been received and affirming the Put Cancellation Date. (d) Truncated Pricing Period. If a Put Cancellation Notice has been delivered to the Investor after the Put Date. the Pricing Period for such Put shall end at on the close of trading on the last full trading day on the Principal Market that ends prior to the moment of initial delivery of the Put Cancellation Notice (a "Truncated Pricing Period") to the Investor. 16 2.3.12 Investment Agreement Cancellation. The Company may terminate (a "Company Termination") its right to initiate future Puts by providing written notice ("Termination Notice") to the Investor, by facsimile and overnight courier, at any time other than during an Extended Put Period, provided that such termination shall have no effect on the parties' other rights and obligations under this Agreement, the Registration Rights Agreement or the Warrants. Notwithstanding the above, any cancellation occurring during an Extended Put Period is governed by Section 2.3.11. 2.3.13 Return of Excess Common Shares. In the event that the number of Shares purchased by the Investor pursuant to its obligations hereunder is less than the Intended Put Share Amount, the Investor shall promptly return to the Company any shares of Common Stock in the Investor's possession that are not being purchased by the Investor. 2.4 Warrants. 2.4.1 Commitment Warrants. In partial consideration hereof, following the execution of the Letter of Agreement dated on or about March 6, 2000 between the Company and the Investor, the Company issued and delivered to Investor or its designated assignees, warrants (the "Commitment Warrants") in the form attached hereto as Exhibit U, or such other form as agreed upon by the parties, to purchase 1,000,000 shares of Common Stock. Each Commitment Warrant shall be immediately exercisable at the Commitment Warrant Exercise Price, and shall have a tern beginning on the date of issuance and ending on date that is five (5) years thereafter. The Warrant Shares shall be registered for resale pursuant to the Registration Rights Agreement. The Investment Commitment Opinion of Counsel shall cover the issuance of the Commitment Warrant and the issuance of the common stock upon exercise of the Commitment Warrant. Notwithstanding any Termination or Automatic Termination of this Agreement, regardless of whether or not the Registration Statement is or is not filed, and regardless of whether or not the Registration Statement is approved or denied by the SEC, the Investor shall retain full ownership of the Commitment Warrant as partial consideration for its commitment hereunder. 2.4.2 Purchase Warrants. Within five (5) Business Days of the end of each Pricing Period, the Company shall issue and deliver to the Investor a warrant ("Purchase Warrant"), in the form attached hereto as Exhibit D, or such other form as agreed upon by the parties, to purchase a number of shares of Common Stock equal to 10% of the Put Share Amount for that Put. Each Purchase Warrant shall be exerciseable at a price (the "Purchase Warrant Exercise Price") which shall initially equal 110% of the Market Price for the applicable Put, and shall have semi-annual reset provisions. Each Purchase Warrant shall be immediately exercisable at the Purchase Warrant Exercise Price, and shall have a term beginning on the date of issuance and ending on the date that is five (5) years thereafter. The Warrant Shares shall be registered for resale pursuant to the Registration Rights Agreement. 2.5 Due Diligence Review. The Company shall make available for inspection and review by the Investor (the "Due Diligence Review"), advisors to and representatives of the Investor (who may or may not be affiliated with the Investor and who are reasonably acceptable to the Company), any underwriter participating in any disposition of Common Stock on behalf of the Investor pursuant to the Registration Statement, any Supplemental Registration Statement, or amendments or supplements thereto or any blue sky, NASD or other filing, all financial and other records, all SEC Documents and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company's officers, directors and employees to supply all such 17 information reasonably requested by the Investor or any such representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investor and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of the Registration Statement. 2.5.1 Treatment of Nonpublic Information. The Company shall not disclose nonpublic information to the Investor or to its advisors or representatives unless prior to disclosure of such information the Company identifies such information as being nonpublic information and provides the Investor and such advisors and representatives with the opportunity to accept or refuse to accept such nonpublic information for review. The Company may, as a condition to disclosing any nonpublic information hereunder, require the Investor and its advisors and representatives to enter into a confidentiality agreement (including an agreement with such advisors and representatives prohibiting them from trading in Common Stock during such period of time as they are in possession of nonpublic information) in form reasonably satisfactory to the Company and the Investor. Nothing herein shall require the Company to disclose nonpublic information to the Investor or its advisors or representatives, and the Company represents that it does not disseminate nonpublic information to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts, provided, however, that notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and representatives of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation to disclose the specific event or circumstance) of which it becomes aware, constituting nonpublic information (whether or not requested of the Company specifically or generally during the course of due diligence by and such persons or entities), which, if not disclosed in the Prospectus included in the Registration Statement, would cause such Prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements therein, in light of the circumstances in which they were made, not misleading. Nothing contained in this Section 2.5 shall be construed to mean that such persons or entities other than the Investor (without the written consent of the Investor prior to disclosure of such information) may not obtain nonpublic information in the course of conducting due diligence in accordance with the terms of this Agreement; provided, however, that in no event shall the Investor's advisors or representatives disclose to the Investor the nature of the specific event or circumstances constituting any nonpublic information discovered by such advisors or representatives in the course of their due diligence without the written consent of the Investor prior to disclosure of such information. 2.5.2 Disclosure of Misstatements and Omissions. The Investor's advisors or representatives shall make complete disclosure to the Investor's counsel of all events or circumstances constituting nonpublic information discovered by such advisors or representatives in the course of their due diligence upon which such advisors or representatives form the opinion that the Registration Statement contains an untrue statement of a material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein, in the light of the circumstances in which they were made, not misleading. Upon receipt of such disclosure, the Investor's counsel shall consult with the Company's independent counsel in order to address the concern raised as to the existence of a material misstatement or omission and to discuss appropriate disclosure with respect thereto; provided, however, that such consultation shall not constitute the advice of the Company's independent counsel to the Investor as to the accuracy of the Registration Statement and related Prospectus. 18 2.5.3 Procedure if Material Facts are Reasonably Believed to be Untrue or are Omitted. In the event after such consultation the Investor or the Investor's counsel reasonably believes that the Registration Statement contains an untrue statement or a material fact or omits a material fact required to be stated in the Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were made, not misleading, (a) the Company shall file with the SEC an amendment to the Registration Statement responsive to such alleged untrue statement or omission and provide the Investor, as promptly as practicable, with copes of the Registration Statement and related Prospectus, as so amended. or (b) if the Company disputes the existence of any such material misstatement or omission, (i) the Company's independent counsel shall provide the Investor's counsel with a Registration Opinion and (ii) in the event the dispute relates to the adequacy of financial disclosure and the Investor shall reasonably request, the Company's independent auditors shall provide to the Company a letter ("Agreed Upon Procedures Report") outlining the performance of such "agreed upon procedures" as shall be reasonably requested by the Investor and the Company shall provide the Investor with a copy of such letter. 2.6 Commitment Payments. On the last Business Day of each six (6) Calendar Month period following the Effective Date (each such period a " Commitment Evaluation Period"), if the Company has not Put at least 51,000,000 in aggregate Put Dollar Amount during that Commitment Evaluation Period, the Company, in consideration of Investor's commitment costs, including, but not limited to, due diligence expenses, shall pay to the Investor an amount (the "Semi-Annual Non-Usage Fee ") equal to the difference of (i) 5100,000, minus (ii) 10% of the aggregate Put Dollar Amount of the Put Shares put to Investor during that Commitment Evaluation Period. In the event that the Company delivers a Termination Notice to the Investor or an Automatic Termination occurs, the Company shall pay to the Investor (the "Termination Fee") the greater of (i) the Semi-Annual Non-Usage Fee for the applicable Commitment Evaluation Period, or (ii) the difference of (x) 5200,000, minus (y) 10% of the aggregate Put Dollar Amount of the Put Shares put to Investor during all Puts to date, and the Company shall not be required to pay the Semi-Annual Non-Usage Fee thereafter. Each Semi Annual Non-Usage Fee or Termination Fee is payable, in cash, within five (5) business days of the date it accrued. The Company shall not be required to deliver any payments to Investor under this subsection until Investor has paid all Put Dollar Amounts that are then due. 3. Representations, Warranties and Covenants of Investor. Investor hereby represents and warrants to and agrees with the Company as follows: 3.1 Accredited Investor. Investor is an accredited investor ("Accredited Investor"), as defined in Rule 501 of Regulation D, and has checked the applicable box set forth in Section 10 of this Agreement. 3.2 Investment Experience; Access to Information; Independent Investigation. 3.2.1 Access to Information. Investor or Investor's professional advisor has been granted the opportunity to ask questions of and receive answers from representatives of the Company, its officers, directors, employees and agents concerning the terms and conditions of this Offering, the Company and its business and prospects, and to obtain any additional 19 information which Investor or Investor's professional advisor deems necessary to verify the accuracy and completeness of the information received. 3.2.2 Reliance on Own Advisors. Investor has relied completely on the advice of, or has consulted with; Investor's own personal tax, investment, legal or other advisors and has not relied on the Company or any of its affiliates, officers, directors, attorneys, accountants or any affiliates of any thereof and each other person, if any, who controls any of the foregoing, within the meaning of Section 15 of the Act for any tax or legal advice (other than reliance on information in the Disclosure Documents as defined in Section 3.2.4 below and on the Opinion of Counsel). The foregoing, however, does not limit or modify Investor's right to rely upon covenants, representations and warranties of the Company in this Agreement. 3.2.3 Capability to Evaluate. Investor has such knowledge and experience in financial and business matters so as to enable such Investor to utilize the information made available to it in connection with the Offering in order to evaluate the merits and risks of the prospective investment, which are substantial, including without limitation those set forth in the Disclosure Documents (as defined in Section 3.2.4 below). 3.2.4 Disclosure Documents. Investor, in making Investor's investment decision to subscribe for the Investment Agreement hereunder, represents that (a) Investor has received and had an opportunity to review (i) the Risk Factors, attached as Exhibit J, (the "Risk Factors") (ii) the Capitalization Schedule, attached as Exhibit K, (the "Capitalization Schedule") and (iii) the Use of Proceeds Schedule, attached as Exhibit L, (the "Use of Proceeds Schedule"); (b) Investor has read, reviewed, and relied solely on the documents described in (a) above the Company's representations and warranties and other information in this Agreement, including the exhibits, documents prepared by the Company which have been specifically provided to Investor in connection with this Offering (the documents described in this Section 3.2.4 (a) and (b) are collectively referred to as the "Disclosure Documents"), and an independent investigation made by Investor and Investor's representatives, if any; (c) Investor has, prior to the date of this Agreement, been given an opportunity to review material contracts and documents of the Company and has had an opportunity to ask questions of and receive answers from the Company's officers and directors; and (d) is not relying on any oral representation of the Company or any other person, nor any written representation or assurance from the Company other than those contained in the Disclosure Documents or incorporated herein or therein. The foregoing, however, does not limit or modify Investor's right to rely upon covenants, representations and warranties of the Company in Sections 5 and 6 of this Agreement. Investor acknowledges and agrees that the Company has no responsibility for, does not ratify, and is under no responsibility whatsoever to comment upon or correct any reports, analyses or other comments made about the Company by any third parties, including, but not limited to, analysts' research reports or comments (collectively, "Third Party Reports"), and Investor has not relied upon any Third Party Reports in making the decision to invest. 3.2.5 Investment Experience; Fend for Self. Investor has substantial experience in investing in securities and it has made investments in securities other than those of the Company. Investor acknowledges that Investor is able to fend for Investor's self in the transaction contemplated by this Agreement, that Investor has the ability to bear the economic risk of Investor's investment pursuant to this Agreement and that Investor is an "Accredited Investor" by virtue of the fact that Investor meets the investor qualification standards set forth in Section 3.1 above. Investor has not been organized for the purpose of investing in securities of the Company, although such investment is consistent with Investor's purposes. 20 3.3 Exempt Offering Under Regulation D. 3.3.1 No General Solicitation. The Investment Agreement was not offered to Investor through, and Investor is not aware of, any form of general solicitation or general advertising, including, without limitation, (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. 3.3.2 Restricted Securities. Investor understands that the Investment Agreement is, the Common Stock and Warrants issued at each Put Closing will be, and the Warrant Shares will be, characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction exempt from the registration requirements of the federal securities laws and that under such laws and applicable regulations such securities may not be transferred-or resold without registration under the Act or pursuant to an exemption therefrom. In this connection, Investor represents that Investor is familiar with Rule 144 under the Act, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 3.3.3 Disposition. Without in any way limiting the representations set forth above, Investor agrees that until the Securities are sold pursuant to an effective Registration Statement or an exemption from registration, they will remain in the name of Investor and will not be transferred to or assigned to any broker, dealer or depositary. Investor further agrees not to sell, transfer, assign, or pledge the Securities (except for any bona fide pledge arrangement to the extent that such pledge does not require registration under the Act or unless an exemption from such registration is available and provided further that if such pledge i: realized upon, any transfer to the pledgee shall comply with the requirements set forth herein), or to otherwise dispose of all or any portion of the Securities unless and until: (a) There is then in effect a registration statement under the Act and any applicable state securities laws covering such proposed disposition and such disposition is made in accordance with such registration statement and in compliance with applicable prospectus delivery requirements; or (b) (i) Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition to the extent relevant for determination of the availability of an exemption from registration, and (ii) if reasonably requested by the Company, Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of the Securities under the Act or state securities laws. It is agreed that the Company will not require the Investor to provide opinions of counsel for transactions made pursuant to Rule 144 provided that Investor and Investor's broker, if necessary, provide the Company with the necessary representations for counsel to the Company to issue an opinion with respect to such transaction.. The Investor is entering into this Agreement for its own account and the Investor has no present arrangement (whether or not legally binding) at any time to sell the Common Stock to or through any person or entity; provided, however, that by making the representations herein, the Investor does not agree to hold the Common Stock for any minimum or other specific term and reserves the right to dispose of the Common Stock at any time in accordance with federal and state securities laws applicable to such disposition. 21 3.4 Due Authorization. 3.4.1 Authority. The person executing this Investment Agreement, if executing this Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Agreement and each other document included herein for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which Investor is executing this Agreement. Investor has reached the age of majority (if an individual) according to the laws of the state in which he or she resides. 3.4.2 Due Authorization. Investor is duly and validly organized, validly existing and in good standing as a limited liability company under the laws of Georgia with full power and authority to purchase the Securities to be purchased by Investor and to execute and deliver this Agreement. 3.4.3 Partnerships. If Investor is a partnership, the representations, warranties, agreements and understandings set forth above are true with respect to all partners of Investor (and if any such partner is itself a partnership, all persons holding an interest in such partnership, directly or indirectly, including through one or more partnerships), and the person executing this Agreement has made due inquiry to determine the truthfulness of the representations and warranties made hereby. 3.4.4 Representatives. If Investor is purchasing in a representative or fiduciary capacity, the representations and warranties shall be deemed to have been made on behalf of the person or persons for whom Investor is so purchasing. 4. Acknowledgments Investor is aware that: 4.1 Risks of Investment. Investor recognizes that an investment in the Company involves substantial risks, including the potential loss of Investor's entire investment herein. Investor recognizes that the Disclosure Documents, this Agreement and the exhibits hereto do not purport to contain all the information, which would be contained in a registration statement under the Act; 4.2 No Government Approval. No federal or state agency has passed upon the Securities, recommended or endorsed the Offering, or made any finding or determination as to the fairness of this transaction; 4.3 No Registration, Restrictions on Transfer. As of the date of this Agreement, the Securities and any component thereof have not been registered under the Act or any applicable state securities laws by reason of exemptions from the registration requirements of the Act and such laws, and may not be sold, pledged (except for any limited pledge in connection with a margin account of Investor to the extent that such pledge does not require registration under the Act or unless an exemption from such registration is available and provided further that if such pledge is realized upon, any transfer to the pledgee shall comply with the requirements set forth herein), assigned or otherwise disposed of in the absence of an effective registration of the Securities and any component thereof under the Act or unless an exemption from such registration is available; 4.4 Restrictions on Transfer. Investor may not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Securities or any component thereof in the absence of either an effective registration statement or an exemption from the registration requirements of the Act and applicable state securities laws; 22 4.5 No Assurances of Registration. There can be no assurance that any registration statement will become effective at the scheduled time, or ever, or remain effective when required, and Investor acknowledges that it may be required to bear the economic risk of Investor's investment for an indefinite period of time; 4.6 Exempt Transaction. Investor understands that the Securities are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and that the representations, warranties, agreements, acknowledgments and understandings set forth herein are being relied upon by the Company in determining the applicability of such exemptions and the suitability of Investor to acquire such Securities. 4.7 Legends. The certificates representing the Put Shares shall not bear a Restrictive Legend. The certificates representing the Warrant Shares shall not bear a Restrictive Legend unless they are issued at a time when the Registration Statement is not effective for resale. It is understood that the certificates evidencing any Warrant Shares issued at a time when the Registration Statement is not effective for resale, subject to legend removal under the terms of Section 6.8 below, shall bear the following legend (the "Legend"): "The securities represented hereby have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, nor the securities laws of any other jurisdiction. They may not be sold or transferred in the absence of an effective registration statement under those securities laws or pursuant to an exemption therefrom." 5. Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to Investor (which shall be true at the signing of this Agreement, and as of any such later date as contemplated hereunder) and agrees with Investor that, except as set forth in the "Schedule of Exceptions" attached hereto as Exhibit C: 5.1 Organization, Good Standing, and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado, USA and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on the business or properties of the Company and its subsidiaries taken as a whole. The Company is not the subject of any pending, threatened or, to its knowledge, contemplated investigation or administrative or legal proceeding (a "Proceeding") by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction, or the Securities and Exchange Commission, The National Association of Securities Dealer, Inc., The Nasdaq Stock Market, Inc. or any state securities commission, or any other governmental entity, which have not been disclosed in the Disclosure Documents. None of the disclosed Proceedings, if any, will have a material adverse effect upon the Company or the market for the Common Stock. The Company has the following subsidiaries: 5.2 Corporate Condition. The Company's condition is, in all material respects, as described in the Disclosure Documents (as further set forth in any subsequently filed Disclosure Documents, if applicable), except for changes in the ordinary course of business and normal year-end adjustments that are not, in the aggregate, materially adverse to the Company. Except for continuing losses, there have been no material adverse changes to the Company's business or financial condition since the dates of such Disclosure Documents. The financial statements as contained in the Company's Form 8-KA filed on or about April 10, 2000 and unaudited pro forma condensed balance sheet have been prepared in accordance with generally accepted accounting principles, consistently applied (except as otherwise permitted by Regulation S-X of the Exchange Act), subject, in the case of unaudited interim financial statements, to customary year end adjustments and the absence of certain footnotes, and fairly present the financial 23 condition of the Company as of the dates of the balance sheets included therein and the consolidated results of its operations and cash flows for the periods then ended. Without limiting the foregoing, there are no material liabilities, contingent or actual, that are not disclosed in the Disclosure Documents (other than liabilities incurred by the Company in the ordinary course of its business, consistent with its past practice, after the period covered by the Disclosure Documents). The Company has paid all material taxes that are due, except for taxes that it reasonably disputes. There is no material claim, litigation, or administrative proceeding pending or, to the best of the Company's knowledge, threatened against the Company, except as disclosed in the Disclosure Documents. This Agreement and the Disclosure Documents do not contain any untrue statement of a material fact and do not omit to state any material fact required to be stated therein or herein necessary to make the statements contained therein or herein not misleading in the light of the circumstances under which they were made. No event or circumstance exist relating to the Company which, under applicable law, requires public disclosure but which has not been so publicly announced or disclosed. 5.3 Authorization. All corporate action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance and delivery of the Common Stock being sold hereunder and the issuance (and/or the reservation for issuance) of the Warrants and the Warrant Shares have been taken, and this Agreement and the Registration Rights Agreement constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except insofar as the enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or other similar laws affecting creditors' rights generally or by principles governing the availability of equitable remedies. The Company has obtained all consents and approvals required for it to execute, deliver and perform each agreement referenced in the previous sentence. 5.4 Valid Issuance of Common Stock. The Common Stock and the Warrants, when issued and sold and delivered in accordance with the terms hereof, for the consideration expressed herein, will be validly issued, fully paid and nonassessable and, based in part upon the representations of Investor in this Agreement, will be issued in compliance with all applicable U.S. federal and state securities laws. The Warrant Shares, when issued in accordance with the terms of the Warrants, shall be duly and validly issued and outstanding, fully paid and nonassessable and based in part on the representations and warranties of Investor, will be issued in compliance with all applicable U.S. federal and state securities laws. The Put Shares, the Warrants and :he Warrant Shares will be issued free of any preemptive rights. 5.5 Compliance with Other Instruments. The Company is not in violation or default of any provisions of its Certificate of Incorporation or Bylaws, each as amended and in effect on and as of the date of the Agreement, or of any material provision of any material instrument or material contract to which it is a party or by which it is bound or of any provision of any federal or state judgment, writ, decree, order, statute, rule or governmental regulation applicable to the Company, which would have a material adverse effect on the Company's business or prospects, or on the performance of its obligations under this Agreement or the Registration .Rights Agreement. The execution, delivery and performance of this Agreement and the other agreements entered into in conjunction with the Offering and the consummation of the transactions contemplated hereby and thereby will not (a) result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or contract or an event which results in the creation of any lien charge or encumbrance upon any assets of the Company, which would have a material adverse effect on the Company's business or prospects, or on the performance of its obligations under this Agreement, the Registration Rights Agreement, (b) violate the Company's Certificate of Incorporation or By-Laws or (c) violate any statute, rule or governmental 24 regulation applicable to the Company which violation would have a material adverse effect on the Company's business or prospects. 5.6 Reporting Company. The Company is subject to the reporting requirements of the Exchange Act, and has a class of securities registered under Section 12 of the Exchange Act not later than six (6) months from the date hereof, and shall file all reports required by the Exchange Act following the date the Company first becomes subject to such reporting obligations. The Company undertakes to furnish Investor with copies of such reports as may be reasonably requested by Investor prior to consummation of this Offering and thereafter, to make such reports available, for the full term of this Agreement, including any extensions thereof, and for as long as Investor holds the Securities. The Common Stock is duly listed on the National Quotation System (a.k.a. Pink Sheets). Except as disclosed in the Schedule of Exceptions, the Company is not in violation of the listing requirements of the O.T.C. Bulletin Board and does not reasonably anticipate that the Common Stock will be delisted by the O.T.C. Bulletin Board for the foreseeable future. The Company has filed all reports required under the Exchange Act. The Company has not furnished to the Investor any material nonpublic information concerning the Company. 5.7 Capitalization. The capitalization of the Company as of the date hereof, is, and the capitalization as of the Closing, subject to exercise of any outstanding warrants and/or exercise of any outstanding stock options, after taking into account the offering of the Securities contemplated by this Agreement and all other share issuances occurring prior to this Offering, will be, as set forth in the Capitalization Schedule as set forth in Exhibit K. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities. Except as disclosed in the Capitalization Schedule, as of the date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, calls or commitments of any character whatsoever relating to. or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company or any of its subsidiaries, or arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries, and (ii) there are no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of its or their securities under the Act (except the Registration Rights Agreement). 5.8 Intellectual Property. The Company has valid, unrestricted and exclusive ownership of or rights to use the patents, trademarks, trademark registrations, trade names, copyrights, know-how, technology and other intellectual property reasonably necessary to the conduct of its business. Exhibit M lists all patents, trademarks, trademark registrations, trade names and copyrights of the Company. The Company has been granted licenses, know-how, technology and/or other intellectual property reasonably necessary to the conduct of its business as set forth in Exhibit M. To the best of the Company's knowledge, the Company is not infringing on the intellectual property rights of any third party, nor is any third party infringing on the Company's intellectual property rights. There are no restrictions in any agreements, licenses, franchises, or other instruments that materially preclude the Company from engaging in its business as presently conducted. 5.9 Use of Proceeds. As of the date hereof, the Company expects to use the proceeds from this Offering (less fees and expenses) for the purposes and in the approximate amounts set forth on the Use of Proceeds Schedule set forth as Exhibit L hereto. These purposes and amounts are estimates and are subject to change without notice to any Investor. 5.10 No Rights of Participation. No person or entity, including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third 25 parties, has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the financing contemplated by this Agreement which has not been waived. 5.11 Company Acknowledgment. The Company hereby acknowledges that Investor may elect to hold the Securities for various periods of time, as permitted by the terms of this Agreement, the Warrants, and other agreements contemplated hereby, and the Company further acknowledges that Investor has made no representations or warranties, either written or oral, as to how long the Securities will be held by Investor or regarding Investor's trading history or investment strategies. 5.12 No Advance Regulatory Approval. The Company acknowledges that this Investment Agreement, the transaction contemplated hereby and the Registration Statement contemplated hereby have not been approved by the SEC, or any other regulatory body and there is no guarantee that this Investment Agreement, the transaction contemplated hereby and the Registration Statement contemplated hereby will ever be approved by the SEC or any other regulatory body. The Company is relying on its own analysis and is not relying on any representation by Investor that either this Investment Agreement, the transaction contemplated hereby or the Registration Statement contemplated hereby has been or will be approved by the SEC or other appropriate regulatory body. 5.13 Underwriter's Fees and Rights of First Refusal. The Company is not obligated to pay any compensation or other fees, costs or related expenditures in cash or securities to any underwriter, broker, agent or other representative other than the Investor in connection with this Offering. 5.14 [Intentionally Left Blank]. 5.15 No Integrated Offering. To the Company's knowledge, neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any of the Company's securities or solicited any offers to buy any security under circumstances that would prevent the parties hereto from consummating the transactions contemplated hereby pursuant to an exemption from registration under Regulation D of the Act or would require the issuance of any other securities to be integrated with this Offering under the Rules of Nasdaq. The Company has not engaged in any form of general solicitation or advertising in connection with the offering of the Common Stock or the Warrants. 5.16 Foreign Corrupt Practices. Neither the Company, nor any of its subsidiaries, nor any director, officer, or to its knowledge, any agent, employee or other person acting on behalf of the Company or any subsidiary has. in the course of its actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 5.17 Key Employees. Each "Key Employee" (as defined in Exhibit N) is currently serving the Company in the capacity disclosed in Exhibit N. No Key Employee, to the best knowledge of the Company and its subsidiaries, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each Key Employee does not subject the Company or any of its subsidiaries to any liability with respect to any of the foregoing matters. 26 No Key Employee has, to the best knowledge of the Company and its subsidiaries, any intention to terminate his employment with, or services to. the Company or any of its subsidiaries. 5.18 Representations Correct. The foregoing representations, warranties and agreements are true, correct and complete in all material respects, and shall survive any Put Closing and the issuance of the shares of Common Stock thereby for a period not to exceed six (6) months following the later of (i) the Termination Date, or (ii) the date that the Commitment Warrant has been fully and completely exercised. 5.19 Tax Status. The Company has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations. except those being contested in good faith and as set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. 5.20 Transactions With Affiliates. Except as set forth in the Disclosure Documents, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 5.21 Application of Takeover Protections. The Company and its board of directors have taken all necessary action, if any. in order to render inapplicable any control share acquisition, business combination or other similar anti-takeover provision under Colorado law which is or could become applicable to the Investor as a result of the transactions contemplated by this Agreement, including, without limitation, the issuance of the Common Stock, any exercise of the Warrants and ownership of the Common Shares and Warrant Shares. The Company has not adopted and will not adopt any "poison pill" provision that will be applicable to Investor as a result of transactions contemplated by this Agreement. 5.22 Other Agreements. The Company has not, directly or indirectly, made any agreements with the Investor under a subscription in the form of this Agreement for the purchase of Common Stock, relating to the terms or conditions of the transactions contemplated hereby or thereby except as expressly set forth herein, respectively, or in exhibits hereto or thereto. 5.23 Major Transactions. There are no other Major Transactions currently pending or contemplated by the Company. 5.24 Financings. There are no other financings currently pending or contemplated by the Company. 5.25 Shareholder Authorization. The Company currently has 25,000,000 shares of Common Stock authorized, 24,099,381 of which are issued and outstanding, and 900,619 of which the Company has reserved or agrees to reserve for issuance upon exercise of the Commitment Warrant. The Company shall. at its next annual shareholder meeting, or at a special meeting to be held before its next annual shareholder meeting, use its best efforts to 27 obtain approval of its shareholders to (i) authorize the issuance of the full number of shares of Common Stock which would be issuable upon exercise of the Commitment Warrant or would otherwise be issuable under this Agreement and eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or any of its securities with respect to the Company's ability to issue shares of Common Stock in excess of the Cap Amount (such approvals being the "20% Approval") and (ii) the increase in the number of authorized shares of Common Stock of the Company (the "Share Authorization Increase Approval") such that at least 10,000,000 shares can be reserved for this Offering. In connection with such shareholder vote, the Company shall use its best efforts to cause all officers and directors of the Company to promptly enter into irrevocable agreements to vote all of their shares in favor of eliminating such prohibitions. As soon as practicable after the 20% Approval and the Share Authorization Increase Approval, the Company agrees to use its best efforts to reserve 10,000,000 shares of Common Stock for issuance under this Agreement, which shall first be reserved toward the Warrant Shares issuable upon exercise of the Commitment Warrant until an aggregate of 1,000,000 shares are so reserved, with the remainder to be reserved for issuance as Put Shares and Warrant Shares issuable upon exercise of the Purchase Warrants. The Company shall not file the Registration Statement required by the Registration Rights Agreement until the Share Authorization Increase Approval has been obtained, and the parties understand that this may delay the Company's ability to initiate Puts indefinitely, provided that nothing in this sentence shall limit the Company's obligations under this Agreement or any of the agreements referred to herein. 5.26 Acknowledgment of Limitations on Put Amounts. The Company understands and acknowledges that the amounts available under this Investment Agreement are limited, among other things, based upon the liquidity of the Company's Common Stock traded on its Principal Market. 6. Covenants of the Company 6.1 Independent Auditors. The Company shall, until at least the Termination Date, maintain as its independent auditors an accounting firm authorized to practice before the SEC. 6.2 Corporate Existence and Taxes. The Company shall, until at least the Termination Date, maintain its corporate existence in good standing and, once it becomes a "Reporting Issuer" (defined as a Company which files periodic reports under the Exchange Act), remain a Reporting Issuer (provided, however, that the foregoing covenant shall not prevent the Company from entering into any merger or corporate reorganization as long as the surviving entity in such transaction, if not the Company, assumes the Company's obligations with respect to the Common Stock and has Common Stock listed for trading on a stock exchange or on Nasdaq and is a Reporting Issuer) and shall pay all its taxes when due except for taxes which the Company disputes. 6.3 Registration Rights. The Company will enter into a registration rights agreement covering the resale of the Common Shares and the Warrant Shares substantially in the form of the Registration Rights Agreement attached as Exhibit A. 6.4 Asset Transfers. The Company shall not (i) transfer, sell, convey or otherwise dispose of any of its material assets to any Subsidiary except for- a cash or cash equivalent consideration and for a proper business purpose or (ii) transfer, sell, convey or otherwise dispose of any of its material assets to any Affiliate, as defined below, during the Term of this Agreement. For purposes hereof, "Affiliate- shall mean any officer of the Company, director of 28 the Company or owner of twenty percent (20%) or more of the Common Stock or other securities of the Company. 6.5 Rights of First Refusal. 6.5.1 Capital Raising Limitations. During the period from the date of this Agreement until the date that is six (6) months after the Termination Date, the Company shall not issue or sell, or agree to issue or sell Equity Securities (as defined below), for cash in private capital raising transactions without obtaining the prior written approval of the Investor of the Offering (the limitations referred to in this subsection 6.5.1 are collectively referred to as the "Capital Raising Limitations"). For purposes hereof, the following shall be collectively referred to herein as, the "Equity Securities": (1) Common Stock or any other equity securities, (ii) any debt or equity securities which are convertible into, exercisable or exchangeable for, or carry the right to receive additional shares of Common Stock or other equity securities, or (iii) any securities of the Company pursuant to an equity line structure or format similar in nature to this Offering. 6.5.2 Investor's Right of Fist Refusal. For any private capital raising transactions of Equity Securities which close after the date hereof and on or prior to the date that is six (6) months year after the Termination Date of this Agreement, not including any warrants issued in conjunction with this Investment Agreement, the Company agrees to deliver to Investor, at least ten (10) days prior to the closing of such transaction, written notice describing the proposed transaction, including the terms and conditions thereof, and providing the Investor and its affiliates an option during the ten (10) day period following delivery of such notice to purchase the securities being offered in such transaction on the same terms as contemplated by such transaction. 6.5.3 Exceptions to Rights of First Refusal. Notwithstanding the above, the Rights of First Refusal shall not apply to any transaction involving issuances of securities in connection with a merger, consolidation, underwritten public offerings, acquisition or sale of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company or exercise of options by employees, consultants or directors, or a primary underwritten offering of the Company's Common Stock, or the transactions set forth on Schedule 6.5.1. The Capital Raising Limitations also shall not apply to (a) the issuance of securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof, (b) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan for the benefit of the Company's employees, directors or consultants, or (c) the issuance of debt securities, with no equity feature, incurred solely for working capital purposes. In additional to any other available remedies, if the Investor, at any time, is more than five (5) business days late in paying any Put Dollar Amounts that are then due, the Investor shall not be entitled to the benefits of Sections 6.5.1 and 6.5.2 above until the date that the Investor has paid all Put Dollar Amounts that are then due. 6.6 Financial 10-KSB Statements, Etc. and Current Reports on Form 8-K. The Company shall deliver to the Investor copies of its annual reports on Form 10-KSB, and quarterly reports on Form 10-QSB and shall deliver to the Investor current reports on Form 8-K within two (2) days of filing for the Term of this Agreement. 6.7 Opinion of Counsel. Investor shall, concurrent with the Investment Commitment Closing, receive an opinion letter from the Company's legal counsel, in the form attached as Exhibit B, or in such form as agreed upon by the parties, and shall, concurrent with 29 each Put Date, receive an opinion letter from the Company's legal counsel, in the form attached as Exhibit I or in such form as agreed upon by the parties. 6.8 Removal of Legend. If the certificates representing any Securities are issued with a restrictive Legend in accordance with the terms of this Agreement, the Legend shall be removed and the Company shall issue a certificate without such Legend to the holder of any Security upon which it is stamped, and a certificate for a security shall be originally issued without the Legend, if (a) the sale of such Security is registered under the Act, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions (the reasonable cost of which shall be borne by the Investor), to the effect that a public sale or transfer of such Security may be made without registration under the Act, or (c) such holder provides the Company with reasonable assurances that such Security can be sold pursuant to Rule 144. Each Investor agrees to sell all Securities, including those represented by a certificate(s) from which the Legend has been removed, or which were originally issued without the Legend, pursuant to an effective registration statement and to deliver a prospectus in connection with such sale or in compliance with an exemption from the registration requirements of the Act. 6.9 Listing. Subject to the remainder of this Section 6.9, the Company shall use its reasonable best efforts ensure that its shares of Common Stock (including all Warrant Shares and Put Shares) are listed and available for trading on the O.T.C. Bulletin Board. Thereafter, the Company shall (i) when listed, use its best efforts to continue the listing and trading of its Common Stock on the O.T.C. Bulletin Board or to become eligible for and listed and available for trading on the Nasdaq Small Cap Market, the NMS, or the New York Stock Exchange ("NYSE"); and (ii) comply in all material respects with the Company's reporting, filing and other obligations under the By-Laws or rules of the National Association of Securities Dealers (" NASD") and such exchanges, as applicable. 6.10 The Company's Instructions to Transfer Agent. The Company will instruct the Transfer Agent of the Common Stock, by delivering instructions in the form of Exhibit T hereto, to issue certificates, registered in the name of each Investor or its nominee, for the Put Shares and Warrant Shares in such amounts as specified from time to time by the Company upon any exercise by the Company of a Put and/or exercise of the Warrants by the holder thereof. Such certificates shall not bear a Legend unless issuance with a Legend is permitted by the terns of this Agreement and Legend removal is not permitted by Section 6.8 hereof and the Company shall cause the Transfer Agent to issue such certificates without a Legend. Nothing in this Section shall affect in any way Investor's obligations and agreement set forth in Sections 3.3.2 or 3.3.3 hereof to resell the Securities pursuant to an effective registration statement and to deliver a prospectus in connection with such sale or in compliance with an exemption from the registration requirements of applicable securities laws. If (a) an Investor provides the Company with an opinion of counsel, which opinion of counsel shall be in fore, substance and scope customary for opinions of counsel in comparable transactions, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from registration or (b) an Investor transfers Securities, pursuant to Rule 144, to a transferee which is an accredited investor, the Company shall permit the transfer, and, in the case of Put Shares and Warrant Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denomination as specified by such Investor. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to an Investor by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 6.10 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 6.10, that an Investor shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate 30 issuance and transfer, without the necessity of showing economic. loss and without any bond or other security being required. 6.11 Stockholder 20% Approval. Prior to the closing of any Put that would cause the Aggregate Issued Shares to exceed the Cap Amount, if required by the rules of NASDAQ because the Company's Common Stock is listed on NASDAQ, the Company shall obtain approval of its stockholders to authorize (i) the issuance of the full number of shares of Common Stock which would be issuable pursuant to this Agreement but for the Cap Amount and eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or any of its securities with respect to the Company's ability to issue shares of Common Stock in excess of the Cap Amount (such approvals being the "Stockholder 20% Approval"). 6.12 Press Release. The Company agrees to provide to the Investor a copy of any proposed press release or other public announcement ("Press Release") to be issued by the Company in connection with this Offering at least 2 business days prior to its release. The Investor shall have the right to approve any Press Release issued by the Company in connection with the Offering, which approval shall not be unreasonably withheld by Investor. 6.13 Change in Law or Policy. In the event of a change in law, or policy of the SEC, as evidenced by a No-Action letter or other written statements of the SEC or the NASD which causes the Investor to be unable to perform its obligations hereunder, this Agreement shall be automatically terminated and no Termination Fee shall be due, provided that notwithstanding any termination under this section 6.13, the Investor shall retain full ownership of the Commitment Warrant as partial consideration for its commitment and its consulting, legal, and other services rendered hereunder. 7. Investor Covenant/Miscellaneous. 7.1 Representations and Warranties Survive the Closing; Severability. Investor's and the Company's representations and warranties shall survive the Investment Date and any Put Closing contemplated by this Agreement notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely thereon for a period not to exceed six (6) months following the later of (i) the Termination Date, or (ii) the date that the Commitment Warrant has been fully and completely exercised. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, or is altered by a term required by the Securities Exchange Commission to be included in the Registration Statement, this Agreement shall continue in full force and effect without said provision; provided that if the removal of such provision materially changes the economic benefit of this Agreement to the Investor, this Agreement shall terminate. 7.2 Successors and Assigns. This Agreement shall not be assignable without the Company's written consent, If assigned, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Investor may assign Investor's rights hereunder, in connection with any private sale of the Common Stock of such Investor, so long as, as a condition precedent to such transfer, the transferee executes an acknowledgment agreeing to be bound by the applicable provisions of this Agreement in a form acceptable to the Company and provides an original copy of such acknowledgment to the Company. 31 7.3 Execution in Counterparts Permitted. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one (1) instrument. 7.4 Titles and Subtitles; Gender. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. The use in this Agreement of a masculine, feminine or neither pronoun shall be deemed to include a reference to the others. 7.5 Written Notices, Etc. Any notice, demand or request required or permitted to be given by the Company or Investor pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered personally, or by facsimile or upon receipt if by overnight or two (2) day courier, addressed to the parties at the addresses and/or facsimile telephone number of the parties set forth at the end of this Agreement or such other address as a party may request by notifying the other in writing; provided, however, that in order for any notice to be effective as to the Investor such notice shall be delivered and sent, as specified herein, to all the addresses and facsimile telephone numbers of the Investor set forth at the end of this Agreement or such other address and/or facsimile telephone number as Investor may request in writing. 7.6 Expenses. Except as set forth in the Registration Rights Agreement, each of the Company and Investor shall pay all costs and expenses that it respectively incurs, with respect to the negotiation, execution, delivery and performance of this Agreement. 7.7 Entire Agreement; Written Amendments Required. This Agreement, including the Exhibits attached hereto, the Common Stock certificates. the Warrants, the Registration Rights Agreement, and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants, whether oral, written, or otherwise except as specifically set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. 7.8 Actions at Law or Equity; Jurisdiction and Venue. The parties acknowledge that any and all actions, whether at law or at equity, and whether or not said actions are based upon this Agreement between the parties hereto, shall be filed in any state or federal court sitting in Atlanta, Georgia. Georgia law shall govern both the proceeding as well as the interpretation and construction of the Transaction Documents and the transaction as a whole. In any litigation between the parties hereto, the prevailing party, as found by the court, shall be entitled to an award of all attorney's fees and costs of court. Should the court refuse to find a prevailing party, each party shall bear its own legal fees and costs. 8. Subscription and Wiring Instructions; Irrevocability. 8.1 Subscription (a) Wire transfer of Subscription Funds. Investor shall deliver Put Dollar Amounts (as payment towards any Put Share Price) by wire transfer, to the Company pursuant to a wire instruction letter to be provided by the Company, and signed by the Company. 32 (b) Irrevocable Subscription. Investor hereby acknowledges and agrees, subject to the provisions of any applicable laws providing for the refund of subscription amounts submitted by Investor, that this Agreement is irrevocable and that Investor is not entitled to cancel, terminate or revoke this Agreement or any other agreements executed by such Investor and delivered pursuant hereto, and that this Agreement and such other agreements shall survive the death or disability of such Investor and shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and assigns. If the Securities subscribed for are to be owned by more than one person, the obligations of all such owners under this Agreement shall be joint and several, and the agreements, representations, warranties. And acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators, successors, legal representatives and assigns. 8.2 Acceptance of Subscription. Ownership of the number of securities purchased hereby will pass to Investor upon the Warrant Closing or any Put Closing. 9. Indemnification. In consideration of the Investor's execution and delivery of the Investment Agreement, the Registration Rights Agreement and the Warrants (the "Transaction Documents") and acquiring the Securities thereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless Investor and all of its stockholders, officers, directors, employees and direct or indirect investors and any of the foregoing person's agents, members, partners or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages. and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorney's fees and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any material misrepresentation or material breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or documents contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby. (c) any cause of action, suit or claim, derivative or otherwise, by any stockholder of the Company based on a breach or alleged breach by the Company or any of its officers or directors of their fiduciary or other obligations to the stockholders of the Company, or (d) claims made by third parties against any of the Indemnitees based on a violation of Section 5 of the Securities Act caused by the integration of the private sale of common stock to the Investor and the public offering pursuant to the Registration Statement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which it would be required to make if such foregoing undertaking was enforceable which is permissible under applicable law. Promptly after receipt by an Indemnified Party of notice of the commencement of any action pursuant to which indemnification may be sought, such Indemnified Party will, if a claim 33 in respect thereof is to be made against the other party (hereinafter "Indemnitor") under this Section 9, deliver to the Indemnitor a written notice of the commencement thereof and the Indemnitor shall have the right to participate in and to assume the defense thereof with counsel reasonably selected by the Indemnitor, provided, however, that an Indemnified Party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel to be paid by the Indemnitor, if representation of such Indemnified Party by the counsel retained by the Indemnitor would be inappropriate due to actual or potential conflicts of interest between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the Indemnitor within a reasonable time of the commencement of any such action, if prejudicial to the Indemnitor's ability to defend such action, shall relieve the Indemnitor of any liability to the Indemnified Party under this Section 9, but the omission to so deliver written notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnified Party other than under this Section 9 to the extent it is prejudicial. [INTENTIONALLY LEFT BLANK] 34 10. Accredited Investor. Investor is an "accredited investor" because (check all applicable boxes): (a) ( ) it is an organization described in Section 501(c)(3) of the Internal Revenue Code, or a corporation, limited duration company, limited liability company, business trust, or partnership no: formed for the specific purpose of acquiring the securities offered. with total assets in excess of $5,000,000. (b) ( ) any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment. (c) ( ) a natural person, who ( ) is a director. executive officer o general partner of the issuer of the securities being offered or sold or a director, executive officer or general partner of a general partner of that issuer. ( ) has an individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeding $1,000,000. ( ) had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. (d) (X) an entity each equity owner of which is an entity described in a - b above or is an individual who could check one (1) of the last three (3) boxes under subparagraph (c) above. (e) ( ) other [specify] ______________________________________________________ 35 The undersigned hereby subscribes the Maximum Offering Amount and acknowledges that this Agreement and the subscription represented hereby shall not be effective unless accepted by the Company as indicated below-. IN WITNESS WHEREOF, the undersigned Investor does represent and certify' under penalty of perjury that the foregoing statements are true and correct and that Investor by the following signature(s) executed this Agreement. Dated this 19th day of May, 2000 /s/ Eric S. Swartz SWARTZ PRIVATE EQUITY, LLC - ------------------------------------ ------------------------------------ Your signature PRINT EXACT NAME IN WHICH YOU WANT THE SECURITIES TO BE REGISTERED ERIC S. SWARTZ SECURITY DELIVERY INSTRUCTIONS: - ------------------------------------ ------------------------------------ Name: Please Print Please type or print address where your security is to be Delivered MANAGER ATTN: ERIC S. SWARTZ - ------------------------------------ ------------------------------ Title/Representative Capacity (if applicable) 200 ROSWELL SUMMIT, SUITE 285 SWARTZ PRIVATE EQUITY, LLC 1080 HOLCOMB BRIDGE ROAD - ------------------------------------ ------------------------------------ Name of Company You Represent (if applicable) Street Address ROSWELL, GEORGIA, U.S.A. ROSWELL, GEORGIA 30076, U.S.A. - ------------------------------------ ------------------------------------ Place of Execution of this Agreement City, State or Province, Country, Offshore Postal Code NOTICE DELIVERY INSTRUCTIONS: WITH A COPY DELIVERED TO: - ----------------------------- ------------------------- Please print address where any Notice Please print address where Copy is is to be delivered to be delivered ATTN: ______________________________ ATTN: ______________________________ - ------------------------------------ ------------------------------------ Street Address Street Address - ------------------------------------ ------------------------------------ City, State or Province, Country, City, State or Country, Offshore Offshore Postal Code Postal Code Telephone: ________________________ Telephone: ________________________ Facsimile: ________________________ Facsimile: ________________________ Facsimile: ________________________ Facsimile: ________________________ THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF THE MAXIMUM OFFERING AMOUNT ON THE 19th DAY OF MAY, 2000. NEW MILLENNIUM MEDIA INTERNATIONAL, INC. By: /s/ John Thatch ------------------------------------ John Thatch, President and CEO Address: Attn: John Thatch 101 Philippe Parkway Suite 300 Safety Harbor, FL 34695 Telephone: (727) 797-6664 Facsimile: (727) 797-7770 EX-4.2 6 0006.txt COMMITMENT WARRANT WITH SWARTZ THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER. AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. Warrant to Purchase 1,000,000 shares WARRANT TO PURCHASE COMMON STOCK OF NEW MILLENIUM MEDIA INTERNATIONAL, INC. THIS CERTIFIES that SWARTZ PRIVATE EQUITY, LLC or any subsequent holder hereof pursuant to Section 8 hereof ("Holder"), has the right to purchase from NEW MILLENIUM MEDIA INTERNATIONAL, INC., a Colorado corporation (the "Company"), up to 1,000,000 fully paid and nonassessable shares of the Company's common stock, $.001 par value per share ("Common Stock"), subject to adjustment as provided herein, at a price equal to the Exercise Price as defined in Section 3 below, at any time beginning on the Date of Issuance (defined below) and ending at 5:00 p.m., New York, New York time the date that is five (5) years after the Date of Issuance (the "Exercise Period"). Holder agrees with the Company that this Warrant to Purchase Common Stock of the Company(this "Warrant") is issued and all rights hereunder shall be held subject to all of the conditions, limitations and provisions set forth herein. 1. DATE OF ISSUANCE AND TERM. -------------------------- This Warrant shall be deemed to be issued on March 6, 2000 ("Date of Issuance"). The term of this Warrant is five (5) years from the Date of Issuance. Of this Warrant to purchase one million (1,000,000) shares of Common Stock of the Company, the Warrant is exercisable as to two hundred fifty thousand (250,000) shares of Common Stock of the Company after the ten (10) business day document review period, unless the same may be extended by mutual consent, in writing, of the Company and the Holder (the "Review Period") referenced in the Equity Line Letter of Agreement dated on or about March 6, 2000, between Holder and Company (the "Letter of Agreement") has ended, shall be further exercisable as to the an additional five hundred thousand (500,000) shares of Common Stock of the Company upon the execution of all Closing Documents (as defined in the Letter of Agreement) and shall be further exercisable as to the remaining two hundred fifty thousand (250,000) shares of Common Stock of the Company upon the earlier of (i) the date of effectiveness of Company's registration statement (the "Registration Statement") to be filed pursuant to the Closing Documents, or (ii) the date that is six (6) months from date of the Letter of Agreement. Anything in this Warrant to the contrary notwithstanding, if the Company delivers written notice to Swartz Private Equity, LLC prior to the expiration of the Review Period that the legal documents for the transaction are unacceptable and the Company wishes to terminate the transaction, Holder shall return this Warrant to the Company and all of Holder's rights under this Warrant shall be null and void and of no effect. 2. EXERCISE. -------- (a) Manner of Exercise. During the Exercise Period, this Warrant may be exercised as to all or any lesser number of full shares of Common Stock covered hereby (the "Warrant Shares") upon surrender of this Warrant, with the Exercise Form attached hereto as EXHIBIT A (the "Exercise Form") duly completed and executed, together with the full Exercise Price (as defined below) for each share of Common Stock as to which this Warrant is exercised, at the office of the Company, Attention: John Thatch, President and CEO, New Millenium Media International, Inc., 101 Philippe Parkway, Suite 300, Safety Harbor, FL 34695; Telephone: (727) 797-6664, Facsimile: (727) 797-7770, or at such other office or agency as the Company may designate in writing, by overnight mail, with an advance copy of the Exercise Form sent to the Company and its Transfer Agent by facsimile (such surrender and payment of the Exercise Price hereinafter called the "Exercise of this Warrant"). (b) Date of Exercise. The "Date of Exercise" of the Warrant shall be defined as the date that the advance copy of the completed and executed Exercise Form is sent by facsimile to the Company, provided that the original Warrant and Exercise Form are received by the Company as soon as practicable thereafter. Alternatively, the Date of Exercise shall be defined as the date the original Exercise Form is received by the Company, if Holder has not sent advance notice by facsimile. (c) Cancellation of Warrant. This Warrant shall be canceled upon the Exercise of this Warrant, and, as soon as practical after the Date of Exercise, Holder shall be entitled to receive Common Stock for the number of shares purchased upon such Exercise of this Warrant, and if this Warrant is not exercised in full, Holder shall be entitled to receive a new Warrant (containing terms identical to this Warrant) representing any unexercised portion of this Warrant in addition to such Common Stock. (d) Holder of Record. Each person in whose name any Warrant for shares of Common Stock is issued shall, for all purposes, be deemed to be the Holder of record of such shares on the Date of Exercise of this Warrant, irrespective of the date of delivery of the Common Stock purchased upon the Exercise of this Warrant. Nothing in this Warrant shall be construed as conferring upon Holder any rights as a stockholder of the Company. 3. PAYMENT OF WARRANT EXERCISE PRICE. --------------------------------- The Exercise Price per share ("Exercise Price") shall initially equal (the "Initial Exercise Price") the lowest Closing Bid Price for the five (5) trading days immediately preceding March 6, 2000, which is $0.30. If the lowest Closing Bid Price of the Company's Common Stock for the five (5) trading days immediately preceding the date, if any, that the Company and Swartz Private Equity, LLC execute Closing Documents as defined in the Letter of Agreement dated on or about March 6, 2000, between Holder and Company (the "Closing Market Price") is less than the Initial Exercise Price, the Exercise Price shall be reset to equal the Closing Market Price, or, if the Date of Exercise is more than six (6) months after the Date of Issuance, the Exercise Price shall be reset to equal the lesser of (i) the Exercise Price then in effect, or (ii) the "Lowest Reset Price," 2 as that term is defined below. The Company shall calculate a "Reset Price" on each six-month anniversary date of the Date of Issuance which shall equal one hundred percent (100%) of the lowest Closing Bid Price of the Company's Common Stock for the five (5) trading days ending on such six-month anniversary date of the Date of Issuance. The "Lowest Reset Price" shall equal the lowest Reset Price determined on any six-month anniversary date of the Date of Issuance preceding the Date of Exercise, taking into account, as appropriate, any adjustments made pursuant to Section 5 hereof. Payment of the Exercise Price may be made by either of the following, or a combination thereof, at the election of Holder: (i) Cash Exercise: cash, bank or cashiers check or wire transfer; or (ii) Cashless Exercise: The Holder, at its option, may exercise this Warrant in a cashless exercise transaction under this subsection (ii) if and only if, on the Date of Exercise, there is not then in effect a current registration statement that covers the resale of the shares of Common Stock to be issued upon exercise of this Warrant . In order to effect a Cashless Exercise, the Holder shall surrender this Warrant at the principal office of the Company together with notice of cashless election, in which event the Company shall issue Holder a number of shares of Common Stock computed using the following formula: X = Y (A-B)/A where: X = the number of shares of Common Stock to be issued to Holder. Y = the number of shares of Common Stock for which this Warrant is being exercised. A = the Market Price of one (1) share of Common Stock (for purposes of this Section 3(ii), the "Market Price" shall be defined as the average Closing Price of the Common Stock for the five (5) trading days prior to the Date of Exercise of this Warrant (the "Average Closing Price"), as reported by the O.T.C. Bulletin Board, National Association of Securities Dealers Automated Quotation System ("Nasdaq") Small Cap Market, or if the Common Stock is not traded on the Nasdaq Small Cap Market, the Average Closing Price in any other over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Market Price shall be the Average Closing Price on such exchange for the five (5) trading days prior to the date of exercise of the Warrants. If the Common Stock is/was not traded during the five (5) trading days prior to the Date of Exercise, then the closing price for the last publicly traded day shall be deemed to be the closing price for any and all (if applicable) days during such five (5) trading day period. B = the Exercise Price. For purposes hereof, the term "Closing Bid Price" shall mean the closing bid price on the the Nasdaq Small Cap Market, the National Market System ("NMS"), the New York Stock Exchange, or the O.T.C. Bulletin Board, or if no longer traded on the Nasdaq Small Cap Market, the National Market System ("NMS"), the New York Stock Exchange, or the O.T.C. Bulletin Board, the "Closing Bid Price" shall equal the closing price on the principal national securities exchange or the over-the-counter system on which the Common Stock is so traded and, if not available, the mean of the high and low prices on the principal national securities exchange on which the Common Stock is so traded. 3 For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended, understood and acknowledged that the Common Stock issuable upon exercise of this Warrant in a cashless exercise transaction shall be deemed to have been acquired at the time this Warrant was issued. Moreover, it is intended, understood and acknowledged that the holding period for the Common Stock issuable upon exercise of this Warrant in a cashless exercise transaction shall be deemed to have commenced on the date this Warrant was issued. 4. TRANSFER AND REGISTRATION. ------------------------- (a) Transfer Rights. Subject to the provisions of Section 8 of this Warrant, this Warrant may be transferred on the books of the Company, in whole or in part, in person or by attorney, upon surrender of this Warrant properly completed and endorsed. This Warrant shall be canceled upon such surrender and, as soon as practicable thereafter, the person to whom such transfer is made shall be entitled to receive a new Warrant or Warrants as to the portion of this Warrant transferred, and Holder shall be entitled to receive a new Warrant as to the portion hereof retained. (b) Registrable Securities. In addition to any other registration rights of the Holder, if the Common Stock issuable upon exercise of this Warrant is not registered for resale at the time the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its Common Stock under the Act (other than a registration relating solely for the sale of securities to participants in a Company stock plan or a registration on Form S-4 promulgated under the Act or any successor or similar form registering stock issuable upon a reclassification, upon a business combination involving an exchange of securities or upon an exchange offer for securities of the issuer or another entity)(a "Piggyback Registration Statement"), the Company shall cause to be included in such Piggyback Registration Statement ("Piggyback Registration") all of the Common Stock issuable upon the exercise of this Warrant ("Registrable Securities") to the extent such inclusion does not violate the registration rights of any other securityholder of the Company granted prior to the date hereof. Nothing herein shall prevent the Company from withdrawing or abandoning the Piggyback Registration Statement prior to its effectiveness. (c) Limitation on Obligations to Register under a Piggyback Registration. In the case of a Piggyback Registration pursuant to an underwritten public offering by the Company, if the managing underwriter determines and advises in writing that the inclusion in the registration statement of all Registrable Securities proposed to be included would interfere with the successful marketing of the securities proposed to be registered by the Company, then the number of such Registrable Securities to be included in the Piggyback Registration Statement, to the extent such Registrable Securities may be included in such Piggyback Registration Statement, shall be allocated among all Holders who had requested Piggyback Registration pursuant to the terms hereof, in the proportion that the number of Registrable Securities which each such Holder seeks to register bears to the total number of Registrable Securities sought to be included by all Holders. If required by the managing underwriter of such an underwritten public offering, the Holders shall enter into an agreement, as determined by the managing underwriter, limiting the number of Registrable Securities to be included in such Piggyback Registration Statement and the terms, if any, regarding the future sale of such Registrable Securities. 4 5. ANTI-DILUTION ADJUSTMENTS. ------------------------- (a) Stock Dividend. If the Company shall at any time declare a dividend payable in shares of Common Stock, then Holder, upon Exercise of this Warrant after the record date for the determination of holders of Common Stock entitled to receive such dividend, shall be entitled to receive upon Exercise of this Warrant, in addition to the number of shares of Common Stock as to which this Warrant is exercised, such additional shares of Common Stock as such Holder would have received had this Warrant been exercised immediately prior to such record date and the Exercise Price will be proportionately adjusted. (b) Recapitalization or Reclassification. (i) STOCK SPLIT. If the Company shall at any time effect a recapitalization, reclassification or other similar transaction of such character that the shares of Common Stock shall be changed into or become exchangeable for a LARGER number of shares (a "Stock Split"), then upon the effective date thereof, the number of shares of Common Stock which Holder shall be entitled to purchase upon Exercise of this Warrant shall be increased in direct proportion to the increase in the number of shares of Common Stock by reason of such recapitalization, reclassification or similar transaction, and the Exercise Price shall be proportionally decreased. (ii) REVERSE STOCK SPLIT. If the Company shall at any time effect a recapitalization, reclassification or other similar transaction of such character that the shares of Common Stock shall be changed into or become exchangeable for a SMALLER number of shares (a "Reverse Stock Split"), then upon the effective date thereof, the number of shares of Common Stock which Holder shall be entitled to purchase upon Exercise of this Warrant shall be proportionately decreased and the Exercise Price shall be proportionally increased. The Company shall give Holder the same notice it provides to holders of Common Stock of any transaction described in this Section 5(b). (c) Distributions. If the Company shall at any time distribute for no consideration to holders of Common Stock cash, evidences of indebtedness or other securities or assets (other than cash dividends or distributions payable out of earned surplus or net profits for the current or preceding years) then, in any such case, Holder shall be entitled to receive, upon Exercise of this Warrant, with respect to each share of Common Stock issuable upon such exercise, the amount of cash or evidences of indebtedness or other securities or assets which Holder would have been entitled to receive with respect to each such share of Common Stock as a result of the happening of such event had this Warrant been exercised immediately prior to the record date or other date fixing shareholders to be affected by such event (the "Determination Date") or, in lieu thereof, if the Board of Directors of the Company should so determine at the time of such distribution, a reduced Exercise Price determined by multiplying the Exercise Price on the Determination Date by a fraction, the numerator of which is the result of such Exercise Price reduced by the value of such distribution applicable to one share of Common Stock (such value to be determined by the Board of Directors of the Company in its discretion) and the denominator of which is such Exercise Price. (d) Notice of Consolidation or Merger. In the event of a merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities or other assets of the Company or another entity or there is a sale of all or substantially all the Company's assets (a "Corporate Change"), then this Warrant shall be exerciseable into such class and type of securities or other assets as Holder would have received had Holder exercised this Warrant immediately prior to such Corporate Change; provided, 5 however, that Company may not affect any Corporate Change unless it first shall have given thirty (30) days notice to Holder hereof of any Corporate Change. (e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise Price" shall mean the purchase price per share specified in Section 3 of this Warrant, until the occurrence of an event stated in subsection (a), (b) or (c) of this Section 5, and thereafter shall mean said price as adjusted from time to time in accordance with the provisions of said subsection. No such adjustment under this Section 5 shall be made unless such adjustment would change the Exercise Price at the time by $.01 or more; provided, however, that all adjustments not so made shall be deferred and made when the aggregate thereof would change the Exercise Price at the time by $.01 or more. (f) Adjustments: Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant to this Section 5, Holder shall, upon Exercise of this Warrant, become entitled to receive shares and/or other securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5. 6. FRACTIONAL INTERESTS. -------------------- No fractional shares or scrip representing fractional shares shall be issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, Holder may purchase only a whole number of shares of Common Stock. If, on Exercise of this Warrant, Holder would be entitled to a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon exercise shall be the next higher number of shares. 7. RESERVATION OF SHARES. --------------------- The Company shall at all times reserve for issuance such number of authorized and unissued shares of Common Stock (or other securities substituted therefor as herein above provided) as shall be sufficient for the Exercise of this Warrant and payment of the Exercise Price. The Company covenants and agrees that upon the Exercise of this Warrant, all shares of Common Stock issuable upon such exercise shall be duly and validly issued, fully paid, nonassessable and not subject to preemptive rights, rights of first refusal or similar rights of any person or entity. 8. RESTRICTIONS ON TRANSFER. ------------------------ (a) Registration or Exemption Required. This Warrant has been issued in a transaction exempt from the registration requirements of the Act by virtue of Regulation D and exempt from state registration under applicable state laws. The Warrant and the Common Stock issuable upon the Exercise of this Warrant may not be pledged, transferred, sold or assigned except pursuant to an effective registration statement or unless the Company has received an opinion from the Company's counsel to the effect that such registration is not required, or the Holder has furnished to the Company an opinion of the Holder's counsel, which counsel shall be reasonably satisfactory to the Company, to the effect that such registration is not required; the transfer complies with any applicable state securities laws; and, if no registration covering the resale of the Warrant Shares is effective at the time the Warrant Shares are issued, the Holder consents to a legend being placed on certificates for the Warrant Shares stating that the securities 6 have not been registered under the Securities Act and referring to such restrictions on transferability and sale. (b) Assignment. If Holder can provide the Company with reasonably satisfactory evidence that the conditions of (a) above regarding registration or exemption have been satisfied, Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a written notice to Company, substantially in the form of the Assignment attached hereto as EXHIBIT B, indicating the person or persons to whom the Warrant shall be assigned and the respective number of warrants to be assigned to each assignee. The Company shall effect the assignment within ten (10) days, and shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of like tenor and terms for the appropriate number of shares. 9. BENEFITS OF THIS WARRANT. ------------------------ Nothing in this Warrant shall be construed to confer upon any person other than the Company and Holder any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of the Company and Holder. 10. APPLICABLE LAW. -------------- This Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the state of Florida, without giving effect to conflict of law provisions thereof. 11. LOSS OF WARRANT. --------------- Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. 12. NOTICE OR DEMANDS. ----------------- Notices or demands pursuant to this Warrant to be given or made by Holder to or on the Company shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, until another address is designated in writing by the Company, to the address set forth in Section 2(a) above. Notices or demands pursuant to this Warrant to be given or made by the Company to or on Holder shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, to the address of Holder set forth in the Company's records, until another address is designated in writing by Holder. IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 21ST day of March, 2000. NEW MILLENIUM MEDIA INTERNATIONAL, INC. By: ________________________________ John Thatch, President and CEO 7 EXHIBIT A EXERCISE FORM FOR WARRANT TO: NEW MILLENIUM MEDIA INTERNATIONAL, INC. The undersigned hereby irrevocably exercises the right to purchase ____________ of the shares of Common Stock (the "Common Stock") of NEW MILLENIUM MEDIA INTERNATIONAL, INC. a Colorado corporation (the "Company"), evidenced by the attached warrant (the "Warrant"), and herewith makes payment of the exercise price with respect to such shares in full, all in accordance with the conditions and provisions of said Warrant. 1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of any of the Common Stock obtained on exercise of the Warrant, except in accordance with the provisions of Section 8(a) of the Warrant. 2. The undersigned requests that stock certificates for such shares be issued free of any restrictive legend, if appropriate, and a warrant representing any unexercised portion hereof be issued, pursuant to the Warrant in the name of the undersigned and delivered to the undersigned at the address set forth below: Dated: _________ ________________________________________________________________________________ Signature ________________________________________________________________________________ Print Name ________________________________________________________________________________ Address ________________________________________________________________________________ NOTICE The signature to the foregoing Exercise Form must correspond to the name as written upon the face of the attached Warrant in every particular, without alteration or enlargement or any change whatsoever. ________________________________________________________________________________ 8 EXHIBIT B ASSIGNMENT (To be executed by the registered holder desiring to transfer the Warrant) FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the "Warrant") hereby sells, assigns and transfers unto the person or persons below named the right to purchase _______ shares of the Common Stock of NEW MILLENIUM MEDIA INTERNATIONAL, INC., evidenced by the attached Warrant and does hereby irrevocably constitute and appoint _______________________ attorney to transfer the said Warrant on the books of the Company, with full power of substitution in the premises. Dated: ______________________________ Signature Fill in for new registration of Warrant: ___________________________________ Name ___________________________________ Address ___________________________________ Please print name and address of assignee (including zip code number) ________________________________________________________________________________ NOTICE The signature to the foregoing Assignment must correspond to the name as written upon the face of the attached Warrant in every particular, without alteration or enlargement or any change whatsoever. ________________________________________________________________________________ EX-4.3 7 0007.txt PURCHASE WARRANT TO SWARTZ THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER. AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED. SEE THE RISK FACTORS SET FORTH UNDER THAT CERTAIN INVESTMENT AGREEMENT BY AND BETWEEN THE COMPANY AND HOLDER REFERENCED THEREIN AS EXHIBIT J. Warrant to Purchase "N" shares Warrant Number ___ Warrant to Purchase Common Stock of New Millennium Media International, Inc. THIS CERTIFIES that Swartz Private Equity, LLC or any subsequent holder hereof ("Holder"), has the right to purchase from New Millennium Media International, Inc., a Colorado corporation (the "Company"), up to "N" fully paid and nonassessable shares, wherein "N" is defined below, of the Company's common stock, $.001 par value per share ("Common Stock"), subject to adjustment as provided herein at a price equal to the Exercise Price as defined in Section 3 below, at any time beginning on the Date of Issuance (defined below) and ending at 5:00 p.m., New York, New York time the date that is five (5) years after the Date of Issuance (the "Exercise Period"); provided, that, with respect to each "Put," as that term is defined in that certain Investment Agreement (the "Investment Agreement") by and between the initial Holder and Company, dated on or about May 19, 2000, "N" shall equal ten percent (10%) of the number of shares of Common Stock purchased by the Holder in that Put. Holder agrees with the Company that this Warrant to Purchase Common Stock of the Company (this "Warrant") is issued and all rights hereunder shall be held subject to all of the conditions, limitations and provisions set forth herein. 1. Date of Issuance and Term. This Warrant shall be deemed to be issued on ("Date of Issuance"). The term of this Warrant is five (5) years from the Date of Issuance. 2. Exercise. (a) Manner of Exercise. During the Exercise Period, this Warrant may be exercised as to all or any lesser number of full shares of Common Stock covered hereby Exhibit D 1 (the "Warrant Shares") upon surrender of this Warrant, with the Exercise Form attached hereto as Exhibit A (the "Exercise Form") duly completed and executed together with the full Exercise Price (as defined below) for each share of Common Stock as to which this Warrant is exercised, at the office of the Company. Attention: John Thatch President and CEO, New Millennium Media International, Ins.; 101 Philippe Parkway, Suite 300, Safety Harbor, FL 34695 Telephone: (727) 797-6664; Facsimile: (727) 797-7770, or at such other office or agency as the Company may designate in writing, by overnight mail, with an advance copy of the Exercise Form sent to the Company and its Transfer Agent by facsimile (such surrender and payment of the Exercise Price hereinafter called the "Exercise of this Warrant"). (b) Date of Exercise. The "Date of Exercise" of the Warrant shall be defined as the date that the advance copy of the completed and executed Exercise Form is sent by facsimile to the Company, provided that the original Warrant and Exercise Form are received by the Company as soon as practicable thereafter. Alternatively, the Date of Exercise shall be defined as the date the original Exercise Form is received by the Company, if Holder has not sent advance notice by facsimile. The Company shall not be required to deliver the shares of Common Stock to the Holder until the requirements of Section 2(a) above are satisfied. (c) Cancellation of Warrant. This Warrant shall be canceled upon the Exercise of this Warrant, and, as soon as practical after the Date of Exercise, Holder shall be entitled to receive Common Stock for the number of shares purchased upon such Exercise of this Warrant, and if this Warrant is not exercised in full, Holder shall be entitled to receive a new Warrant (containing terms identical to this Warrant) representing any unexercised portion of this Warrant in addition to such Common Stock. (d) Holder of Record. Each person in whose name any Warrant for shares of Common Stock is issued shall, for all purposes, be deemed to be the Holder of record of such shares on the Date of Exercise of this Warrant, irrespective of the date of delivery of the Common Stock purchased upon the Exercise of this Warrant. Nothing in this Warrant shall be construed as conferring upon Holder any rights as a stockholder of the Company. 3. Payment of Warrant Exercise Price. The Exercise Price ("Exercise Price"), shall initially equal $Y per share ("Initial Exercise Price"), where "Y" shall equal 110% of the Market Price for the applicable Put (as both are defined in the Investment Agreement) or, if the Date of Exercise is more than six (6) months after the Date of Issuance, the lesser of (i) the Initial Exercise Price or (ii) the "Lowest Reset Price," as that term is defined below. The Company shall calculate a "Reset Price" on each six-month anniversary date of the Date of issuance which shall equal one hundred and ten percent (110%) of the lowest closing bid price of the Common Stock for the five (5) trading days ending on such six-month anniversary date of the Date of Issuance. The "Lowest Reset Price" shall equal the lowest Reset Price determined on any six-month anniversary date of the Date of Issuance preceding the Date of Exercise, taking into account, as appropriate, any adjustments made pursuant to Section 5 hereof. Payment of the Exercise Price may be made by either of the following, or a combination thereof, at the election of Holder: (i) Cash Exercise: cash, bank or cashiers check or wire transfer; or (ii) Cashless Exercise: subject to the last sentence of this Section 3, surrender of this Warrant at the principal office of the Company together with notice of cashless election, in which event the Company shall issue Holder a number of shares of Common 2 Stock computed using the following formula: X = Y (A-B)/A where: X = the number of shares of Common Stock to be issued to Holder. Y = the number of shares of Common Stock for which this Warrant is being exercised. A = the Market Price of one ( 1) share of Common Stock (for purposes of this Section 3(ii), the "Market Price" shall be defined as the average Closing Price of the Common Stock for the five (5) trading days prior to the Date of Exercise of this Warrant (the "Average Closing Price"), as reported by the O.T.C. Bulletin Board. National Association of Securities Dealers Automated Quotation System (" Nasdaq") Small Cap Market, or if the Common Stock is not traded on the Nasdaq Small Cap Market, the Average Closing Price in any other over-the-counter market; provided, however, that if the Common Stock is listed on a stock exchange, the Market Price shall be the Average Closing Price on such exchange for the five (5) trading days prior to the date of exercise of the Warrants. If the Common Stock is/was not traded during the five (5) trading days prior to the Date of Exercise, then the closing price for the last publicly traded day shall be deemed to be the closing price for any and all (if applicable) days during such five (5) trading day period. B = the Exercise Price. For purposes hereof, the term "Closing Bid Price" shall mean the closing bid price on the O.T.C. Bulletin Board, the National Market System (" NMS" ), the New York Stock Exchange, the Nasdaq Small Cap Market, or if no loner traded on the O.T.C. Bulletin Board, the NMS, the New York Stock Exchange, the Nasdaq Small Cap Market, the "Closing Bid Price" shall equal the closing price on the principal national securities exchange or the over-the-counter system on which the Common Stock is so traded and, if not available, the mean of the high and low prices on the principal national securities exchange on which the Common Stock is so traded. For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended, understood and acknowledged that the Common Stock issuable upon exercise of this Warrant in a cashless exercise transaction shall be deemed to have been acquired at the time this Warrant was issued. Moreover, it is intended, understood and acknowledged that the holding period for the Common Stock issuable upon exercise of this Warrant in a cashless exercise transaction shall be deemed to have commenced on the date this Warrant was issued. Notwithstanding anything to the contrary contained herein, this Warrant may not be exercised in a cashless exercise transaction if on the Date of Exercise, the shares of Common Stock to be issued upon exercise of this Warrant would upon such issuance be then registered pursuant to an effective registration statement filed pursuant to that certain Registration Rights Agreement dated on or about May 19, 2000 by and among the Company and certain investors, or otherwise be registered under the Securities Act of 1933, as amended. 3 4. Transfer and Registration. (a) Transfer Rights. Subject to the provisions of Section 8 of this Warrant, this Warrant may be transferred on the books of the Company, in whole or in part, in person or by attorney, upon surrender of this Warrant properly completed and endorsed. This Warrant shall be canceled upon such surrender and, as soon as practicable thereafter, the person to whom such transfer is made shall be entitled to receive a new Warrant or Warrants as to the portion of this Warrant transferred, and Holder shall be entitled to receive a new Warrant as to the portion hereof retained. (b) Registrable Securities. The Common Stock issuable upon the exercise of this Warrant constitutes "Registrable Securities" under that certain Registration Rights Agreement dated on or about May 19, 2000 between the Company and certain investors and, accordingly, has the benefit of the registration rights pursuant to that agreement. 5. Anti-Dilution Adjustments. (a) Stock Dividend. If the Company shall at any time declare a dividend payable in shares of Common Stock, then Holder, upon Exercise of this Warrant after the record date for the determination of holders of Common Stock entitled to receive such dividend, shall be entitled to receive upon Exercise of this Warrant, in addition to the number of shares of Common Stock as to which this Warrant is exercised, such additional shares of Common Stock as such Holder would have received had this Warrant been exercised immediately prior to such record date and the Exercise Price will be proportionately adjusted. (b) Recapitalization or Reclassification. If the Company shall at any time effect a recapitalization, reclassification or other similar transaction of such character that the shares of Common Stock shall be changed into or become exchangeable for a larger or smaller number of shares, then upon the effective date thereof the number of shares of Common Stock which Holder shall be entitled to purchase upon Exercise of this Warrant shall be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of Common Stock by reason of such recapitalization, reclassification or similar transaction, and the Exercise Price shall be, in the case of an increase in the number of shares, proportionally decreased and in the case of decrease in the number of shares, proportionally increased. The Company shall give Holder the same notice it provides to holders of Common Stock of any transaction described in this Section 5(b). (c) Distributions. If the Company shall at any time distribute for no consideration to holders of Common Stock cash, evidences of indebtedness or other securities or assets (other than cash dividends or distributions payable out of earned surplus or net profits for the current or preceding years) then in any such case, Holder shall be entitled to receive, upon Exercise of this Warrant, with respect to each share of Common Stock issuable upon such exercise, the amount of cash or evidences of indebtedness or other securities or assets which Holder would have been entitled to receive with respect to each such share of Common Stock as a result of the happening of such event had this Warrant been exercised immediately prior to the record date or other date fixing shareholders to be affected by such event (the "Determination Date") or, in lieu thereof, if the Board of Directors of the Company should so determine at the time of such distribution, a reduced Exercise Price determined by multiplying the Exercise Price on the Determination Date by a fraction, the numerator of which is the result of such Exercise Price reduced by the value of such distribution applicable to one share of Common Stock (such value to be determined by the Board of Directors of the Company in its discretion) and the denominator of which is such Exercise Price. 4 (d) Notice of Consolidation or Merger. In the event of a merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities or other assets of the Company or another entity or there is a sale of all or substantially all the Company's assets (a "Corporate Change"), then this Warrant shall be exerciseable into such class and type of securities or other assets as Holder would have received had Holder exercised this Warrant immediately prior to such Corporate Change; provided, however, that Company may not affect any Corporate Change unless it first shall have given thirty (30) days notice to Holder hereof of any Corporate Change. (e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise Price" shall mean the purchase price per share specified in Section 3 of this Warrant, until the occurrence of an event stated in subsection (a), (b) or (c) of this Section 5, and thereafter shall mean said price as adjusted from time to time in accordance with the provisions of said subsection. No such adjustment under this Section 5 shall be made unless such adjustment would change the Exercise Price at the time by $.01 or more; provided, however, that all adjustments not so made shall be deferred and made when the aggregate thereof would change the Exercise Price at the time by $.01 or more. No adjustment made pursuant to any provision of this Section 5 shall have the net effect of increasing the Exercise Price in relation to the split adjusted and distribution adjusted price of the Common Stock. The number of shares of Common Stock subject hereto shall increase proportionately with each decrease in the Exercise Price. (f) Adjustments. Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant to this Section 5, Holder shall, upon Exercise of this Warrant, become entitled to receive shares and/or other securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5. 6. Fractional Interests. No fractional shares or scrip representing fractional shares shall be issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, Holder may purchase only a whole number of shares of Common Stock. If, on Exercise of this Warrant, Holder would be entitled to a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon exercise shall be the next higher number of shares. 7. Reservation of Shares. The Company shall at all times reserve for issuance such number of authorized and unissued shares of Common Stock (or other securities substituted therefor as herein above provided) as shall be sufficient for the Exercise of this Warrant and payment of the Exercise Price. The Company covenants and agrees that upon the Exercise of this Warrant all shares of Common Stock issuable upon such exercise shall be duly and validly issued, fully paid, nonassessable and not subject to preemptive rights, rights of first refusal or similar rights of any person or entity. 5 8. Restrictions on Transfer. (a) Registration or Exemption Required. This Warrant has been issued in a transaction exempt from the registration requirements of the Act by virtue of Regulation D and exempt from state registration under applicable state laws. The Warrant and the Common Stock issuable upon the Exercise of this Warrant may not be pledged, transferred, sold or assigned except pursuant to an effective registration statement or an exemption to the registration requirements of the Act and applicable state laws. (b) Assignment. If Holder can provide the Company with reasonably satisfactory evidence that the conditions of (a) above regarding registration or exemption have been satisfied, Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a written notice to Company, substantially in the form of the Assignment attached hereto as Exhibit B, indicating the person or persons to whom the Warrant shall be assigned and the respective number of warrants to be assigned to each assignee. The Company shall effect the assignment within ten (10) days, and shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of like tenor and terms for the appropriate number of shares. 9. Benefits of this Warrant. Nothing in this Warrant shall be construed to confer upon any person other than the Company and Holder any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of the Company and Holder. 10. Applicable Law. This Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the state of Colorado, without giving effect to conflict of law provisions thereof. 11. Loss of Warrant. Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. 12. Notice or Demands. Notices or demands pursuant to this Warrant to be given or made by Holder to or on the Company shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, until another address is designated in writing by the Company, to the address set forth in Section 2(a) above. Notices or demands pursuant to this Warrant to be given or made by the Company to or on Holder 6 shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, to the address of Holder set forth in the Company's records, until another address is designated in writing by Holder. IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the ____ day of ________, 200__. New Millennium Media International, Inc. By: _____________________________ John Thatch, President & CEO 7 EXHIBIT A EXERCISE FORM FOR WARRANT TO: ____________________ New Millennium Media International, Inc. The undersigned hereby irrevocably exercises the right to purchase ___________ of the shares of Common Stock (the "Common Stock") of New Millennium Media International, Inc., a Colorado corporation (the "Company"), evidenced by the attached warrant (the "Warrant"), and herewith makes payment of the exercise price with respect to such shares in full, all in accordance with the conditions and provisions of said Warrant. 1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of any of the Common Stock obtained on exercise of the Warrant, except in accordance with the provisions of Section 8(a) of the Warrant. 2. The undersigned requests that stock certificates for such shares be issued free of any restrictive legend, if appropriate, and a warrant representing any unexercised portion hereof be issued, pursuant to the Warrant in the name of the undersigned and delivered to the undersigned at the address set forth below: Dated: ________________________________________________________________________________ Signature ________________________________________________________________________________ Print Name ________________________________________________________________________________ Address NOTICE The signature to the foregoing Exercise Form must correspond to the name as written upon the face of the attached Warrant in every particular, without alteration or enlargement or any change whatsoever. ________________________________________________________________________________ 8 EXHIBIT B ASSIGNMENT (To be executed by the registered holder desiring to transfer the Warrant) FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the "Warrant") hereby sells, assigns and transfers unto the person or persons below named the right to purchase ___________ shares of the Common Stock of New Millennium Media International, Inc., evidenced by the attached Warrant and does hereby irrevocably constitute and appoint ___________________________ attorney to transfer the said Warrant on the books of the Company, with full power of substitution in the premises. Dated: _________________ _____________________________________ Signature Fill in for new registration of Warrant: _________________________________________ Name _________________________________________ Address _________________________________________ Please print name and address of assignee (including zip code number) ________________________________________________________________________________ NOTICE The signature to the foregoing Assignment must correspond to the name as written upon the face of the attached Warrant in every particular, without alteration or enlargement or any change whatsoever. ________________________________________________________________________________ 9 EX-4.4 8 0008.txt WARRANT SIDE AGREEMENT AGREEMENT THIS AGREEMENT (the "Agreement") is entered into as of May 19, 2000, by and among NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a corporation duly organized and existing under the laws of the State of Colorado (the "Company") and Swartz Private Equity, LLC (hereinafter referred to as "Swartz"). RECITALS: WHEREAS, pursuant to the Company's offering ("Equity Line") of up to Twenty Five Million Dollars ($25,000,000), excluding any funds paid upon exercise of the Warrants, of Common Stock of the Company pursuant to that certain Investment Agreement (the "Investment Agreement") between the Company and Swartz dated on or about May 19, 2000, the Company has agreed to sell and Swartz has agreed to purchase, from time to time as provided in the Investment Agreement, shares of the Company's Common Stock for a maximum aggregate offering amount of Twenty Five Million Dollars ($25,000,000); and WHEREAS, pursuant to the terms of the Investment Agreement, the Company has agreed, among other things, to issue to the Subscriber Commitment Warrants, as defined in the Investment Agreement, to purchase a number of shares of Common Stock, exercisable for five (5) years from their respective dates of issuance. TERMS: NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Issuance of Commitment Warrants. As compensation for entering into the Equity Line, Swartz received a warrant convertible into 1,000,000 shares of the Company's Common Stock, in the form attached hereto as Exhibit A (the "Commitment Warrants"). 2. Issuance of Additional Warrants. At the earlier of (i) March 15, 2001 or (ii) the date of the first Put Notice delivered to Swartz pursuant to the Investment Agreement, Swartz shall receive additional warrants (the "Additional Warrants"), to purchase a number of shares of Common Stock, if necessary, such that the sum of the number of Commitment Warrants and the number of Additional Warrants issued to Swartz shall equal at least 4% of the number of fully diluted shares of Common Stock of the Company that are then outstanding. If the Company shall at any time effect a recapitalization, reclassification or other similar transaction of such character that the shares of Common Stock shall be changed into or become exchangeable for a smaller number of shares (a "Reverse Stock Split"), then on the date of such Reverse Stock Split, and on each one year anniversary (each, an "Anniversary Date") of the Reverse Stock Split thereafter throughout the term of the Commitment Warrants, the Company shall issue to Swartz additional warrants (the "Additional Warrants"), in the form of Exhibit A, to purchase a number of shares of Common Stock, if necessary, such that the sum of the number of Warrants and the number of Additional Warrants issued to Swartz shall equal at least 4.0% of the number of fully diluted shares of Common Stock of the Company that are outstanding immediately following the Reverse Stock 1 Split or Anniversary Date, as applicable. The Additional Warrants shall be exerciseable at the same price as the Commitment Warrants, shall have the same reset provisions as the Commitment Warrants, shall have piggyback registration rights and shall have a 5-year term. 3. Opinion of Counsel. Concurrently with the issuance and delivery of the Commitment Opinion (as defined in the Investment Agreement) to the Investor, or on the date that is six (6) months after the date of this Agreement, whichever is sooner, the Company shall deliver to the Investor an Opinion of Counsel (signed by the Company's independent counsel) covering the issuance of the Commitment Warrants and the Additional Warrants, and the issuance and resale of the Common Stock issuable upon exercise of the Warrants and the Additional Warrants. 4. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia applicable to agreements made in and wholly to be performed in that jurisdiction, except for matters arising under the Act or the Securities Exchange Act of 1934, which matters shall be construed and interpreted in accordance with such laws. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this 19th day of May, 2000. NEW MILLENNIUM MEDIA SUBSCRIBER: INTERNATIONAL, INC. SWARTZ PRIVATE EQUITY, LLC. By: /s/ John Thatch By: /s/ Eric S. Swartz ----------------------------- ---------------------------- John Thatch, President & CEO Eric S. Swartz, Manager New Millennium Media International, Inc. 1080 Holcomb Bridge Road 101 Philippe Parkway Bldg. 200, Suite 285 Suite 300 Roswell, GA 30076 Safety Harbor, FL 34695 Telephone: (770) 640-8130 Telephone: (727) 797-6664 Facsimile: (770) 640-7150 Facsimile: (727) 797-7770 2 EX-4.5 9 0009.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of May 19, 2000, by and among New Millennium Media International, Inc., a corporation duly incorporated and existing under the laws of the State of Colorado (the "Company"), and the subscriber as named on the signature page hereto (hereinafter referred to as "Subscriber"). RECITALS: WHEREAS, pursuant to the Company's offering ("Offering") of up to Twenty-Five Million Dollars ($25,000,000), excluding any funds paid upon exercise of the Warrants, of Common Stock of the Company pursuant to that certain Investment Agreement of even date herewith (the "Investment Agreement") between the Company and the Subscriber, the Company has agreed to sell and the Subscriber has agreed to purchase, from time to time as provided in the Investment Agreement, shares of the Company's Common Stock for a maximum aggregate offering amount of Twenty-Five Million Dollars ($25,000,000); WHEREAS, pursuant to the terms of the Investment Agreement, the Company has agreed to issue to the Subscriber the Commitment Warrants and, from time to time, the Purchase Warrants, each as defined in the Investment Agreement, to purchase a number of shares of Common Stock, exercisable for five (5) years from their respective dates of issuance (collectively, the "Warrants"); and WHEREAS, pursuant to the terms of the Investment Agreement, the Company has agreed to provide the Subscriber with certain registration rights with respect to the Common Stock to be issued in the Offering and the Common Stock issuable upon exercise of the Warrants as set forth in this Agreement. TERMS: NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement (including the Recitals above), the following terms shall have the following meanings (such meanings to be equally applicable to both singular and plural forms of the terms defined): "Additional Registration Statement" shall have the meaning set forth in Section 3(b). "Amended Registration Statement" shall have the meaning set forth in Section 3(b). "Business Day" shall have the meaning set forth in the Investment Agreement. 1 "Closing Bid Price" shall have the meaning set forth in the Investment Agreement. "Common Stock" shall mean the common stock, par value $0.001, of the Company. "Due Date" shall mean the date that is one hundred twenty (120) days after the date of this Agreement. "Effective Date" shall have the meaning set forth in Section 2.4. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder. "Filing Deadline" shall mean the date that is sixty (60) days from the date that the Company's shareholders approve the authorization and issuance of additional shares of Common Stock pursuant to the Investment Agreement. "Investment Agreement" shall have the meaning set forth in the Recitals hereto. "Holder" shall mean Subscriber, and any other person or entity owning or having the right to acquire Registrable Securities or any permitted assignee; "Piggyback Registration" and "Piggyback Registration Statement" shall have the meaning set forth in Section 4. "Put" shall have the meaning as set forth in the Investment Agreement. "Register," "Registered," and "Registration" shall mean and refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule, and the declaration or ordering of effectiveness of such registration statement or document. "Registrable Securities" shall have the meaning set forth in Section 2.1. "Registration Statement" shall have the meaning set forth in Section 2.2. "Rule 144" shall mean Rule 144, as amended, promulgated under the Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder. "Subscriber" shall have the meaning set forth in the preamble to this Agreement. 2 "Supplemental Registration Statement" shall have the meaning set forth in Section 3(b). "Warrants" shall have the meaning set forth in the above Recitals. "Warrant Shares" shall mean shares of Common Stock issuable upon exercise of any Warrant. 2. Required Registration. 2.1 Registrable Securities. "Registrable Securities" shall mean those shares of the Common Stock of the Company together with any capital stock issued in replacement of, in exchange for or otherwise in respect of such Common Stock, that are: (i) issuable or issued to the Subscriber pursuant to the Investment Agreement, and (ii) issuable or issued upon exercise of the Warrants; provided, however, that notwithstanding the above, the following shall not be considered Registrable Securities: (a) any Common Stock which would otherwise be deemed to be Registrable Securities, if and to the extent that those shares of Common Stock may be resold in a public transaction without volume limitations or other material restrictions without registration under the Securities Act, including without limitation, pursuant to Rule 144 under the Securities Act; and (b) any shares of Common Stock which have been sold in a private transaction in which the transferor's rights under this Agreement are not assigned. 2.2 Filing of Initial Registration Statement. The Company shall, by the Filing Deadline, file a registration statement ("Registration Statement") on Form SB-2 (or other suitable form, at the Company's discretion, but subject to the reasonable approval of Subscriber), covering the resale of a number of shares of Common Stock as Registrable Securities equal to at least Ten Million (10,000,000) shares of Common Stock and shall cover, to the extent allowed by applicable law, such indeterminate number of additional shares of Common Stock that may be issued or become issuable as Registrable Securities by the Company pursuant to Rule 416 of the Securities Act. In the event that the Company has not filed the Registration Statement by the Filing Deadline, then the Company shall pay to Subscriber an amount equal to $500, in cash, for each Business Day after the Filing Deadline until such Registration Statement is filed, payable within ten (10) Business Days following the end of each calendar month in which such payments accrue. 2.3 [Intentionally Left Blank]. 2.4 Registration Effective Date. The Company shall use its reasonable best efforts to have the Registration Statement declared effective by the SEC (the date of such effectiveness is referred to herein as the "Effective Date") by the Due Date. 2.5 [Intentionally Left Blank]. 3 2.6 [Intentionally Left Blank]. 2.7 Shelf Registration. The Registration Statement shall be prepared as a "shelf" registration statement under Rule 415, and shall be maintained effective until all Registrable Securities are resold pursuant to the Registration Statement. 2.8 Supplemental Registration Statement. Anytime the Registration Statement does not cover a sufficient number of shares of Common Stock to cover all outstanding Registrable Securities, the Company shall promptly prepare and file with the SEC such Supplemental Registration Statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all such Registrable Securities and shall use its best efforts to cause such Supplemental Registration Statement to be declared effective as soon as possible. 3. Obligations of the Company. Whenever required under this Agreement to effect the registration of any Registrable Securities, the Company shall, as expeditiously and reasonably possible: (a) Prepare and file with the Securities and Exchange Commission ("SEC") a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective and to remain effective until all Registrable Securities are resold pursuant to such Registration Statement, notwithstanding any Termination or Automatic Termination (as each is defined in the Investment Agreement) of the Investment Agreement. (b) Prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement ("Amended Registration Statement") or prepare and file any additional registration statement ("Additional Registration Statement," together with the Amended Registration Statement, "Supplemental Registration Statements") as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Supplemental Registration Statements or such prior registration statement and to cover the resale of all Registrable Securities. (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Use its reasonable best efforts to register and qualify the securities covered by such Registration Statement under such other securities or Blue Sky laws of the jurisdictions in which the Holders are located, of such other jurisdictions as shall be reasonably requested by the Holders of the Registrable Securities covered by such Registration Statement and of all other jurisdictions where legally required, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 4 (e) [Intentionally Omitted]. (f) As promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, use its best efforts promptly to prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to each Holder as such Holder may reasonably request. (g) Provide Holders with notice of the date that a Registration Statement or any Supplemental Registration Statement registering the resale of the Registrable Securities is declared effective by the SEC, and the date or dates when the Registration Statement is no longer effective. (h) Provide Holders and their representatives the opportunity and a reasonable amount of time, based upon reasonable notice delivered by the Company, to conduct a reasonable due diligence inquiry of Company's pertinent financial and other records and make available its officers and directors for questions regarding such information as it relates to information contained in the Registration Statement. (i) Provide Holders and their representatives the opportunity to review the Registration Statement and all amendments or supplements thereto prior to their filing with the SEC by giving the Holder at least five (5) business days advance written prior to such filing. (j) Provide each Holder with prompt notice of the issuance by the SEC or any state securities commission or agency of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceeding for such purpose. The Company shall use its best efforts to prevent the issuance of any stop order and, if any is issued, to obtain the removal thereof at the earliest possible date. (k) Use its best efforts to list the Registrable Securities covered by the Registration Statement with all securities exchanges or markets on which the Common Stock is then listed and prepare and file any required filing with the NASD, American Stock Exchange, NYSE and any other exchange or market on which the Common Stock is listed. 4. Piggyback Registration. If anytime prior to the date that the Registration Statement is declared effective or during any Ineffective Period (as defined in the Investment Agreement) the Company proposes to register (including for this purpose a registration effected by the Company for shareholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than a registration relating solely for the sale of securities to participants in a Company stock plan or a registration on Form S-4 promulgated under the Securities Act or any successor or similar form registering stock issuable upon a reclassification upon a business combination involving an 5 exchange of securities or upon an exchange offer for securities of the issuer or another entity) the Company shall, at such time, promptly give each Holder written notice of such registration ("Piggyback Registration Statement"). Upon the written request of each Holder given by fax within ten (10) days after mailing of such notice by the Company, the Company shall cause to be included in such registration statement under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered ("Piggyback Registration") to the extent such inclusion does not violate the registration rights of any other security holder of the company granted prior to the date hereof; provided, however, that nothing herein shall prevent the Company from withdrawing or abandoning such registration statement prior to its effectiveness. 5. Limitation on Obligations to Register under a Piggyback Registration. In the case of a Piggyback Registration pursuant to an underwritten public offering by the Company, if the managing underwriter determines and advises in writing that the inclusion in the related Piggyback Registration Statement of all Registrable Securities proposed to be included would interfere with the successful marketing of the securities proposed to be registered by the Company, then the number of such Registrable Securities to be included in such Piggyback Registration Statement, to the extent any such Registrable Securities may be included in such Piggyback Registration Statement, shall be allocated among all Holders who had requested Piggyback Registration pursuant to the terms hereof, in the proportion that the number of Registrable Securities which each such Holder seeks to register bears to the total number of Registrable Securities sought to be included by all Holders. If required by the managing underwriter of such an underwritten public offering, the Holders shall enter into an agreement limiting the number of Registrable Securities to be included in such Piggyback Registration Statement and the terms, if any, regarding the future sale of such Registrable Securities. 6. Dispute as to Registrable Securities. In the event the Company believes that shares sought to be registered under Section 2 or Section 4 by Holders do not constitute "Registrable Securities" by virtue of Section 2.1 of this Agreement, and the status of those shares as Registrable Securities is disputed, the Company shall provide, at its expense, an Opinion of Counsel, reasonably acceptable to the Holders of the Securities at issue (and satisfactory to the Company's transfer agent to permit the sale and transfer), that those securities may be sold immediately, without volume limitation or other material restrictions, without registration under the Securities Act, by virtue of Rule 144 or similar provisions. 7. Furnish Information. At the Company's request, each Holder shall furnish to the Company such information regarding Holder, the Registrable Securities held by it, and the intended method of disposition of such securities to the extent required to effect the registration of its Registrable Securities or to determine that registration is not required pursuant to Rule 144 or other applicable provision of the Securities Act. The Company shall include all information provided by such Holder pursuant hereto in the Registration Statement, substantially in the form supplied, except to the extent such information is not permitted by law. 8. Expenses. All expenses, other than commissions and fees and expenses of counsel to the selling Holders, incurred in connection with registrations, filings or qualifications pursuant hereto, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company, shall be borne by the Company. 6 9. Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Agreement: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the officers, directors, partners, legal counsel, and accountants of each Holder, any underwriter (as defined in the Securities Act, or as deemed by the Securities Exchange Commission, or as indicated in a registration statement) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of Section 15 of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements or omissions: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, and the Company will reimburse each such Holder, officer or director, underwriter 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; provided, however, that the indemnity agreement contained in this subsection 9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, officer, director, underwriter or controlling person; provided however, that the above shall not relieve the Company from any other liabilities which it might otherwise have. (b) Each Holder of any securities included in such registration being effected shall indemnify and hold harmless the Company, its directors and officers, each underwriter and each other person, if any, who controls (within the meaning of the Securities Act) the Company or such other indemnified party, against any liability, joint or several, to which any such indemnified party may become subject under the Securities Act or any other statute or at common law, insofar as such liability (or actions in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of any material fact contained, on the effective date thereof, in any registration statement under which securities were registered under the Securities Act at the request of such Holder, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any omission or alleged omission by such Holder to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, preliminary or final prospectus, amendment or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by such Holder specifically for use therein. Such Holder shall reimburse any indemnified party for any 7 legal fees incurred in investigating or defending any such liability; provided, however, that such Holder's obligations hereunder shall be limited to an amount equal to the proceeds to such Holder of the securities sold in any such registration; and provided further, that no Holder shall be required to indemnify any party against any liability arising from any untrue or misleading statement or omission contained in any preliminary prospectus if such deficiency is corrected in the final prospectus or for any liability which arises out of the failure of such party to deliver a prospectus as required by the Securities Act. (c) Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume, the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflicting interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 9, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 9. (d) In the event that the indemnity provided in paragraphs (a) and/or (b) of this Section 9 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and each Holder agree to contribute to the aggregate claims, losses, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which the Company and one or more of the Holders may be subject in such proportion as is appropriate to reflect the relative fault of the Company and the Holders in connection with the statements or omissions which resulted in such Losses. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or by the Holders. The Company and the Holders agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation that does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9. each person who controls a Holder of Registrable Securities within the meaning of either the Securities Act or the Exchange Act and each director, officer, partner, employee and agent of a Holder shall have the same rights to contribution as such holder, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act and each director and officer of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). 8 (e) The obligations of the Company and Holders under this Section 9 shall survive the resale, if any, of the Common Stock, the completion of any offering of Registrable Securities in a Registration Statement under this Agreement, and otherwise. 10. Reports Under Exchange Act. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; and (b) use its reasonable best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act. 11. Amendment of Registration Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the written consent of each Holder affected thereby. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder, each future Holder, and the Company. 12. Notices. All notices required or permitted under this Agreement shall be made in writing signed by the party making the same, shall specify the section under this Agreement pursuant to which it is given, and shall be addressed if to (i) the Company at: New Millennium Media International, Inc.; Attn: John Thatch; 101 Philippe Parkway, Suite 300; Safety Harbor, FL 34695; Telephone: (727) 797-6664, Facsimile: (727) 797-7770; Email: nhojt@aol.com (or at such other location as directed by the Company in writing) and (ii) the Holders at their respective last address as the party as shown on the records of the Company. Any notice, except as otherwise provided in this Agreement, shall be made by fax and shall be deemed given at the time of transmission of the fax. 13. Termination. This Agreement shall terminate on the date all Registrable Securities cease to exist (as that term is defined in Section 2.1 hereof); but without prejudice to (i) the parties' rights and obligations arising from breaches of this Agreement occurring prior to such termination (ii) other indemnification obligations under this Agreement. 14. Assignment. No assignment, transfer or delegation, whether by operation of law or otherwise, of any rights or obligations under this Agreement by the Company or any Holder, respectively, shall be made without the prior written consent of the majority in interest of the Holders or the Company, respectively; provided that the rights of a Holder may be transferred to a subsequent holder of the Holder's Registrable Securities (provided such transferee shall provide to the Company, together with or prior to such transferee's request to have such Registrable Securities included in a Registration, a writing executed by such transferee agreeing to be bound as a Holder by the terms of this Agreement), and the Company hereby agrees to file an amended 9 registration statement including such transferee or a selling security holder thereunder; and provided further that the Company may transfer its rights and obligations under this Agreement to a purchaser of all or a substantial portion of its business if the obligations of the Company under this Agreement are assumed in connection with such transfer, either by merger or other operation of law (which may include without limitation a transaction whereby the Registrable Securities are converted into securities of the successor in interest) or by specific assumption executed by the transferee. 15. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia applicable to agreements made in and wholly to be performed in that jurisdiction, except for matters arising under the Securities Act or the Exchange Act, which matters shall be construed and interpreted in accordance with such laws. Any dispute arising out of or relating to this Agreement or the breach, termination or validity hereof shall be finally settled by the federal or state courts located in Fulton County, Georgia. 16. Execution in Counterparts Permitted. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one (1) instrument. 17. Specific Performance. The Holder shall be entitled to the remedy of specific performance in the event of the Company's breach of this Agreement, the parties agreeing that a remedy at law would be inadequate. 18. Indemnity. Each party shall indemnify each other party against any and all claims, damages (including reasonable attorney's fees), and expenses arising out of the first party's breach of any of the terms of this Agreement. 19. Entire Agreement; Written Amendments Required. This Agreement, including the Exhibits attached hereto, the Investment Agreement, the Common Stock certificates, and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly provided herein, [Intentionally Left Blank] 10 neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this 19th day of May, 2000. NEW MILLENNIUM MEDIA INTERNATIONAL, INC. By: /s/ John Thatch, President & CEO ----------------------------------- John Thatch, President & CEO Address: 101 Philippe Parkway Suite 300 Safety Harbor, FL 94695 Telephone: (727) 797-6664 Facsimile: (727) 797-7770 E-mail: nhojt@aol.com SUBSCRIBER: SWARTZ PRIVATE EQUITY, LLC. By: /s/ Eric S. Swartz ----------------------------------- Eric S. Swartz, Manager Address: 1080 Holcomb Bridge Road Bldg. 200, Suite 285 Roswell, GA 30076 Telephone: (770) 640-8130 Facsimile: (770) 640-7150 EX-4.6 10 0010.txt LETTER AGREEMENT WITH SWARTZ SWARTZ INSTITUTIONAL FINANCE NEW MILLENIUM MEDIA INTERNATIONAL LETTER OF AGREEMENT FOR A $2 MILLION PRIVATE PLACEMENT OF SECURITIES PURSUANT TO REGULATION D Company: New Millenium Media International, Inc. ("New Millenium") Placement Dunwoody Brokerage Services, Inc. d/b/a Swartz Institutional Agent: Finance ("Swartz"). Offering: $2 million of Equity Securities (the "Securities"). Swartz will act as a non-exclusive Placement Agent for the equity offering through the date of Settlement. Securities The placement will be sold on a best efforts basis to qualified Placement: institutional investors. Swartz agrees to introduce New Millenium to institutional investors and strategic partners which are qualified to purchase Private Placement Securities and which have a pre-qualified interest in a potential investment into New Millenium. Placement Swartz shall act as a non-exclusive Placement Agent for a Period: 120-day period beginning upon the date of execution of this Agreement (the "Placement Period"). Swartz shall receive a Placement Fee (as defined below) during the Placement Period. Terms of Swartz will provide assistance and consult with New Millenium Securities: in the agreed upon structure and terms of the Securities. Placement Swartz shall provide complete legal documents and legal Documents: services to prepare all documents required for the placement. Escrow: Swartz shall provide escrow services through First Union National Bank, Atlanta, Georgia. Placement Fee: A dollar amount equal to 7% of the aggregate purchase price of Securities placed, plus an expense re-allowance equal to 1% of the aggregate purchase price of all Securities placed, which covers all of Swartz's legal and brokerage expenses of placement. In addition, a Warrant to purchase a number of shares of common stock equal to 10% of the amount placed divided by the 5 day average closing bid price prior to closing, exercisable at an exercise price equal to the 5 day average closing bid price prior to closing. Non- Any potential investor who Swartz arranges to have discussions Circumvention: with New Millenium whether or not such investor(s) participate in the offering(s) contemplated by this Letter of Agreement (collectively referred to as "Swartz Investors"), shall be considered, for purposes of this Agreement, the property of Swartz. In the event that New Millenium accepts an investment from a Swartz Investor in a private placement for a period of 36 months from the date hereof, without the prior written approval of Swartz, New Millenium agrees to pay to Swartz a fee as stated above, at the time of closing. If a Swartz Investor is introduced to New Millenium but fails to participate in the Private Placement referenced herein, New Millenium agrees that if it accepts an investment from such Investor within a period of 12 months from the date hereof, New Millenium agrees to pay to Swartz a fee as stated above at the time of accepting such investment. Warrants Warrants referenced herein shall have piggyback registration Referenced rights, reset provisions, shall have anti-dilution provisions in this following any reverse stock splits and shall have a 5-year term. Agreement DUNWOODY BROKERAGE SERVICES, INC. NEW MILLENIUM MEDIA INTERNATIONAL, INC. By:________________________________ By:__________________________________ Robert Hopkins, President Print Name:__________________________ Date:______________________________ Title: ______________________________ Date: _______________________________ SWARTZ INSTITUTIONAL FINANCE By: _______________________________ Eric Swartz, OSJ Date: ___________________________________ EX-4.7 11 0011.txt EMPLOYEE STOCK OPTION PLAN WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. The undersigned, being the Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation (the "Corporation"), hereby adopt the following resolutions pursuant to the Colorado Business Corporation Act: WHEREAS, the Board of Directors of the Corporation authorized the formation of a Compensation Committee, as permitted by the Bylaws of the Corporation; and WHEREAS; the Compensation Committee has submitted the 2000 Stock Option Plan (the "Plan"), dated June 26th, 2000 for approval by the Board of Directors in the form attached hereto as Exhibit "A"; and WHEREAS, the Board of Directors of the Company deems it to be in the best interests of the Corporation to adopt the 2000 Stock Option Plan, which provides for the issuance of up 3,000,000 shares of the Common Stock of the Corporation. BE IT RESOLVED that the Corporation reserve from the authorized but unissued shares of the Common Stock of the Corporation a total of up to 3,000,000 shares of Common Stock for exercise of stock options granted pursuant to the Plan; and BE IT RESOLVED, that the Board of Directors recommend that the Shareholders of the Corporation adopt the form of the Plan attached hereto as Exhibit "A"; and be it FURTHER RESOLVED, that the proper officers of the Corporation are hereby authorized and directed to do any and all such further acts and things as, in their judgment, are necessary or appropriate to carry out the purposes and intent of the foregoing resolution. The undersigned hereby execute this Written Consent, deemed effective as of June 26th, 2000. Dated: 6/26/00 ------------- ------------------------------------ Gerald C. Parker, Director Dated: 6/26/00 ------------- ------------------------------------ John Thatch, Director Dated: 6/26/00 ------------- ------------------------------------ Andrew M. Badolato, Director Dated: 6/26/00 ------------- ------------------------------------ Tony Gomes, Director WRITTEN CONSENT OF A MAJORITY OF THE SHAREHOLDERS OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. The undersigned, a majority of the holders, entitled to vote, of the outstanding Common Stock of NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation (the "Corporation"), hereby adopt the following resolutions pursuant to the Colorado Business Corporation Act: WHEREAS, the Board of Directors of the Company deem it to be in the best interests of the Corporation to adopt the form of the New Millennium Media International, Inc. 2000 Option Plan (the "Plan") attached hereto, which provides for the issuance of up 3,000,000 shares of the Common Stock of the Corporation; and WHEREAS, the Board of Directors of the Corporation have recommended that the Shareholders of the Corporation approve the Plan in the form attached hereto as Exhibit "A". BE IT RESOLVED, that the Corporation adopt the form of the Plan attached hereto as Exhibit "A"; and BE IT RESOLVED that the Corporation reserve from the authorized but unissued shares of the Common Stock of the Corporation a total of up to 3,000,000 shares of Common Stock for exercise of stock options granted pursuant to the Plan; and BE IT FURTHER RESOLVED, that the proper officers of the Corporation are hereby authorized and directed to do any and all such further acts and things as, in their judgment, are necessary or appropriate to carry out the purposes and intent of the foregoing resolution. The undersigned hereby execute this Written Consent, deemed effective as of June 26th, 2000. Dated: 06/26/00 Investment Management of America, Inc. ------------- By ------------------------------------ Gerald C. Parker, Chairman (____ shares) By ------------------------------------ Andrew M. Badolato, President/CEO Dated: 06/26/00 ------------- ------------------------------------ John Thatch, Director and Shareholder (2.5m. shares) WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. The undersigned, being the Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation (the "Corporation"), hereby adopt the following resolutions pursuant to the Colorado Business Corporation Act: WHEREAS, the Board of Directors of the Corporation deems it to be in the best interests of the Corporation to grant to those persons listed on the attached Exhibit "A", in the amounts and at an exercise price as listed next to each person's name, non-qualified stock options ("NSO") to purchase the Corporation's Common Stock, par value $.001. BE IT RESOLVED, that the Corporation is hereby authorized to grant the foregoing options; and BE IT RESOLVED, that the form of NSO Grant Form attached hereto as Exhibit "B" be and hereby is ratified, confirmed and approved; and BE IT FURTHER RESOLVED, that the proper officers of the Corporation are hereby authorized and directed to do any and all such further acts and things as, in their judgment, are necessary or appropriate to carry out the purposes and intent of the foregoing resolution. The undersigned hereby execute this Written Consent, deemed effective as of June 26th, 2000. Dated: 6/26/00 ------------- ------------------------------------ Gerald C. Parker, Director Dated: 6/26/00 ------------- ------------------------------------ John Thatch, Director Dated: 6/26/00 ------------- ------------------------------------ Andrew M. Badolato, Director Dated: 6/26/00 ------------- ------------------------------------ Tony Gomes, Director Exhibit "B" [NSO GRANT FORM] NEW MILLENNIUM MEDIA INTERNATIONAL, INC. Suite 300, 101 Philippe Parkway Safety Harbor, Florida 34695 Date: _______________ Dear _____________: The Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (the "Corporation") is pleased to award you an Option pursuant to the provisions of the New Millennium Media International, Inc. 2000 Stock Option Plan (the "Plan"). This letter will describe the Option granted to you. Attached to this letter is a copy of the Plan. The terms of the Plan also set forth provisions governing the Option granted to you. Therefore, in addition to reading this letter you should also read the Plan. Your signature on this letter is an acknowledgment to us that you have read and understand the Plan and that you agree to abide by its terms. All terms not defined in this letter shall have the same meaning as in the Plan. 1 Type of Option. You are granted an NSO. Please see in particular Sections 4, 5 and 11 of the Plan. 2 Rights and Privileges. Subject to the conditions hereinafter set forth, we grant you the right to purchase ___________ shares of Common Stock ("Common Stock") at $________ per share, the current fair market value of a share of Common Stock. The right to purchase the shares of Common Stock accrues in _____________ installments over the time periods described below: The right to acquire _________shares accrues on ___________. The right to acquire _________shares accrues on ___________. 3 Time of Exercise. The Option may be exercised at any time and from time to time beginning when the right to purchase the shares of Common Stock accrues and ending when they terminate as provided in Section 5 of this letter. 4 Method of Exercise. The Options shall be exercised by written notice to the Chairman of the Board of Directors at the Corporation's principal place of business. The notice shall set forth the number of shares of Common Stock to be acquired and shall contain a check payable to the Corporation in full payment for the Common Stock or that number of already owned shares of Common Stock equal in value to the total Exercise Price of the Option. We shall make delivery of the shares of Common Stock subject to the conditions described in Section 13 of the Plan. 5 Termination of Option. To the extent not exercised, the Option shall terminate upon the first to occur of the following dates: (a) ________, 200__, being _________ years from the date of grant pursuant to the provisions of Section 2 of this Agreement; or (b) Except as otherwise provided for herein, upon the termination of your employment with the Corporation and any of its subsidiaries Plan for any reason. (c) The expiration of 12 months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan, if such employment termination occurs by reason of your death, permanent disability (as defined herein) or retirement. As used herein, "permanent disability" means your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 6 Securities Laws. The Option and the shares of Common Stock underlying the Option have not been registered under the Securities Act of 1933, as amended (the "Act"). The Corporation has no obligations to ever register the Option or the shares of Common Stock underlying the Option. All shares of Common Stock acquired upon the exercise of the Option shall be "restricted securities" as that term is defined in Rule 144 promulgated under the Act. The certificate representing the shares shall bear an appropriate legend restricting their transfer. Such shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and the Corporation has been furnished with an opinion of counsel satisfactory in form and substance to the Corporation that such registration is not required. 7 Binding Effect. The rights and obligations described in this letter shall inure to the benefit of and be binding upon both of us, and our respective heirs, personal representatives, successors and assigns. 8 Date of Grant. The Option shall be treated as having been granted to you on the date of this letter even though you may sign it at a later date. Very truly yours, By: __________________________ President AGREED AND ACCEPTED: ______________________________ Date: ________________________ WRITTEN CONSENT OF THE BOARD OF DIRECTORS OF NEW MILLENNIUM MEDIA INTERNATIONAL, INC. The undersigned, being the Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation (the "Corporation"), hereby adopt the following resolutions pursuant to the Colorado Business Corporation Act: WHEREAS, the Board of Directors of the Corporation deems it to be in the best interests of the Corporation to grant to those persons listed on the attached Exhibit "A" in the amounts and at an exercise price as listed next to each person's name, incentive stock options ("ISO") to purchase the Corporation's Common Stock, par value $.001. BE IT RESOLVED, that the Corporation is hereby authorized to grant the foregoing options; and BE IT RESOLVED, that the form of ISO Grant Form attached hereto as Exhibit "B" be and hereby is ratified, confirmed and approved; and BE IT FURTHER RESOLVED, that the proper officers of the Corporation are hereby authorized and directed to do any and all such further acts and things as, in their judgment, are necessary or appropriate to carry out the purposes and intent of the foregoing resolution. The undersigned hereby execute this Written Consent, deemed effective as of June 26th, 2000. Dated: 6/26/00 ------------- ------------------------------------ Gerald C. Parker, Director Dated: 6/26/00 ------------- ------------------------------------ John Thatch, Director Dated: 6/26/00 ------------- ------------------------------------ Andrew M. Badolato, Director Dated: 6/26/00 ------------- ------------------------------------ Tony Gomes, Director Exhibit "B" [ISO GRANT FORM] NEW MILLENNIUM MEDIA INTERNATIONAL, INC. Suite 300, 101 Philippe Parkway Safety Harbor, Florida 34695 Date: _______________ Dear _____________: The Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (the "Corporation") is pleased to award you an Option pursuant to the provisions of the New Millennium Media International, Inc. 2000 Common Stock Option Plan (the "Plan"). This letter will describe the Option granted to you. Attached to this letter is a copy of the Plan. The terms of the Plan also set forth provisions governing the Option granted to you. Therefore, in addition to reading this letter you should also read the Plan. Your signature on this letter is an acknowledgment to us that you have read and understand the Plan and that you agree to abide by its terms. All terms not defined in this letter shall have the same meaning as in the Plan. 1 Type of Option. You are granted an ISO. Please see in particular Section 11 of the Plan. 2 Rights and Privileges. Subject to the conditions hereinafter set forth, we grant you the right to purchase _______ shares of Common Stock at $________ per share, the current fair market value of a share of Common Stock. The right to purchase the shares of Common Stock accrues in ________ installments over the time periods described below: The right to acquire ___________ shares accrues on ___________. The right to acquire ___________ shares accrues on ___________. The right to acquire ___________ shares accrues on ___________. 3 Time of Exercise The Option may be exercised at any time and from time to time beginning when the right to purchase the shares of Common Stock accrues and ending when they terminate as provided in Section 5 of this letter. 4 Method of Exercise. The Options shall be exercised by written notice to the Chairman of the Board of Directors at the Corporation's principal place of business. The notice shall set forth the number of shares of Common Stock to be acquired and shall contain a check payable to the Corporation in full payment for the Common Stock or that number of already owned shares of Common Stock equal in value to the total Exercise Price of the Option. We shall make delivery of the shares of Common Stock subject to the conditions described in Section 13 of the Plan. 5 Termination of Option. To the extent not exercised, the Option shall terminate upon the first to occur of the following dates: (a) ________, 200___, being _________ years from the date of grant pursuant to the provisions of Section 2 of this Agreement; or (b) The expiration of thirty (30) days following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan for any reason, other than by reason of death or permanent disability. As used herein, "permanent disability" means your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; or (c) The expiration of 12 months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan, if such employment termination occurs by reason of your death or by reason of your permanent disability (as defined above). 6 Securities Laws. The Option and the shares of Common Stock underlying the Option have not been registered under the Securities Act of 1933, as amended (the "Act"). The Corporation has no obligations to ever register the Option or the shares of Common Stock underlying the Option. All shares of Common Stock acquired upon the exercise of the Option shall be "restricted securities" as that term is defined in Rule 144 promulgated under the Act. The certificate representing the shares shall bear an appropriate legend restricting their transfer. Such shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and the Corporation has been furnished with an opinion of counsel satisfactory in form and substance to the Corporation that such registration is not required. 7 Binding Effect. The rights and obligations described in this letter shall inure to the benefit of and be binding upon both of us, and our respective heirs, personal representatives, successors and assigns. 8 Date of Grant. The Option shall be treated as having been granted to you on the date of this letter even though you may sign it at a later date. Very truly yours, By: __________________________ President AGREED AND ACCEPTED: ______________________________ Date: ________________________ NEW MILLENNIUM MEDIA INTERNATIONAL, INC. 2000 STOCK OPTION PLAN 1 Grant of Options; Generally. In accordance with the provisions hereinafter set forth in this stock option plan, the name of which is the NEW MILLENNIUM MEDIA INTERNATIONAL, INC. 2000 STOCK OPTION PLAN (the "Plan") the Board of Directors (the "Board") or the Compensation Committee (the "Stock Option Committee") of NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation, (the "Corporation") is hereby authorized to issue from time to time on the Corporation's behalf to any one or more Eligible Persons, as hereinafter defined, options to acquire shares of the Corporation's Common Stock, $.001 par value (the "Stock"). 2 Type of Options. The Board or the Stock Option Committee is authorized to issue Incentive Stock Options ("ISOs") that meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), which options are hereinafter referred to collectively as ISOs or singularly as an ISO. The Board or the Stock Option Committee is also, in its discretion, authorized to issue options that are not ISOs, which options are hereinafter referred to collectively as Non Statutory Options ("NSO's") or singularly as an NSO. The Board or the Stock Option Committee is also authorized to issue "Reload Options" in accordance with Paragraph 8 herein, which options are hereinafter referred to collectively as Reload Options, or singularly as a Reload Option. Except where the context indicates to the contrary, the term "Option" or "Options" means ISOs, NSOs and Reload Options. 3 Amount of Stock. The aggregate number of shares of Stock that may be purchased pursuant to the exercise of Options shall be Three Million (3,000,000) shares. Of this amount, the Board or the Stock Option Committee shall have the power and authority to designate whether any Options so issued shall be ISOs or NSOs, subject to the restrictions on ISOs contained elsewhere herein. If an Option ceases to be exercisable, in whole or in part, the shares of Stock underlying such Option shall continue to be available under this Plan. Further, if shares of Stock are delivered to the Corporation as payment for shares of Stock purchased by the exercise of an Option granted under this Plan, such shares of Stock shall also be available under this Plan. If there is any change in the number of shares of Stock due to the declaration of stock dividends, recapitalization resulting in stock split-ups or combinations or exchanges of shares of Stock, or otherwise, the number of shares of Stock available for purchase upon the exercise of Options, the shares of Stock subject to any Option and the exercise price of any outstanding Option shall be appropriately adjusted by the Board or the Stock Option Committee. The Board or the Stock Option Committee shall give notice of any adjustments to each Eligible Person granted an Option under this Plan and such adjustments shall be effective and binding on all Eligible Persons. If because of one or more recapitalizations, reorganizations or other corporate events, the holders of outstanding Stock receive something other than shares of Stock then, upon exercise of an Option, the Eligible Person will receive what the holder would have owned if the holder had exercised the Option immediately before the first such corporate event and not disposed of anything the holder received as a result of the corporate event. 4 Eligible Persons. (a) With respect to ISOs, an Eligible Person means any individual who has been employed by the Corporation or by any subsidiary of the Corporation for a continuous period of at least six months. (b) With respect to NSOs, an Eligible Person means: (i) any individual who has been employed by the Corporation or by any subsidiary of the Corporation for a continuous period of at least six months, (ii) any director of the Corporation or any subsidiary of the Corporation or (iii) any consultant of the Corporation or any subsidiary of the Corporation. 5 Grant of Options. The Board or the Stock Option Committee has the right to issue the Options established by this Plan to Eligible Persons. The Board or the Stock Option Committee shall follow the procedures prescribed for it elsewhere in this Plan. A grant of Options shall be set forth in writing signed on behalf of the Corporation or by a majority of the members of the Stock Option Committee. The writing shall identify whether the Option being granted is an ISO or an NSO and shall set forth the terms that govern the Option. The terms shall be determined by the Board or the Stock Option Committee and may include, among other terms, the number of shares of Stock that may be acquired pursuant to the exercise of the Options, when the Options may be exercised, the period for which the Option is granted and including the expiration date, the effect on the Options if the Eligible Person terminates employment and whether the Eligible Person may deliver shares of Stock or exchange the Option for a cashless exercise to pay for the shares of Stock to be purchased by the exercise of the Option. However, no term shall be set forth in the writing which is inconsistent with any of the terms of this Plan. The terms of an Option granted to an Eligible Person may differ from the terms of an Option granted to another Eligible Person and may differ from the terms of an earlier Option granted to the same Eligible Person. 6 Option Price. The option price per share shall be determined by the Board or the Stock Option Committee at the time any Option is granted and shall be not less than: (i) in the case of an ISO, the fair market value, (ii) in the case of an ISO granted to a ten percent or greater stockholder, 110 percent of the fair market value or (iii) in the case of an NSO, not less than the fair market value (but in no event less than the par value) of one share of Stock on the date the Option is granted, as determined by the Board or the Stock Option Committee. Fair market value as used herein shall be: (a) If shares of Stock shall be traded on an exchange or over-the-counter market, the mean between the high and low sales prices of Stock on such exchange or over-the-counter market on which such shares shall be traded on that date, or if such exchange or over-the-counter market is closed or if no shares shall have traded on such date, on the last preceding date on which such shares shall have traded. (b) If shares of Stock shall not be traded on an exchange or over-the-counter market, the value as determined by a recognized appraiser as selected by the Board or the Stock Option Committee or pursuant to Section 12 herein. 7 Purchase of Shares. An Option shall be exercised by the tender to the Corporation of the full purchase price of the Stock with respect to which the Option is exercised and written notice of the exercise. The purchase price of the Stock shall be in United States dollars, payable in cash, check, Promissory Note secured by the Shares issued through exercise of the related Options, or in property, or Corporation stock or by Option exchange for a cashless exercise, if so permitted by the Board or the Stock Option Committee in accordance with the discretion granted in Paragraph 5 hereof, having a value equal to such purchase price. The Corporation shall not be required to issue or deliver any certificates for shares of Stock purchased upon the exercise of an Option prior to: (i) if requested by the Corporation, the filing with the Corporation by the Eligible Person of a representation in writing that it is the Eligible Person's then present intention to acquire the Stock being purchased for investment and not for resale and/or (ii) the completion of any registration or other qualification of such shares under any government regulatory body, which the Corporation shall determine to be necessary or advisable. 8 Grant of Reload Options. In granting an Option under this Plan, the Board or the Stock Option Committee may include a Reload Option provision therein, subject to the provisions set forth in Paragraph 20 herein. A Reload Option provision provides that if the Eligible Person pays the exercise price of shares of Stock to be purchased by the exercise of an ISO, NSO or another Reload Option (the "Original Option") by delivering to the Corporation shares of Stock already owned by the Eligible Person (the "Tendered Shares"), the Eligible Person shall receive a Reload Option which shall be a new Option to purchase shares of Stock equal in number to the tendered shares. The terms of any Reload Option shall be determined by the Board or the Stock Option Committee consistent with the provisions of this Plan. 9 Stock Option Committee. The Stock Option Committee may be appointed from time to time by the Corporation's Board of Directors. The Board may from time to time remove members from or add members to the Stock Option Committee. The Stock Option Committee shall be constituted so as to permit the Plan to comply in all respects with the provisions set forth in Paragraph 20 herein. The members of the Stock Option Committee may elect one of its members as its chairman. The Stock Option Committee shall hold its meetings at such times and places as its chairman shall determine. A majority of the Stock Option Committee's members present in person shall constitute a quorum for the transaction of business. All determinations of the Stock Option Committee will be made by the majority vote of the members constituting the quorum. The members may participate in a meeting of the Stock Option Committee by conference telephone or similar communications equipment by means of which all members participating in the meeting can hear each other. Participation in a meeting in that manner will constitute presence in person at the meeting. Any decision or determination reduced to writing and signed by all members of the Stock Option Committee will be effective as if it had been made by a majority vote of all members of the Stock Option Committee at a meeting that is duly called and held. 10 Administration of Plan. In addition to granting Options and to exercising the authority granted to it elsewhere in this Plan, the Board or the Stock Option Committee is granted the full right and authority to interpret and construe the provisions of this Plan, promulgate, amend and rescind rules and procedures relating to the implementation of the Plan and to make all other determinations necessary or advisable for the administration of the Plan, consistent, however, with the intent of the Corporation that Options granted or awarded pursuant to the Plan comply with the provisions of Paragraphs 20 and 21 herein. All determinations made by the Board or the Stock Option Committee shall be final, binding and conclusive on all persons including the Eligible Person, the Corporation and its stockholders, employees, officers and directors and consultants. No member of the Board or the Stock Option Committee will be liable for any act or omission in connection with the administration of this Plan unless it is attributable to that member's willful misconduct. 11 Provisions Applicable to ISOs. The following provisions shall apply to all ISOs granted by the Board or the Stock Option Committee and are incorporated by reference into any writing granting an ISO: (a) An ISO may only be granted within ten (10) years from the date of this Plan, which is the date that this Plan was originally adopted by the Corporation's Board of Directors. (b) An ISO may not be exercised after the expiration of ten (10) years from the date the ISO is granted. (c) The option price may not be less than the fair market value of the Stock at the time the ISO is granted. (d) An ISO is not transferable by the Eligible Person to whom it is granted and is exercisable during his or her lifetime only by the Eligible Person. (e) If the Eligible Person receiving the ISO owns at the time of the grant stock possessing more than ten (10%) percent of the total combined voting power of all classes of stock of the employer corporation or of its parent or subsidiary corporation (as those terms are defined in the Code), then the option price shall be at least 110% of the fair market value of the Stock and the ISO shall not be exercisable after the expiration of five (5) years from the date the ISO is granted. (f) The aggregate fair market value (determined at the time the ISO is granted) of the Stock with respect to which the ISO is first exercisable by the Eligible Person during any calendar year (under this Plan and any other incentive stock option plan of the Corporation) shall not exceed $100,000. (g) Even if the shares of Stock that are issued upon exercise of an ISO are sold within one year following the exercise of such ISO so that the sale constitutes a disqualifying disposition for ISO treatment under the Code, no provision of this Plan shall be construed as prohibiting such a sale. (h) This Plan was adopted by the Corporation on the 26th day of June 2000 by virtue of its approval by the Corporation's Board of Directors and the majority shareholders of the Corporation. 12 Determination of Fair Market Value. In granting ISOs under this Plan, the Board or the Stock Option Committee shall make a good faith determination as to the fair market value of the Stock at the time of granting the ISO. 13 Restrictions on Issuance of Stock. The Corporation shall not be obligated to sell or issue any shares of Stock pursuant to the exercise of an Option unless the Stock with respect to which the Option is being exercised is at that time effectively registered or exempt from registration under the Securities Act of 1933, as amended, and any other applicable laws, rules and regulations. The Corporation may condition the exercise of an Option granted in accordance herewith upon receipt from the Eligible Person, or any other purchaser thereof, of a written representation that at the time of such exercise it is his or her then present intention to acquire the shares of Stock for investment and not with a view to, or for sale in connection with, any distribution thereof; except that, in the case of a legal representative of an Eligible Person, "distribution" shall be defined to exclude distribution by will or under the laws of descent and distribution. Prior to issuing any shares of Stock pursuant to the exercise of an Option, the Corporation shall take such steps as it deems necessary to satisfy any withholding tax obligations imposed upon it by any level of government. 14 Exercise in the Event of Death or Termination of Employment. (a) If an optionee shall die: (i) while an employee of the Corporation or a Subsidiary or (ii) within three months after termination of his employment with the Corporation or a Subsidiary because of his disability or retirement, his Options may be exercised, to the extent that the optionee shall have been entitled to do so on the date of his death, by the person or persons to whom the optionee's right under the Option pass by will or applicable law, or if no such person has such right, by his executors or administrators, at any time, or from time to time. In the event of termination of employment because of his death while an employee or because of disability or retirement, his Options may be exercised not later than the expiration date specified in Paragraph 5 or one year after the optionee's death, whichever date is earlier. (b) If an optionee's employment by the Corporation or a Subsidiary shall terminate because of his disability and such optionee has not died within the following three months, he may exercise his Options, to the extent that he shall have been entitled to do so at the date of the termination of his employment, at any time, or from time to time, but not later than the expiration date specified in Paragraph 5 hereof or one year after termination of employment, whichever date is earlier. (c) If an optionee's employment shall terminate by reason of his retirement in accordance with the terms of the Corporation's tax-qualified retirement plans if any or with the consent of the Board or the Stock Option Committee or involuntarily other than by termination for cause and such optionee has not died within the following three months he may exercise his Option to the extent he shall have been entitled to do so at the date of the termination of his employment at any time and from to time, but not later than the expiration date specified in Paragraph 5 hereof or thirty (30) days after termination of employment, whichever date is earlier. For purposes of this Paragraph 14, termination for cause shall mean: (i) termination of employment for cause as defined in the optionee's Employment Agreement or (ii) in the absence of an Employment Agreement for the optionee, termination of employment by reason of the optionee's commission of a felony, fraud or willful misconduct which has resulted, or is likely to result, in substantial and material damage to the Corporation or a Subsidiary as the Board or the Stock Option Committee, in its sole discretion, may determine. (d) If an optionee's employment shall terminate for any reason, voluntarily or otherwise, other than by death, disability or retirement, all right to exercise his Option shall terminate at the date of such termination of employment absent specific provisions in the optionee's Option Agreement. 15 Corporate Events. In the event of the proposed dissolution or liquidation of the Corporation, a proposed sale of all or substantially all of the assets of the Corporation, a merger or tender for the Corporation's shares of Common Stock, the Board of Directors may declare that each Option granted under this Plan shall terminate as of a date to be fixed by the Board of Directors; provided that not less than thirty (30) days written notice of the date so fixed shall be given to each Eligible Person holding an Option, and each such Eligible Person shall have the right, during the period of thirty (30) days preceding such termination, to exercise his Option as to all or any part of the shares of Stock covered thereby, including shares of Stock as to which such Option would not otherwise be exercisable. Nothing set forth herein shall extend the term set for purchasing the shares of Stock set forth in the Option. 16 No Guarantee of Employment. Nothing in this Plan or in any writing granting an Option will confer upon any Eligible Person the right to continue in the employ of the Eligible Person's employer or will interfere with or restrict in any way the right of the Eligible Person's employer to discharge such Eligible Person at any time for any reason whatsoever, with or without cause. 17 Non-transferability. No Option granted under the Plan shall be transferable. During the lifetime of the optionee an Option shall be exercisable only by him. 18 No Rights as Stockholder. No optionee shall have any rights as a stockholder with respect to any shares subject to his Option prior to the date of issuance to him of a certificate or certificates for such shares. 19 Amendment and Discontinuance of Plan. The Corporation's Board of Directors may amend, suspend or discontinue this Plan at any time. However, no such action may prejudice the rights of any Eligible Person who has prior thereto been granted Options under this Plan. Further, no amendment to this Plan which has the effect of: (a) increasing the aggregate number of shares of Stock subject to this Plan (except for adjustments pursuant to Paragraph 3 herein) or (b) changing the definition of Eligible Person under this Plan may be effective unless and until approval of the stockholders of the Corporation is obtained in the same manner as approval of this Plan is required. The Corporation's Board of Directors is authorized to seek the approval of the Corporation's stockholders for any other changes it proposes to make to this Plan which require such approval; however, the Board of Directors may modify the Plan, as necessary, to effectuate the intent of the Plan as a result of any changes in the tax, accounting or securities laws treatment of Eligible Persons and the Plan, subject to the provisions set forth in this Paragraph 19, and Paragraph 20. 20 Compliance with Code. The aspects of this Plan on ISOs is intended to comply in every respect with Section 422 of the Code and the regulations promulgated thereunder. In the event any future statute or regulation shall modify the existing statute, the aspects of this Plan on ISOs shall be deemed to incorporate by reference such modification. Any stock option agreement relating to any Option granted pursuant to this Plan outstanding and unexercised at the time any modifying statute or regulation becomes effective shall also be deemed to incorporate by reference such modification and no notice of such modification need be given to optionee. If any provision of the aspects of this Plan on ISOs is determined to disqualify the shares purchasable pursuant to the Options granted under this Plan from the special tax treatment provided by Code Section 422, such provision shall be deemed null and void and to incorporate by reference the modification required qualifying the shares for said tax treatment. 21 Compliance With Other Laws and Regulations. The Plan, the grant and exercise of Options thereunder, and the obligation of the Corporation to sell and deliver Stock under such Options, shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation shall not be required to issue or deliver any certificates for shares of Stock prior to: (a) the listing of such shares on any stock exchange or over-the-counter market on which the Stock may then be listed, if applicable, and (b) the completion of any registration or qualification of such shares under any federal or state law, or any ruling or regulation of any government body which the Corporation shall, in its sole discretion, determine to be necessary or advisable. Moreover, no Option may be exercised if its exercise or the receipt of Stock pursuant thereto would be contrary to applicable laws. 22 Disposition of Shares. In the event any share of Stock acquired by an exercise of an Option granted under the Plan shall be transferable within two years of the date such Option was granted or within one year after the transfer of such Stock pursuant to such exercise, the optionee shall give prompt written notice thereof to the Corporation or the Stock Option Committee. 23 Name. The Plan shall be known as the "NEW MILLENNIUM MEDIA INTERNATIONAL, INC. 2000 Stock Option Plan". 24 Notices. Any notice hereunder shall be in writing and sent by certified mail, return receipt requested or by facsimile transmission (with electronic or written confirmation of receipt) and when addressed to the Corporation or the Committee shall be sent to New Millennium Media International, Inc., Attention: John Thatch, Suite 300, 101 Philippe Parkway, Safety Harbor, Florida 34695, subject to the right of either party to designate at any time hereafter in writing some other address, facsimile number or person to whose attention such notice shall be sent. 25 Headings. The headings preceding the text of Sections and subparagraphs hereof are inserted solely for convenience of reference, and shall not constitute a part of this Plan nor shall they affect its meaning, construction or effect. 26 Effective Date. This Plan, the New Millennium Media International, Inc. 2000 Stock Option Plan was adopted by the Board of Directors and majority shareholders of the Corporation on June 26th, 2000 The effective date of the Plan shall be the same date. Dated as of June 26th, 2000 NEW MILLENNIUM MEDIA INTERNATIONAL, INC. By: ------------------------------------ John Thatch, President [NSO GRANT FORM] NEW MILLENNIUM MEDIA INTERNATIONAL, INC. Suite 300, 101 Philippe Parkway Safety Harbor, Florida 34695 Date: _______________ Dear _____________: The Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (the "Corporation") is pleased to award you an Option pursuant to the provisions of the New Millennium Media International, Inc. 2000 Stock Option Plan (the "Plan"). This letter will describe the Option granted to you. Attached to this letter is a copy of the Plan. The terms of the Plan also set forth provisions governing the Option granted to you. Therefore, in addition to reading this letter you should also read the Plan. Your signature on this letter is an acknowledgment to us that you have read and understand the Plan and that you agree to abide by its terms. All terms not defined in this letter shall have the same meaning as in the Plan. 1 Type of Option. You are granted an NSO. Please see in particular Sections 4, 5 and 11 of the Plan. 2 Rights and Privileges. Subject to the conditions hereinafter set forth, we grant you the right to purchase _______ shares of Common Stock ("Common Stock") at $_________ per share, the current fair market value of a share of Common Stock. The right to purchase the shares of Common Stock accrues in _____________ installments over the time periods described below: The right to acquire __________ shares accrues on __________. The right to acquire __________ shares accrues on __________. 3 Time of Exercise. The Option may be exercised at any time and from time to time beginning when the right to purchase the shares of Common Stock accrues and ending when they terminate as provided in Section 5 of this letter. 4 Method of Exercise. The Options shall be exercised by written notice to the Chairman of the Board of Directors at the Corporation's principal place of business. The notice shall set forth the number of shares of Common Stock to be acquired and shall contain a check payable to the Corporation in full payment for the Common Stock or that number of already owned shares of Common Stock equal in value to the total Exercise Price of the Option. We shall make delivery of the shares of Common Stock subject to the conditions described in Section 13 of the Plan. 5 Termination of Option. To the extent not exercised, the Option shall terminate upon the first to occur of the following dates: (a) ___________, 200___, being __________ years from the date of grant pursuant to the provisions of Section 2 of this Agreement; or (b) Except as otherwise provided for herein, upon the termination of your employment with the Corporation and any of its subsidiaries Plan for any reason. (c) The expiration of 12 months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan, if such employment termination occurs by reason of your death, permanent disability (as defined herein) or retirement. As used herein, "permanent disability" means your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 6 Securities Laws. The Option and the shares of Common Stock underlying the Option have not been registered under the Securities Act of 1933, as amended (the "Act"). The Corporation has no obligations to ever register the Option or the shares of Common Stock underlying the Option. All shares of Common Stock acquired upon the exercise of the Option shall be "restricted securities" as that term is defined in Rule 144 promulgated under the Act. The certificate representing the shares shall bear an appropriate legend restricting their transfer. Such shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and the Corporation has been furnished with an opinion of counsel satisfactory in form and substance to the Corporation that such registration is not required. 7 Binding Effect. The rights and obligations described in this letter shall inure to the benefit of and be binding upon both of us, and our respective heirs, personal representatives, successors and assigns. 8 Date of Grant. The Option shall be treated as having been granted to you on the date of this letter even though you may sign it at a later date. Very truly yours, By: __________________________ President AGREED AND ACCEPTED: ______________________________ Date: ________________________ [ISO GRANT FORM] NEW MILLENNIUM MEDIA INTERNATIONAL, INC. Suite 300, 101 Philippe Parkway Safety Harbor, Florida 34695 Date: _______________ Dear _____________: The Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (the "Corporation") is pleased to award you an Option pursuant to the provisions of the New Millennium Media International, Inc. 2000 Common Stock Option Plan (the "Plan"). This letter will describe the Option granted to you. Attached to this letter is a copy of the Plan. The terms of the Plan also set forth provisions governing the Option granted to you. Therefore, in addition to reading this letter you should also read the Plan. Your signature on this letter is an acknowledgment to us that you have read and understand the Plan and that you agree to abide by its terms. All terms not defined in this letter shall have the same meaning as in the Plan. 1 Type of Option. You are granted an ISO. Please see in particular Section 11 of the Plan. 2 Rights and Privileges. Subject to the conditions hereinafter set forth, we grant you the right to purchase ________ shares of Common Stock at $_______ per share, the current fair market value of a share of Common Stock. The right to purchase the shares of Common Stock accrues in ___________ installments over the time periods described below: The right to acquire __________ shares accrues on __________. The right to acquire __________ shares accrues on __________. The right to acquire __________ shares accrues on __________. 3 Time of Exercise. The Option may be exercised at any time and from time to time beginning when the right to purchase the shares of Common Stock accrues and ending when they terminate as provided in Section 5 of this letter. 4 Method of Exercise. The Options shall be exercised by written notice to the Chairman of the Board of Directors at the Corporation's principal place of business. The notice shall set forth the number of shares of Common Stock to be acquired and shall contain a check payable to the Corporation in full payment for the Common Stock or that number of already owned shares of Common Stock equal in value to the total Exercise Price of the Option. We shall make delivery of the shares of Common Stock subject to the conditions described in Section 13 of the Plan. 5 Termination of Option. To the extent not exercised, the Option shall terminate upon the first to occur of the following dates: (a) _________, 200___, being ____________ years from the date of grant pursuant to the provisions of Section 2 of this Agreement; or (b) The expiration of thirty (30) days following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan for any reason, other than by reason of death or permanent disability. As used herein, "permanent disability" means your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; or (c) The expiration of 12 months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan, if such employment termination occurs by reason of your death or by reason of your permanent disability (as defined above). 6 Securities Laws. The Option and the shares of Common Stock underlying the Option have not been registered under the Securities Act of 1933, as amended (the "Act"). The Corporation has no obligations to ever register the Option or the shares of Common Stock underlying the Option. All shares of Common Stock acquired upon the exercise of the Option shall be "restricted securities" as that term is defined in Rule 144 promulgated under the Act. The certificate representing the shares shall bear an appropriate legend restricting their transfer. Such shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and the Corporation has been furnished with an opinion of counsel satisfactory in form and substance to the Corporation that such registration is not required. 7 Binding Effect. The rights and obligations described in this letter shall inure to the benefit of and be binding upon both of us, and our respective heirs, personal representatives, successors and assigns. 8 Date of Grant. The Option shall be treated as having been granted to you on the date of this letter even though you may sign it at a later date. Very truly yours, By: __________________________ President AGREED AND ACCEPTED: ______________________________ Date: ________________________ [NSO GRANT FORM WITH RELOAD OPTIONS] NEW MILLENNIUM MEDIA INTERNATIONAL, INC. Suite 300, 101 Philippe Parkway Safety Harbor, Florida 34695 Date: _______________ Dear _____________: The Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (the "Corporation") is pleased to award you an Option pursuant to the provisions of the New Millennium Media International, Inc. 2000 Common Stock Option Plan (the "Plan"). This letter will describe the Option granted to you. Attached to this letter is a copy of the Plan. The terms of the Plan also set forth provisions governing the Option granted to you. Therefore, in addition to reading this letter you should also read the Plan. Your signature on this letter is an acknowledgment to us that you have read and understand the Plan and that you agree to abide by its terms. All terms not defined in this letter shall have the same meaning as in the Plan. 1 Type of Option. You are granted an NSO with Reload Options. Please see in particular Sections 8 and 11 of the Plan. 2 Rights and Privileges. (a) Subject to the conditions hereinafter set forth, we grant you the right to purchase _________ shares of Common Stock at $_________ per share, the current fair market value of a share of Common Stock. The right to purchase the shares of Common Stock accrues in ___________ installments over the time periods described below: The right to acquire __________ shares accrues on __________. The right to acquire __________ shares accrues on __________. (b) In addition to the Option granted hereby (the "Underlying Option"), the Corporation will grant you a reload option (the "Reload Option") as hereinafter provided. A Reload Option is hereby granted to you if you acquire shares of Common Stock pursuant to the exercise of the Underlying Option and pay for such shares of Common Stock with shares of Common Stock already owned by you (the "Tendered Shares"). The Reload Option grants you the right to purchase shares of Common Stock equal in number to the number of Tendered Shares. The date on which the Tendered Shares are tendered to the Corporation in full or partial payment of the purchase price for the shares of Common Stock acquired pursuant to the exercise of the Underlying Option is the Reload Grant Date. The exercise price of the Reload Option is the fair market value of the Tendered Shares on the Reload Grant Date. The fair market value of the Tendered Shares shall be the low bid price per share of the Corporation's Common Stock on the Reload Grant Date. The Reload Option shall vest equally over a period of ____________ (____) years, commencing on the first anniversary of the Reload Grant Date, and on each anniversary of the Reload Grant Date thereafter; however, no Reload Option shall vest in any calendar year if it would allow you to purchase for the first time in that calendar year shares of Common Stock with a fair market value in excess of $100,000, taking into account ISOs previously granted to you. The Reload Option shall expire on the earlier of: (i) _____________________ (_____)years from the Reload Grant Date, (ii) in accordance with Paragraph 5(b) or (iii) in accordance with Paragraph 5(c) as set forth herein. If vesting of the Reload Option is deferred then the Reload Option shall vest in the next calendar year subject, however, to the deferral of vesting previously provided. Except as provided herein the Reload Option is subject to all of the other terms and provisions of this Agreement governing Options. 3 Time of Exercise. The Option may be exercised at any time and from time to time beginning when the right to purchase the shares of Common Stock accrues and ending when they terminate as provided in Section 5 of this letter. 4 Method of Exercise. The Options shall be exercised by written notice to the Chairman of the Board of Directors at the Corporation's principal place of business. The notice shall set forth the number of shares of Common Stock to be acquired and shall contain a check payable to the Corporation in full payment for the Common Stock or that number of already owned shares of Common Stock equal in value to the total Exercise Price of the Option. We shall make delivery of the shares of Common Stock subject to the conditions described in Section 13 of the Plan. 5 Termination of Option. To the extent not exercised, the Option shall terminate upon the first to occur of the following dates: (a) ______________, 200____, being __________ years from the date of grant pursuant to the provisions of Section 2 of this Agreement; or (b) The expiration of three months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan for any reason; other than by reason of death or permanent disability. As used herein, "permanent disability" means your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; or (c) The expiration of 12 months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan, if such employment termination occurs by reason of your death or by reason of your permanent disability (as defined above). 6. Securities Laws. The Option and the shares of Common Stock underlying the Option have not been registered under the Securities Act of 1933, as amended (the "Act"). The Corporation has no obligations to ever register the Option or the shares of Common Stock underlying the Option. All shares of Common Stock acquired upon the exercise of the Option shall be "restricted securities" as that term is defined in Rule 144 promulgated under the Act. The certificate representing the shares shall bear an appropriate legend restricting their transfer. Such shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and the Corporation has been furnished with an opinion of counsel satisfactory in form and substance to the Corporation that such registration is not required. 7. Binding Effect. The rights and obligations described in this letter shall inure to the benefit of and be binding upon both of us, and our respective heirs, personal representatives, successors and assigns. 8. Date of Grant. The Option shall be treated as having been granted to you on the date of this letter even though you may sign it at a later date. Very truly yours, By: __________________________ President AGREED AND ACCEPTED: ______________________________ Date: ________________________ [ISO GRANT FORM WITH RELOAD OPTIONS] NEW MILLENNIUM MEDIA INTERNATIONAL, INC. Suite 300, 101 Philippe Parkway Safety Harbor, Florida 34695 Date: _______________ Dear _____________: The Board of Directors of NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (the "Corporation") is pleased to award you an Option pursuant to the provisions of the New Millennium Media International, Inc. 2000 Common Stock Option Plan (the "Plan"). This letter will describe the Option granted to you. Attached to this letter is a copy of the Plan. The terms of the Plan also set forth provisions governing the Option granted to you. Therefore, in addition to reading this letter you should also read the Plan. Your signature on this letter is an acknowledgment to us that you have read and understand the Plan and that you agree to abide by its terms. All terms not defined in this letter shall have the same meaning as in the Plan. 1. Type of Option. You are granted an ISO with Reload Options. Please see in particular Sections 8 and 11 of the Plan. 2. Rights and Privileges. (a) Subject to the conditions hereinafter set forth, we grant you the right to purchase _________ shares of Common Stock at $____________ per share, the current fair market value of a share of Common Stock. The right to purchase the shares of Common Stock accrues in ______________ installments over the time periods described below: The right to acquire __________ shares accrues on __________. The right to acquire __________ shares accrues on __________. (b) In addition to the Option granted hereby (the "Underlying Option"), the Corporation will grant you a reload option (the "Reload Option") as hereinafter provided. A Reload Option is hereby granted to you if you acquire shares of Common Stock pursuant to the exercise of the Underlying Option and pay for such shares of Common Stock with shares of Common Stock already owned by you (the "Tendered Shares"). The Reload Option grants you the right to purchase shares of Common Stock equal in number to the number of Tendered Shares. The date on which the Tendered Shares are tendered to the Corporation in full or partial payment of the purchase price for the shares of Common Stock acquired pursuant to the exercise of the Underlying Option is the Reload Grant Date. The exercise price of the Reload Option is the fair market value of the Tendered Shares on the Reload Grant Date. The fair market value of the Tendered Shares shall be the low bid price per share of the Corporation's Common Stock on the Reload Grant Date. The Reload Option shall vest equally over a period of ___________ (____)years, commencing on the first anniversary of the Reload Grant Date, and on each anniversary of the Reload Grant Date thereafter; however, no Reload Option shall vest in any calendar year if it would allow you to purchase for the first time in that calendar year shares of Common Stock with a fair market value in excess of $100,000, taking into account ISOs previously granted to you. The Reload Option shall expire on the earlier of (i) __________________ (________) years from the Reload Grant Date, or (ii) in accordance with Paragraph 5(b), or (iii) in accordance with Paragraph 5(c) as set forth herein. If vesting of the Reload Option is deferred, then the Reload Option shall vest in the next calendar year, subject, however, to the deferral of vesting previously provided. Except as provided herein the Reload Option is subject to all of the other terms and provisions of this Agreement governing Options. 3. Time of Exercise. The Option may be exercised at any time and from time to time beginning when the right to purchase the shares of Common Stock accrues and ending when they terminate as provided in Section 5 of this letter. 4. Method of Exercise. The Options shall be exercised by written notice to the Chairman of the Board of Directors at the Corporation's principal place of business. The notice shall set forth the number of shares of Common Stock to be acquired and shall contain a check payable to the Corporation in full payment for the Common Stock or that number of already owned shares of Common Stock equal in value to the total Exercise Price of the Option. We shall make delivery of the shares of Common Stock subject to the conditions described in Section 13 of the Plan. 5. Termination of Option. To the extent not exercised, the Option shall terminate upon the first to occur of the following dates: (a) ___________, 200____, being _________________ years from the date of grant pursuant to the provisions of Section 2 of this Agreement; or (b) The expiration of three months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan for any reason, other than by reason of death or permanent disability. As used herein, "permanent disability" means your inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; or (c) The expiration of 12 months following the date your employment terminates with the Corporation and any of its subsidiaries included in the Plan, if such employment termination occurs by reason of your death or by reason of your permanent disability (as defined above). 6. Securities Laws. The Option and the shares of Common Stock underlying the Option have not been registered under the Securities Act of 1933, as amended (the "Act"). The Corporation has no obligations to ever register the Option or the shares of Common Stock underlying the Option. All shares of Common Stock acquired upon the exercise of the Option shall be "restricted securities" as that term is defined in Rule 144 promulgated under the Act. The certificate representing the shares shall bear an appropriate legend restricting their transfer. Such shares cannot be sold, transferred, assigned or otherwise hypothecated without registration under the Act or unless a valid exemption from registration is then available under applicable federal and state securities laws and the Corporation has been furnished with an opinion of counsel satisfactory in form and substance to the Corporation that such registration is not required. 7. Binding Effect. The rights and obligations described in this letter shall inure to the benefit of and be binding upon both of us, and our respective heirs, personal representatives, successors and assigns. 8. Date of Grant. The Option shall be treated as having been granted to you on the date of this letter even though you may sign it at a later date. Very truly yours, By: __________________________ President AGREED AND ACCEPTED: ______________________________ Date: ________________________ EX-10.1 12 0012.txt IMA CONTRACT EXHIBIT 10.1 IMA CONTRACT WITH NMMI REGARDING PREFERRED STOCK MEMORANDUM OF AGREEMENT April 12, 2000 On the above date in Safety Harbor, Florida through their respective boards of directors Investment Management of America, Inc. and New Millennium Media International, Inc. reached an agreement and began implementation of the terms of the agreement as follows: 1. New Millennium Media International, Inc. needed approximately three million shares of common stock to satisfy overdue contractual obligations of two individuals: W. Cole Leary - one million six hundred fifty six thousand six hundred seventy two (1,656,672) and Mark S. Western - one million three hundred forty three thousand three hundred twenty eight (1,343,328), for a total of three million shares of Common Stock in New Millennium Media International, Inc. 2. New Millennium Media International, Inc. did not have available sufficient shares of common stock to satisfy this requirement, but had available ten million shares of preferred stock. 3. Investment Management of America, Inc. is the owner of approximately twelve million shares of common stock in New Millennium Media International, Inc. 4. New Millennium Media International, Inc. is intending to immediately commence the process of amending its corporate charter to increase its authorization of common stock by fifty million shares and to change the preferences of five million shares of its preferred stock by allowing voting rights. 5. New Millennium Media International, Inc. and Investment Management of America, Inc. agree that Investment Management of America, Inc. will trade with New Millennium Media International, Inc. three million shares of its common stock for three million stares of New Millennium Media International, Inc. preferred stock provided that the preferences of the preferred stock will be changed so that it will have voting rights and all other advantages of the common stock and further provided that when New Millennium Media International, Inc. amends its articles of incorporation to increase the authorization amount for common stock, it will issue to Investment Management of America, Inc. three million shares of common stock in exchange for the three million shares of preferred stock owned by Investment Management of America, Inc. 6. These two corporations have entered into this agreement in good faith in a genuine effort to expedite New Millennium Media International, Inc.'s efforts to increase its capital, i.e., "the Swartz transaction" and to permanently lay to rest the obligations to the two individuals mentioned above in paragraph one. 7. The respective Minutes of Board of Directors meetings for the two contracting corporations that are dated April 12, 2000 pertaining to these issues of this agreement are included by reference in this agreement. Page 1 of 2 8. The respective parties to this agreement recognize and understand and agree that the contracting parties have board member(s) mutual to both contracting corporations and waive any conflict issues that do or could arise from such individuals that serve on both boards either directly or by stock ownership control. Investment Management of America, Inc. By /s/ Gerald C. Parker ------------------------------------------- Gerald C. Parker, Chairman of the Board Attested by: /s/ Larry G. Rightmyer - ---------------------------------------------- Larry G. Rightmyer Secretary/VP/Operations New Millennium Media International, Inc. By /s/ John Thatch ------------------------------------------- John "JT" Thatch, President/CEO Page 2 of 2 EX-10.2 13 0013.txt MERGER AGREEMENT WITH PROGRESSIVE MAILER ARTICLES OF MERGER ------------------ Pursuant to the provisions of the Colorado Business Corporation Act, the undersigned corporations adopt the following Articles of Merger: FIRST: Annexed hereto and made a part hereof is the Agreement and Plan of Merger regarding the merger of Progressive Mailer Corp., a Florida profit corporation, with and into New Millennium Media International, Inc., a Colorado profit corporation (collectively, the "Constituent Corporations"). New Millennium Media International, Inc. shall be the surviving corporation subsequent to the merger. SECOND: The shareholders of Progressive Media Corp. were required to vote for approval of the Agreement and Plan of Merger and the number of shares cast for the Agreement and Plan of Merger by each voting group entitled to vote separately on the merger was sufficient for approval by that voting group. In that there are no shares outstanding of New Millennium Media International, Inc., shareholder approval of the Agreement and Plan of Merger was not required. THIRD: The merger shall become effective upon the close of business on April 30, 1998. IN WITNESS WHEREOF, the undersigned Constituent Corporations, through their respective Presidents, duly executes the above and foregoing Articles of Merger as of this 28th day of April, 1998. NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (a Colorado corporation) By: /s/ Troy H. Lowrie ------------------------------------ Troy H. Lowrie, President PROGRESSIVE MAILER CORP. (a Florida corporation) By: /s/ Troy H. Lowrie ------------------------------------ Troy H. Lowrie, President AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER made April 27, 1998 between New Millennium Media International, Inc. ("New. Millennium"), a corporation organized and existing under the laws of the State of Colorado, and Progressive Mailer Corp. ("Progressive"), a corporation organized and existing under the laws of the State of Florida, being sometimes referred to herein as the "Constituent Corporations." WHEREAS, Progressive's business operations are conducted from its principal office which is located in Denver, Colorado and, consequently, the Board of Directors of Progressive deems it advisable for the general welfare of Progressive and its shareholders that it change its state of domicile from Florida to Colorado; and WHEREAS, New Millennium is a Colorado corporation which was recently formed to consummate a merger of Progressive into New Millennium to effect the change in domicile of Progressive from Florida to Colorado; NOW, THEREFORE, the Constituent Corporations agree that Progressive shall be merged with and into New Millennium as the surviving corporation in accordance with the applicable laws of Florida and Colorado, that the name of the surviving corporation shall continue to be New Millennium Media International, Inc. (which in its capacity as surviving corporation is hereinafter called the "Surviving Corporation"), and that the terms and conditions of the merger and the mode of carrying it into effect shall be as follows: Section 1. Effective Date ------------------------- This merger provided for in this Agreement shall become effective upon execution and filing of Articles of Merger as provided by the laws of the States of Florida and Colorado with the Secretaries of State of the States of Florida and Colorado. However, for all accounting purposes the effective day of the merger shall be as of the close of business on April 30, 1998 (the "Effective Date"). Section 2. Governing Law ------------------------ The Surviving Corporation shall be governed by the laws of the State of Colorado. Section 3. Articles of Incorporation ------------------------------------ The Articles of Incorporation of New Millennium shall be the Articles of Incorporation of the Surviving Corporation from and after the Effective Date, subject to the right of the Surviving Corporation to amend its Articles of Incorporation in accordance with the laws of the State of Colorado. Section 4. Manner Converting Shares ----------------------------------- 4.1 Conversion. The mode of carrying the merger into effect and the manner and basis of converting the shares of Progressive into shares of the Surviving Corporation are as follows: (1) Each share of Common Stock, $.001 par value per share, of Progressive ("Progressive Common Stock") which is issued and outstanding on the Effective Date (other than shares owned by shareholders who have objected to the merger and demanded purchase of their shares in accordance with the provisions of Section 607.1320 of the Florida Business Corporation Act and with respect to which such demands shall not have been withdrawn with the consent of Progressive and New Millennium ("Dissenting Shares") shall, by virtue of the merger and without any action on the part of the holder thereof, be converted into one share of Common Stock, $.001 par value, of New Millennium ("New Millennium Common Stock"). (2) Each share of Progressive Common Stock which is issued and outstanding and owned by Progressive on the Effective Date shall, by virtue of the merger and without any action on the part of Progressive, be retired and cancelled. (3) As of the date of this agreement, there are no shares of New Millennium Common Stock issued and outstanding or held by New Millennium in its treasury. 4.2 Exchange of Certificates As promptly as practicable after the Effective Date, each holder of an outstanding certificate or certificates theretofore representing shares of Progressive Common Stock (other than certificates representing Dissenting Shares) shall surrender the same to Interwest Transfer, Inc., Salt Lake City, Utah ("Exchange Agent"), and shall receive in exchange a certificate or certificates representing the number of full shares of New Millennium Common Stock into which the shares of Progressive Common Stock represented by the certificate or certificates so surrendered shall have been converted. 4.3 Fractional Shares. Fractional shares of New Millennium Common Stock shall not be issued. 4.4 Unexchanged Certificates Until surrendered, each outstanding Certificate which, prior to the Effective Date, represented Progressive Common Stock (other than certificates representing Dissenting Shares) shall be deemed for all purposes, other than the payment of dividends or other distributions, to evidence ownership of the whole number of shares of New Millennium Common Stock into which it was converted, and no dividend or other distribution payable to holders of New Millennium Common Stock as of any date subsequent to the Effective Date shall be paid to the holders of outstanding certificates. There shall be paid to the record holders of the certificates issued in exchange therefor the amount, without interest thereon, of dividends and other distributions which would have been payable with respect to the shares of New Millennium Common Stock represented thereby. 2 Section 5. Terms And Conditions Of Merger ----------------------------------------- The terms and conditions of the merger are as follows: 5.1 Bylaws. The Bylaws of New Millennium as they shall exist on the Effective Date shall be and remain the bylaws of the Surviving Corporation until the same shall be altered, amended and repealed as therein provided. 5.2 Directors and Officers. The directors and officers of the Surviving Corporation shall continue in office until the next annual meeting of shareholders and until their successors shall have been elected and qualified. 5.3 Effect of Merger. On the Effective Date, all the property, rights, privileges, franchises, patents, trademarks, licenses, registrations and other assets of every kind and description of Progressive shall be transferred to, vested in and devolve on the Surviving Corporation without further act or deed, and all property, rights, and every other interest of the Surviving Corporation and Progressive shall be as effectively the property of the Surviving Corporation as they were of the Surviving Corporation and Progressive, respectively. Progressive hereby agrees from time to time, as and when requested by the Surviving Corporation or by its successors or assigns, to execute and deliver or cause to be executed and delivered all such deeds and instruments and to take or cause to be taken such further or other action as the Surviving Corporation may deem necessary or desirable in order to vest in and confirm to the Surviving Corporation title to and possession of any property of Progressive acquired or to be acquired by reason of or as a result of the merger herein provided for and otherwise to carry out the intent and purposes hereof and the proper officers and directors of Progressive and the proper officers and directors of the Surviving Corporation are fully authorized in the name of Progressive or otherwise to take any and all such action. 5.4 Continuation of Obligations. All corporate acts, plans, policies, contracts, approvals and authorizations of Progressive, its shareholders, board of directors, committees elected or appointed by the board of directors, officers and agents, which were valid and effective immediately prior to the Effective Date shall be taken for all purposes as the acts, plans, policies, contracts, approvals and authorizations of the Surviving Corporation and shall be as effective and binding thereon as the same were with respect to Progressive. The employees of Progressive shall become the employees of the Surviving Corporation and continue to be entitled to the same rights and benefits that they enjoyed as employees of Progressive. Any employee plan or agreement of Progressive shall be adopted, effective and binding on the Surviving Corporation as the same were with respect to Progressive. 5.5 Designation of Agent for Service of Process. The Surviving Corporation hereby (1) agrees that it may be served with process in the State of Florida in any proceeding for the enforcement of any obligation of Progressive and in any proceeding for the enforcement of the rights of a dissenting shareholder of Progressive; (2) irrevocably appoints the Secretary of State of the State of Florida as its agent to accept service or process in any such proceedings; and (3) agrees that 3 it will promptly pay to dissenting shareholders of Progressive the amount, if any, to which they shall be entitled pursuant to the laws of the State of Florida. Section 6. Termination Or Abandonment ------------------------------------- Anything in this Agreement or elsewhere to the contrary notwithstanding, this Agreement may be terminated and abandoned by the board of directors of either Constituent Corporation at any time prior to the date of filing Articles of Merger with the Secretaries of State of Florida and Colorado. Section 7. General Provisions ----------------------------- 7.1 Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation, or communication, whether oral or written, between the parties hereto relating to the transactions contemplated herein or the subject matter hereof. 7.2 Headings. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 7.3 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day year first above written. NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation By /s/ Troy H. Lowrie ----------------------------------------- Troy H. Lowrie, President PROGRESSIVE MAILER CORP., a Florida corporation By /s/ Troy H. Lowrie ----------------------------------------- Troy H. Lowrie, President 4 CT CORPORATION SYSTEM 660 East Jefferson Street Tallahassee, FL 32301 Tel. 850 222 1092 Fax 850 222 7615 5-1-98 Ms. Kathy Waterman Brenman Bromberg & Tenebaum PC Mellon Financial Center 1775 Sherman Street, Suite 1001 Denver, CO 80203-4314 RE: Progressive Mailer Corp. merging into: New Millennium Media International, Inc. Order #: 1255521 Dear Ms. Waterman: As instructed, we enclose the following document(s), as issued by the State of Florida: Evidence of Merger filed on 4/30/98 If you have any questions concerning this order, please contact Mary Janiszewski in our Denver office. Thank you for this opportunity to be of service. Very truly yours, CT-Tallahassee Enclosure(s) Via: Federal Expess/Fax /ms Kathy Waterman 303-830-8890 A CCH LEGAL INFORMATION SERVICES COMPANY FLORIDA DEPARTMENT OF STATE Sandra B. Mortham Secretary of State May 1, 1998 C T CORPORATION SYSTEM TALLAHASSEE, FL The Articles of Merger were filed on April 30, 1998, for NEW MILLENNIUM MEDIA INTERNATIONAL, INC., the surviving corporation not authorized to transact business in Florida. Should you have any further questions regarding this matter, please feel free to call (850) 487-6050, the Amendment Filing Section. Cheryl Coulliette Document Specialist Division of Corporations Letter Number: 998A00023972 Division of Corporations - P.O. Box 6327 - Tallahassee, Florida 32314 ARTICLES OF MERGER ------------------ Pursuant to the provisions of the Florida Business Corporation Act, the undersigned corporations adopt the following Articles of Merger: FIRST: Annexed hereto and made a part hereof is the Agreement and Plan of Merger regarding the merger of Progressive Mailer Corp., a Florida profit corporation, with and into New Millennium Media International, Inc., a Colorado profit corporation (collectively, the "Constituent Corporations"). New Millennium Media International, Inc. shall be the surviving corporation subsequent to the merger. SECOND: The merger shall become effective upon the close of business on April 30, 1998. THIRD: In that there are no shares outstanding of New Millennium Media International, Inc., shareholder approval of the Agreement and Plan of Merger was not required. FOURTH: The Agreement and Plan of Merger was adopted by the shareholders of Progressive Media Corp. on April 28, 1998. The Agreement and Plan of Merger was adopted by the Board of Directors of New Millennium Media International, Inc. on April 21, 1998. IN WITNESS WHEREOF, the undersigned Constituent Corporations, through their respective Presidents, duly executes the above and foregoing Articles of Merger as of this 28th day of April, 1998. PROGRESSIVE MAILER CORP. (a Florida corporation) By: /s/ Troy H. Lowrie ------------------------------------ Troy H. Lowrie, President NEW MILLENNIUM MEDIA INTERNATIONAL, INC. (a Colorado corporation) By: /s/ Troy H. Lowrie ------------------------------------ Troy H. Lowrie, President AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER made April 27, 1998 between New Millennium Media International, Inc. ("New Millennium"), a corporation organized and existing under the laws of the State of Colorado, and Progressive Mailer Corp. ("Progressive"), a corporation organized and existing under the laws of the State of Florida, being sometimes referred to herein as the "Constituent Corporations." WHEREAS, Progressive's business operations are conducted from its principal office which is located in Denver, Colorado and, consequently, the Board of Directors of Progressive deems it advisable for the general welfare of Progressive and its shareholders that it change its state of domicile from Florida to Colorado; and WHEREAS, New Millennium is a Colorado corporation which was recently formed to consummate a merger of Progressive into New Millennium to effect the change in domicile of Progressive from Florida to Colorado; NOW, THEREFORE, the Constituent Corporations agree that Progressive shall be merged with and into New Millennium as the surviving corporation in accordance with the applicable laws of Florida and Colorado, that the name of the surviving corporation shall continue to be New Millennium Media International, Inc. (which in its capacity as surviving corporation is hereinafter called the "Surviving Corporation"), and that the terms and conditions of the merger and the mode of carrying it into effect shall be as follows: Section 1 Effective Date ------------------------ This merger provided for in this Agreement shall become effective upon execution and filing of Articles of Merger as provided by the laws of the States of Florida and Colorado with the Secretaries of State of the States of Florida and Colorado. However, for all accounting purposes the effective day of the merger shall be as of the close of business on April 30, 1998 (the "Effective Date"). Section 2. Governing Law ------------------------ The Surviving Corporation shall be governed by the laws of the State of Colorado. Section 3 Articles of Incorporation ----------------------------------- The Articles of Incorporation of New Millennium shall be the Articles of Incorporation of the Surviving Corporation from and after the Effective Date, subject to the right of the Surviving Corporation to amend its Articles of Incorporation in accordance with the laws of the State of Colorado. Section 4 Manner of Converting Shares ------------------------------------- 4.1 Conversion. The mode of carrying the merger into effect and the manner and basis of converting the shares of Progressive into shares of the Surviving Corporation are as follows: (1) Each share of Common Stock, $.001 par value per share, of Progressive ("Progressive Common Stock") which is issued and outstanding on the Effective Date (other than shares owned by shareholders who have objected to the merger and demanded purchase of their shares in accordance with the provisions of Section 607.1320 of the Florida Business Corporation Act and with respect to which such demands shall not have been withdrawn with the consent of Progressive and New Millennium ("Dissenting Shares") shall, by virtue of the merger and without any action on the part of the holder thereof, be converted into one share of Common Stock, $.001 par value, of New Millennium ("New Millennium Common Stock"). (2) Each share of Progressive Common Stock which is issued and outstanding and owned by Progressive on the Effective Date shall, by virtue of the merger and without any action on the part of Progressive, be retired and cancelled. (3) As of the date of this agreement, there are no shares of New Millennium Common Stock issued and outstanding or held by New Millennium in its treasury. 4.2 Exchange of Certificates As promptly as practicable after the Effective Date, each holder of an outstanding certificate or certificates theretofore representing shares of Progressive Common Stock (other than certificates representing Dissenting Shares) shall surrender the same to Interwest Transfer, Inc., Salt Lake City, Utah ("Exchange Agent"), and shall receive in exchange a certificate or certificates representing the number of full shares of New Millennium Common Stock into which the shares of Progressive Common Stock represented by the certificate or certificates so surrendered shall have been converted. 4.3 Fractional Shares. Fractional shares of New Millennium Common Stock shall not be issued. 4.4 Unexchanged Certificates Until surrendered, each outstanding certificate which, prior to the Effective Date, represented Progressive Common Stock (other than certificates representing Dissenting Shares) shall be deemed for all purposes, other than the payment of dividends or other distributions, to evidence ownership of the whole number of shares of New Millennium Common Stock into which it was converted, and no dividend or other distribution payable to holders of New Millennium Common Stock as of any date subsequent to the Effective Date shall be paid to the holders of outstanding certificates. There shall be paid to the record holders of the certificates issued in exchange therefor the amount, without interest thereon, of dividends and other distributions which would have been payable with respect to the shares of New Millennium Common Stock represented thereby. 2 Section 5 Terms And Conditions Of Merger ---------------------------------------- The terms and conditions of the merger are as follows: 5.1 Bylaws. The Bylaws of New Millennium as they shall exist on the Effective Date shall be and remain the bylaws of the Surviving Corporation until the same shall be altered, amended and repealed as therein provided. 5.2 Directors and Officers. The directors and officers of the Surviving Corporation shall continue in office until the next annual meeting of shareholders and until their successors shall have been elected and qualified. 5.3 Effect of Merger On the Effective Date, all the property, rights, privileges, franchises, patents, trademarks, licenses, registrations and other assets of every kind and description of Progressive shall be transferred to, vested in and devolve on the Surviving Corporation without further act or deed, and all property, rights, and every other interest of the Surviving Corporation and Progressive shall be as effectively the property of the Surviving Corporation as they were of the Surviving Corporation and Progressive, respectively. Progressive hereby agrees from time to time, as and when requested by the Surviving Corporation or by its successors or assigns, to execute and deliver or cause to be executed and delivered all such deeds and instruments and to take or cause to be taken such further or other action as the Surviving Corporation may deem necessary or desirable in order to vest in and confirm to the Surviving Corporation title to and possession of any property of Progressive acquired or to be acquired by reason of or as a result of the merger herein provided for and otherwise to carry out the intent and purposes hereof and the proper officers and directors of Progressive and the proper officers and directors of the Surviving Corporation are fully authorized in the name of Progressive or otherwise to take any and all such action. 5.4 Continuation of Obligations. All corporate acts, plans, policies, contracts, approvals and authorizations of Progressive, its shareholders, board of directors, committees elected or appointed by the board of directors, officers and agents, which were valid and effective immediately prior to the Effective Date shall be taken for all purposes as the acts, plans, policies, contracts, approvals and authorizations of the Surviving Corporation and shall be as effective and binding thereon as the same were with respect to Progressive. The employees of Progressive shall become the employees of the Surviving Corporation and continue to be entitled to the same rights and benefits that they enjoyed as employees of Progressive. Any employee plan or agreement of Progressive shall be adopted, effective and binding on the Surviving Corporation as the same were with respect to Progressive. 5.5 Designation of Agent or Service of Process The Surviving Corporation hereby (1) agrees that it may be served with process in the State of Florida in any proceeding for the enforcement of any obligation of Progressive and in any proceeding for the enforcement of the rights of a dissenting shareholder of Progressive; (2) irrevocably appoints the Secretary of State of the State of Florida as its agent to accept service or process in any such proceedings; and (3) agrees that 3 will promptly pay to dissenting shareholders of Progressive the amount, if any, to which they shall be entitled pursuant to the laws of the State of Florida. Section 6 Termination Or Abandonment ------------------------------------ Anything in this Agreement or elsewhere to the contrary notwithstanding, this Agreement may be terminated and abandoned by the board of directors of either Constituent Corporation at any time prior to the date of filing Articles of Merger with the Secretaries of State of Florida and Colorado. Section 7. General Provisions ----------------------------- 7.1 Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation, or communication, whether oral or written, between the parties hereto relating to the transactions contemplated herein or the subject matter hereof. 7.2 Headings. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 7.3 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day year first above written. NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation By /s/ Troy H. Lowrie -------------------------------------------- Troy H. Lowrie, President PROGRESSIVE MAILER CORP., a Florida corporation By /s/ Troy H. Lowrie -------------------------------------------- Troy H. Lowrie, President EX-10.3 14 0014.txt ASSET PURCHASE AGREEMENT WITH LUFAM ASSET PURCHASE AGREEMENT ------------------------ PROGRESSIVE MAILER CORP. Buyer LUFAM TECHNOLOGIES, INC. Seller Dated April 8, 1998 INDEX TO ASSET PURCHASE AGREEMENT ARTICLE 1. PURCHASE AND SALE OF ASSETS 1.01 Sale of Business - Assets being Purchased.............................1 1.02 Purchase Price .......................................................1 1.03 Closing ..............................................................1 ARTICLE 2. WARRANTIES OF SELLER 2.01 Subsidiaries and Affiliates ..........................................1 2.02 Title to Assets.......................................................2 2.03 Authority to Sell.....................................................2 2.04 Financial Records ....................................................2 2.05 Liabilities ..........................................................2 2.06 Absence of Certain Changes ...........................................2 2.07 No Violation .........................................................2 2.08 Taxes.................................................................3 2.09 Litigation ...........................................................3 2.10 Disclosure............................................................3 2.11 Broker's or Finder's Fees.............................................3 2.12 Due Diligence.........................................................3 2.13 Survival of Warranties................................................3 2.14 Other Agreements......................................................3 ARTICLES 3. WARRANTIES OF BUYER 3.01 Due Organization......................................................4 3.02 Authority to Buy......................................................4 3.03 Capitalization........................................................4 3.04 Subsidiaries and Affiliates...........................................4 3.05 Financial Statements..................................................4 3.06 Absence of Undisclosed Liabilities....................................4 3.07 Absence of Certain Changes............................................5 3.08 Litigation............................................................5 3.09 Title.................................................................5 3.10 Tax Returns...........................................................5 3.11 No Violation..........................................................5 3.12 Disclosure............................................................5 3.13 Broker's or Finder's Fees.............................................6 i ARTICLE 4. OPERATION OF BUSINESS 4.01 Seller to Continue Business...........................................6 4.02 Adjustments...........................................................6 4.03 Fees and Expenses.....................................................6 ARTICLE 5. CONDITIONS TO BUYER'S PERFORMANCE 5.01 Performance by Seller.................................................7 5.02 Representations and Warranties True as of the Closing Date............7 5.03 Third Party Consents..................................................7 5.04 No Material Adverse Change............................................7 5.05 Absence of Litigation.................................................7 5.06 Corporate Approvals...................................................7 ARTICLE 6. CONDITIONS OF SELLER'S PERFORMANCE 6.01 Representations and Warranties True as of the Closing Date............8 6.02 Performance By Buyer..................................................8 6.03 Corporate Approvals...................................................8 ARTICLE 7. SELLER'S COVENANTS 7.01 Conduct of Business...................................................8 7.02 Buyer's Investigation.................................................8 7.03 Relinquishment of Name................................................8 ARTICLE 8. INDEMNITY AGREEMENT 8.01 Seller's Indemnity....................................................9 8.02 Buyer's Indemnity.....................................................9 8.03 Indemnity Agreements of the Parties...................................9 ARTICLE 9. TERMINATION DEFAULT REMEDIES 9.01 Termination..........................................................10 9.02 Default Remedies.....................................................10 9.03 Litigation Costs.....................................................10 ARTICLE 10. OPINION OF COUNSEL 10.01 Opinion of Seller's Counsel..........................................10 ii ARTICLE 11. MISCELLANEOUS 11.01 Brokers and Finders..................................................10 11.02 Conditions and Best Efforts..........................................11 11.03 Notices..............................................................11 ARTICLE 12. GENERAL PROVISIONS 12.01 Further Assurances...................................................12 12.02 Waiver...............................................................12 12.03 Entire Agreement.....................................................12 12.04 Binding Effect.......................................................12 12.05 Schedules and Exhibits...............................................12 12.06 Headings.............................................................12 12.07 Governing Law........................................................12 12.08 Assignment...........................................................13 12.09 No Benefit to Third Parties..........................................13 12.10 Counterparts.........................................................13 ATTACHMENTS EXHIBIT 1.01 Schedule of Assets to be Purchased EXHIBIT 2.01 Seller's Subsidiaries and Affiliates EXHIBIT 2.02 Seller's Title to Assets EXHIBIT 2.04 Seller's Financial Records EXHIBIT 2.05 Liabilities of Seller EXHIBIT 2.08 Litigation Pending Against Seller EXHIBIT 5.03 Third Party Consents EXHIBIT 5.06 Seller's Corporate Approvals EXHIBIT 6.03 Buyer's Corporate Approvals EXHIBIT 10 Opinion of Seller's Counsel iii ASSET PURCHASE AGREEMENT Progressive Mailer Corp., a Florida corporation, hereinafter called "Buyer," and Lufam Technologies, Inc., a California corporation (including its subsidiaries and affiliates as set forth herein), hereinafter called "Seller," hereby agree as follows: ARTICLE 1. PURCHASE AND SALE OF ASSETS 1.01. Sale of Business - Assets being Purchased. Seller shall sell, assign, and deliver to Buyer and Buyer shall purchase and accept, on the closing date, all the assets and properties owned by Seller or in which Seller has any right, title, or interest of every kind and description, wherever located, including all property tangible or intangible and real or personal, good will, processes, research and development projects, designs, patents, accounts receivable, bank accounts, cash, securities, claims, contract rights, the right to use names, trade names, trademarks, and copyrights used by Seller in connection with its business and products, all as more specifically described and set forth in Exhibit 1.01, attached hereto. 1.02. Purchase Price. Buyer shall purchase the aforementioned assets for and in consideration of the issuance at closing to Seller of 6.4 million shares of Buyer's common stock ($.001 par value). 1.03. Closing. The sale and purchase described in this Agreement shall be consummated on or before April 14, 1998 ("Closing" or "Closing Date"). Such Closing shall take place at 10:00 a.m. on April 14, 1998, or such other date specified by the parties, at the offices of Brenman Bromberg & Tenenbaum, P.C. In the event the Closing does not occur on or before April 14, 1998 or an extension as may mutually be agreed upon by Buyer and Seller then this Asset Purchase Agreement shall be treated as null and void. ARTICLE 2. WARRANTIES OF SELLER 2.01. Subsidiaries and Affiliates. Seller's subsidiaries and affiliates are as set forth on Exhibit 2.01. 1 2.02. Title to Assets. Seller has good and marketable title to all assets covered by this Agreement including its rights to all patents, know how and intellectual property relating to the products it distributes. Except as disclosed on Exhibit 2.02, the assets are not subject to any mortgage, encumbrance or lien of any kind except minor encumbrances which do not materially interfere with the use of the property in the conduct of the business of Seller. 2.03. Authority to Sell. Seller has complied with all the requirements of any applicable law of the State of California relative to the sale of assets described in this Agreement and that prior to Closing, all of the consents and approvals that may be required by law or by agreements to which Seller may be a party will be obtained. 2.04. Financial Records. Seller will or has provided to Buyer the Seller's financial records for the period from inception to March 15, 1998, which are identified on Exhibit 2.04. Such financial records are correct and complete and are able to be audited as determined by Buyer's accountants. Seller has taken no action and will take no action prior to the Closing to materially change the financial condition of Seller as shown on the financial records delivered pursuant to this section. 2.05. Liabilities. Seller has no liabilities except as set forth on Exhibit 2.05. No liabilities of Seller are being assumed by Buyer. 2.06. Absence of Certain Chance. There has been no material adverse change in the business, properties or financial condition of Seller since March 15, 1998. 2.07. No violation. Consummation of the transactions contemplated by this Agreement will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease or agreement, or any order, judgment, decree, law or regulation to which any property of Seller is subject or by which Seller is bound, except for breaches or defaults which in the aggregate would not have a materially adverse effect on Seller's properties, business operations or financial condition. 2 2.08. Taxes. No required federal, state and local tax returns are delinquent and Seller has no outstanding tax liabilities, including but not limited to income, withholding, property and corporate franchise taxes. 2.09. Litigation. Except as set forth in Exhibit 2.08, there is now no litigation pending against Seller of which it or its officers are aware nor is Seller aware of any threatened litigation that will, might, or could affect consummation of the purchase and sale described in this Agreement or transfer of title of any of the assets in good and marketable condition to Buyer, or may result in a material adverse change in the business in respect to which the assets are operated. 2.10. Disclosure. Neither this Agreement nor any Schedule, Exhibit or certificate delivered in accordance with the terms hereof, or any document or statement in writing which has been supplied by or on behalf of Seller or by any of Seller's directors or officers, in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits any statement of a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact or circumstance known to Seller which materially and adversely affects or which may materially and adversely affect its business, prospects or financial condition or its assets, which has not been set forth in this Agreement, the Schedules, Exhibits, certificates or statements furnished in writing to Buyer in connection with the transactions contemplated by this Agreement. 2.11. Broker's or Finder's Fees. No broker, finder or similar intermediary is entitled to fees in connection with the transactions contemplated by this Agreement by virtue of any action or agreement of Seller. 2.12. Due Diligence. Seller has completed its due diligence review of Buyer. 2.13. Survival of Warranties. Seller agrees that all warranties made by it in this Agreement shall survive the Closing. 2.14. Other Agreements: At Closing, Seller shall execute the following agreements: 3 (a) Assignment of Multi-add Contract; (b) Bill of Sale; and (c) Assignment of Name, Trade Name and Trade Mark ARTICLE 3. WARRANTIES OF BUYER Buyer represents and warrants as follows: 3.01. Due Organization. Buyer is a corporation duly organized and existing under the Laws of the State of Florida and is in good standing. Buyer is in the process of reincorporating in the State of Colorado and should it do so prior to closing, Buyer shall be a corporation duly organized and existing under the Laws of the State of Colorado and shall be in good standing. 3.02. Authority to Buy. This Agreement has been approved in accordance with all applicable laws and Buyer has full power and authority to both execute and perform this contract. 3.03. Capitalization. Buyer's authorized capital stock consists of 50,000,000 shares of Common Stock, ($.001 par value), of which 4,749,000 shares are issued and outstanding, fully paid and nonassessable. There are no options, warrants or rights outstanding to purchase shares of Common Stock from Buyer. 3.04. Subsidiaries and Affiliates. Buyer has no subsidiaries and no affiliated entities. 3.05. Financial Statements. Seller's balance sheet as of ______, ___ 1997, fairly presents the financial condition of Buyer as of said date and in conformity with generally accepted accounting principles consistently applied. 3.06. Absence of Undisclosed Liabilities. Except to the extent reflected or reserved against in Buyer's Balance Sheet, Buyer did not have at that date any liabilities or obligations (secured, unsecured, contingent or otherwise) of a nature customarily reflected in a corporate balance sheet prepared in accordance with generally accepted accounting principles ("Liabilities"). All Liabilities incurred subsequent to the Balance Sheet date have been or will be paid by Buyer. 4 3.07. Absence of Certain Changes. There has been no material adverse change in the business, properties or financial condition of Buyer since March 15, 1998. 3.08. Litigation. There is no litigation, proceeding or investigation pending or, to the knowledge of Buyer, threatened against Buyer which if successful might result in a material adverse change in the business, properties or financial condition of Buyer or which questions the validity or legality of this Agreement or of any action taken or to be taken by Buyer in connection with this Agreement. 3.09. Title. Buyer has good and valid title to all property included in the Balance Sheet, other than property disposed of in the ordinary course of business after said date. The properties of Buyer are not subject to any mortgage, encumbrance or lien of any kind. 3.10. Tax Returns. No required federal, state and local tax returns are delinquent and Buyer has no outstanding tax liabilities, including but not limited to income, withholding, property and corporate franchise taxes. 3.11. No Violation. Consummation of the transactions contemplated by this Agreement will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease or agreement, or any order, judgment, decree, law or regulation to which any property of Buyer is subject or by which Buyer is bound, except for breaches or defaults which in the aggregate would not have a materially adverse effect on Buyer's properties, business operations or financial condition. 3.12. Disclosure. Neither this Agreement nor any Schedule, Exhibit or certificate delivered in accordance with the terms hereof, or any document or statement in writing which has been supplied by or on behalf of Buyer or by any of Buyer's directors or officers, in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits any statement of a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact or circumstance known to Buyer which materially and adversely affects or which may materially and adversely affect its business, prospects or financial condition or its assets, which has not been 5 set forth in this Agreement, the Schedules, Exhibits, certificates or statements furnished in writing to Seller in connection with the transactions contemplated by this Agreement. 3.13. Broker's or Finder's Fees. No broker, finder or similar intermediary is entitled to fees in connection with the transactions contemplated by this Agreement by virtue of any action or agreement of Buyer. ARTICLE 4. OPERATION OF BUSINESS 4.01. Seller to Continue Business. Seller shall continue to operate its business in the normal course from the date of this Agreement until the Closing. Any and all risk of loss or damages to the assets during such period from any and all causes shall be borne by the Seller. 4.02. Adjustments. The operation of Seller's business and related income and expenses up to the close of business on the day before the Closing Date shall be for the account of Seller and thereafter for the account of Purchaser. Expenses, including but not limited to utilities, personal property taxes, rents, real property taxes, wages, vacation pay, payroll taxes, and fringe benefits of employees of Seller, shall be prorated between Seller and Purchaser as of the close of business on the Closing Date, the proration to be made and paid, insofar as reasonably possible, on the Closing Date, with settlement of any remaining items to be made within 30 days following the Closing Date. 4.03. Fees and Expenses. Legal, accounting and other fees, costs and expenses to be incurred by each party regarding this Agreement and the transactions contemplated hereby shall be paid by the party incurring them. ARTICLE 5. CONDITIONS TO BUYER'S PERFORMANCE Absent a waiver in writing, all obligations of the Buyer under this Agreement are subject to satisfaction of the following conditions on or before the Closing Date: 6 5.01. Performance by Seller. Seller shall have performed, satisfied and complied with all covenants, agreements, and conditions required by this Agreement to be performed or complied with by it, on or before the Closing Date. 5.02. Representations and Warranties True as of the Closing Date. Except as otherwise permitted by this Agreement, all representations and warranties by Seller in this Agreement shall be true on and as of the Closing Date as though made at that time. 5.03. Third Party Consents. All consents and approvals required to be given by third parties shall have been obtained and Buyer shall have been furnished with appropriate evidence reasonably satisfactory to it and its counsel of the granting of such consents and approvals, all of which shall be attached hereto as Exhibit 5.03. 5.04. No Material Adverse Chance. During the period from the date of the most recent financial record set forth in Exhibit 2.04 to the Closing Date there shall not have been any material adverse change in the financial condition or results of operations of Seller and Seller has not sustained any material loss or damage to its assets, whether or not insured, that materially affects its ability to conduct a material part of its business. 5.05. Absence of Litigation. No action, suit, or proceeding before any court or any governmental body or authority, pertaining to the transaction contemplated by this Agreement, or to its consummation, shall have been instituted or threatened on or before the Closing Date. 5.06. Corporate Approvals. The board of directors and the shareholders of Seller, shall. have duly authorized and approved the execution and delivery of this Agreement and all corporate action necessary or proper to fulfill Seller's obligations hereunder on or before the Closing Date, copies of such approvals shall be attached hereto as Exhibit 5.06. 7 ARTICLE 6. CONDITIONS OF SELLER'S PERFORMANCE Absent a waiver in writing, all obligations of Seller hereunder are subject to the satisfaction of the following conditions on or before the Closing Date: 6.01. Representations and Warranties True as of the Closing Date. All representations and warranties of Buyer contained in this Agreement shall be true on and as of the Closing Date as though such representations and warranties were made on and as of. that date. 6.02. Performance By Buyer. Buyer shall have performed and complied with all covenants and agreements and satisfied all conditions required by this Agreement to be performed by Buyer on or before the Closing Date. 6.03. Corporate Approvals. The Board of Directors of Buyer, shall have duly authorized and approved the execution and delivery of this Agreement and all action necessary or proper to fulfill Buyer's obligations hereunder on or before the Closing Date, copies of which approvals shall be attached hereto as Exhibit 6.03. ARTICLE 7. SELLER'S COVENANTS 7.01. Conduct of Business. From the date of this Agreement to the Closing, Seller shall operate the business without causing detriment thereto, shall maintain in effect all contracts, permits and approvals necessary for the operation of the business as it is now being conducted, and shall maintain the relationships with all persons and entities with whom Seller currently is doing business. 7.02. Buyer's Investigation. Seller shall make available to Buyer at all reasonable times all books and records of the business and such other items as may be from time to time requested by Buyer. 7.03. Relinquishment of Name. Immediately following the Closing, Seller shall cause all persons who currently are using the name "Lufam Technologies, Inc." and any or all names under which all or part of its business is conducted to relinquish the use of such names by all appropriate acts and filings as may be required 8 with various state and local authorities, and to acknowledge that Seller and all other persons have no rights with respect to the use and exploitation of such names and any trade names or trade marks which prior to closing had been utilized through Seller. ARTICLE 8. INDEMNITY AGREEMENT 8.01. Seller's Indemnity. Except as otherwise expressly provided in this Agreement or any attachment to this Agreement, Seller shall indemnify and hold Buyer and the property of Buyer, including the assets purchased, free and harmless from any and all claims, liability, loss, damage, or expense resulting from Seller's ownership of the assets or Seller's operation of the assets, including any claim, liability, loss or damage arising by reason of the injury to or death of any person or persons, or the damage of any property, caused by Seller's use of the assets, the condition of the assets when owned by Seller, or the defective design or manufacture by Seller of any product or products. 8.02. Buyer's Indemnity. Except as otherwise provided in this Agreement or any attachment to this Agreement, Buyer shall indemnify and hold Seller free and harmless from any and all claims, liabilities, loss, damage, or expense resulting from Buyer's acts or omissions to act after the Closing Date as they relate to the assets purchased and liabilities assumed by Buyer pursuant to this Agreement. Provided, however, Buyer shall incur no liability under this section until and unless the aggregate amount of any and all claims, liability, loss, damage, or expense equals or exceeds $5,000. 8.03. Indemnity Agreements of the Parties. The parties each shall indemnify, defend, reimburse and hold harmless the other from and against any and all Losses resulting from: (a) Any inaccuracy in, or breach of, any representation and warranty or nonfulfillment of any covenant on the part of Buyer or Seller, respectively, contained in this Agreement. (b) Any misrepresentation in or omission from or nonfulfillment of any covenant on the part of Buyer or Seller, respectively, contained in any other agreement, certificate or 9 other instrument furnished or to be furnished to the other party by that party pursuant to this Agreement. ARTICLE 9. TERMINATION DEFAULT REMEDIES 9.01. Termination. If either Buyer or Seller materially defaults in the due and timely performance of any of its warranties, covenants or agreements or in the event of the failure to satisfy or fulfill any of the conditions, the non-defaulting party may on the Closing Date give notice of termination. The notice shall specify the default or defaults upon which the notice is based. The termination shall be effective ten days after the Closing Date, unless the specified default or defaults have been cured on or before the effective date of the termination. 9.02. Default' Remedies. Notwithstanding Section 9.01, in the event of a default, the non-defaulting party may seek specific performance of this Agreement against the defaulting party from a court of competent jurisdiction, or alternatively, such non-defaulting party may seek damages from the defaulting party. 9.03. Litigation Costs. If any legal action or other proceeding is brought for the enforcement of this Agreement or to remedy its breach, the prevailing party in such action or proceeding shall be entitled to recover its actual attorney's fees and other costs incurred in the action or proceeding, in addition to such other relief to which it may be entitled. ARTICLE 10. OPINION OF COUNSEL 10.01. Opinion of Seller's Counsel. Seller shall have delivered to Buyer the opinion of its counsel, Brown, Harmon & Eckstein, P.C., dated the Closing Date, in substantially the form of Exhibit 10 hereto. ARTICLE 11. MISCELLANEOUS 11.01. Brokers and Finders. Neither Seller nor Buyer have employed any broker or finder in connection with the transactions contemplated by this Agreement, or taken action that would give 10 rise to a valid claim against any party for a brokerage commission, finder's fee, or other like payment. 11.02. Conditions and Best Efforts. Seller will use its best efforts to effectuate the transactions contemplated by this Agreement and to fulfill all the conditions of the obligations of Seller under this Agreement, and will do all acts and things as may be required to carry out its obligations under this Agreement and to consummate and complete this Agreement. 11.03. Notices. Any and all notices or other communications required or permitted by this Agreement or by law to be served on or given to either party hereto, Buyer or Seller, by the other party hereto shall be, unless otherwise required by law, in writing and deemed duly served and given when personally delivered to the party to whom directed or any of its officers or, in lieu of such personal service, when deposited in the United States mail, first-class postage prepaid, addressed to: Buyer: Progressive Mailer Corp. Attention: Troy H. Lowrie, President 1601 West Evans Avenue Denver, Colorado 80223 With A Copy To Counsel: Brenman Bromberg & Tenenbaum, P.C., Attorneys at Law, Attention: A. Thomas Tenenbaum 1775 Sherman Street, Suite 1001 Denver, Colorado, 80203 Seller: Lufam Technologies, Inc. Attention: Sidney Lucero, President 13316 Sunset Blvd. Brentwood, California 90049 With A Copy To Counsel: Brown, Harmon & Eckstein, P.C. Attention: John A. Eckstein 1700 Norwest Center Suite 3000 Denver, Colorado 80203 11 ARTICLE 12. GENERAL PROVISIONS 12.01. Further Assurances. At any time, and from time to time, after the Effective Date, each party will execute such additional instruments and take such action as may be reasonably requested by the other party to confirm or perfect title to any property transferred hereunder or otherwise to carry out the intent and purposes of this Agreement. 12.02. Waiver. Any failure on the part of either party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived in writing by the party to whom such compliance is owed. 12.03. Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation, or communication, whether oral or written, between the parties hereto relating to the transactions contemplated herein or the subject matter hereof. 12.04. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns; provided that this Agreement may not be assigned by any party without the consent of the other parties. 12.05. Schedules and Exhibits. The Schedules and Exhibits referred to in this Agreement shall be construed as an integral part of this Agreement as if the same had been set forth herein and shall be satisfactory in form and substance to each party hereto. 12.06. Headings. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 12.07. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado, the principal place of business of Buyer, without regard to conflict of laws. This Agreement shall be subject to the jurisdiction and venue of the state and federal courts situated in Denver, Colorado. 12 12.08. Assignment This agreement shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns; provided, however, that any assignment by either party of its rights under this Agreement without the written consent of the other party shall be void. 12.09. No Benefit to Third Parties. No provision of this Agreement is intended to confer any rights or remedies upon any person not a party of this Agreement. 12.10. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. EXECUTED on April 8, 1998 at Denver, Colorado. Buyer: Progressive Mailer Corp. By: /s/ Troy H. Lowrie ------------------------------ Troy H. Lowrie, President Seller: Lufam Technologies, Inc. By: /s/ Sidney Lucero ------------------------------ Sidney Lucero, President 13 Exhibit 2.01 The assets of RKS Impressions are also being purchased. RKS Impressions has no liabilities other than the balance of the purchase of equipment, see Exhibit 5.03 regarding assignment of leases. Exhibit 2.05 LTI has no liabilities other than as set forth in the Schedule of Assets. Authority for conversion of all loans and advances to LTI to equity is attached as a separate document Authority to Covert Loans and Advances to Equity In order to induce Progressive Mailer Corporation to close on the Asset Purchase Agreement executed with LuFam Technologies, Inc., the undersigned, representing creditors of LTI hereby agree to convert loans to equity in the form of stock. /s/ Kenneth C. Osgood -------------------------------- Kenneth C. Osgood Director /s/ Richard J. Lucero -------------------------------- Richard J. Lucero Director /s/ Richard Juan Lucero -------------------------------- Richard Juan Lucero Shareholders /s/ Gloria L. Lucero -------------------------------- Gloria L. Lucero Shareholders Exhibit 2.08 There is no litigation pending against LTI. Stephen Richter, former counsel to LuFam Technologies, Inc. has indicated his intent to collect the balance of his legal fees totaling approximately eighteen thousand (18,000) dollars. Exhibit 5.03 Third party consents may be required regarding assignment of the following and will be obtained as soon as possible after the close of this Agreement Office: Albert Sweet Development Julie E. Kleinick, RPA P.O. Box 931025 Los Angeles, CA, 90093 (213) 464-7441 Fax: (213) 464-3681 re: 1111 North Las Palmas Ave Hollywood, CA. 90038 Telephone: (AT&T Capital Leasing Services, Inc.) Graybar Financial Services, LLC 8170 Lackland Road Bel Ridge, MO. 63114 (Fax) 800/543-0274 Security: Westec Security Richard Beetle Stone, Consultant 2242 E. Foothill Blvd Pasedena, CA. 91107 (213) 460-6869 Cell Phone: Pacific Bell Mobile Services Contract # 428175 Customer Care Department 1-800-393-7267 Furniture: Fashion Furniture Leasing Contact: Juliana Agreement No. 31188 8370 Wilshire Blvd. Beverly Hills, CA. 90211 (213) 651-4400 Insurance: Kovatch Insurance Agency 8939 S. Sepulveda Blvd, #262 Los Angeles, CA. 90045 Dan Kovatch (310) 670-4700 Subscription: Signs Of The Times Industry Literature 407 Gilbert Avenue Cincinnati, OH 45202 800-421-1321 Customer No. 1549404 (RKS Impressions) Construction Solutions and Designs, Inc. Printing/Computer 423 Forrest Ridge Equipment Kerrville, TX 78028 Attn: Elizabeth Brady LUFAM TECHNOLOGIES, INC. 1111 North Las Palmas Hollywood, CA 90038 (213) 461-8111 April 20, 1998 Progressive Mailer Corp. Troy H. Lowrie 1601 West Evans Denver, CO 80223 Re: Letter of Assignment. LuFam Technologies, Inc., (a privately held California Corporation) hereby assigns to Progressive Mailer Corp., (a public company d.b.a. New Millennium Media International) the following Trademarks and Tradenames: 1. LuFam Technologies, Inc. 2. R.K.S., Inc. 3. New Millennium Media International 4. EyeCatcher 5. IllumiSign 6. All other Trademarks and Tradenames used in connection with the business of LuFam Technologies, Inc. /s/ - ------------------------------- LuFam Technologies, Inc. By: SID LUCERO Date: 4-23-98 EX-10.4 15 0015.txt AMENDED AND RESTATED MERGER AGREEMENT WITH UNERGI AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER by and among New Millennium Media International, Inc. New Millennium Media, Inc. a wholly owned subsidiary of New Millennium Media International, Inc. and UNERGI, Inc. dated August 31, 1999 TABLE OF CONTENTS Section 1. The Merger......................................................1 1.1 Actions to be Taken.............................................1 1.2 Conversion of Target Securities ................................2 1.3 Exchange of Certificates........................................2 1.4 Fractional Shares...............................................3 1.5 Unexchanged Certificates........................................3 1.6 Legend on Parent Certificates Issued in Conversion of the Target Common Stock.............................................3 1.7 Filing of Merger Documents .....................................3 Section 2. Representations and Warranties of Target .......................3 2.1 Corporate Organization and Good Standing .......................3 2.2 Capitalization..................................................4 2.3 Authorization, Execution and Delivery...........................4 2.4 Financial Statements ...........................................4 2.5 Absence of Undisclosed Liabilities .............................4 2.6 Absence of Certain Changes......................................4 2.7 Litigation, Etc. ...............................................4 2.8 Contracts.......................................................5 2.9 Title...........................................................5 2.10 Tax Returns.....................................................5 2.11 No Violation....................................................5 2.12 Books and Records...............................................5 2.13 Disclosure......................................................5 2.14 Broker's or Finder's Fees.......................................5 Section 3. Representations and Warranties of Parent and Sub ...............6 3.1 Corporate Organization..........................................6 3.2 Capitalization..................................................6 3.3 Authorization, Execution and Delivery...........................6 3.4 Financial Statements............................................6 3.5 Absence of Undisclosed Liabilities..............................7 3.6 Absence of Certain Changes......................................7 3.7 Litigation......................................................7 3.8 Contracts.......................................................7 3.9 Title...........................................................7 3.10 Tax Returns.....................................................7 3.11 No Violation....................................................7 3.12 Books and Records...............................................7 3.13 Continuity of Business Enterprise...............................7 3.14 Compliance with Law ............................................7 3.15 Disclosure......................................................8 3.16 Broker's or Finder's Fees.......................................8 Section 4. Conduct of Target Pending the Effective Date....................8 4.1 Regular Course of Business......................................8 4.2 Restricted Activities and Transactions..........................8 4.3 Advice of Changes...............................................9 4.4 Access to Records and Properties................................9 Section 5. Conduct of Parent and Sub Pending the Effective Date............9 5.1 Regular Course of Business......................................9 5.2 Restricted Activities and Transactions.........................10 5.3 Advice of Changes..............................................10 5.4 Access to Records and Properties...............................10 5.5 Guarantee of Sub Obligations...................................11 i Section 6 MUTUAL COVENANTS...............................................11 6.1 Confidentiality ...............................................11 6.2 Expenses.......................................................11 6.3 Further Assurances.............................................12 Section 7. Conditions Precedent to Obligation of Target...................12 7.1 Parent and Sub Representations and Warranties..................12 7.2 Parent and Sub Covenants.......................................12 7.3 Guarantee of Sub Obligations...................................12 Section 8. Conditions Precedent to Obligation of Parent ..................12 8.1 Target's Representations and Warranties........................12 8.2 Target's Covenants.............................................12 8.3 Funding........................................................12 Section 9. Designation of Agent for Service...............................12 Section 10. Stand-still Agreement and Break-off Fee........................13 Section 11. Notice of Events...............................................13 Section 12. Termination....................................................13 12.1 Circumstances of Termination...................................13 12.2 Effect of Termination..........................................14 Section 13. General Provisions.............................................14 13.1 Further Assurances.............................................14 13.2 Waiver.........................................................14 13.3 Entire Agreement...............................................14 13.9 Headings.......................................................14 13.5 Governing Law..................................................14 13.6 Assignment.....................................................14 Section 14. Survival of Representations, Warranties and Agreements ........15 Section 15. Indemnity Agreements of Parent and Target......................15 Section 16. Other Agreements ..............................................15 16.1 Public Disclosure..............................................15 16.2 Notices........................................................15 16.3 Binding Effect.................................................16 16.4 Entire Agreement...............................................16 16.5 Schedules and Exhibits.........................................16 16.6 Applicable Law and Jurisdiction ...............................16 16.7 No Benefit to Third Parties....................................16 16.8 Counterparts...................................................16 16.9 Acknowledgments................................................17 ii Exhibits and Schedules ---------------------- Schedule 1.1(d) Officers and Directors of Surviving Corporation Schedule 1.3 Target Shareholder Information Schedule 2.2 Obligations to Issue Shares Pursuant to Subscription Agreement Schedule 2.5 Target Liabilities Schedule 2.6 Changes of Target Schedule 2.7 Litigations, etc. Schedule 2.8 Contracts of Target Schedule 2.9 Properties of Target Schedule 3.5 Parent Liabilities iv AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER ("Amended Agreement") dated as of August 31, 1999, by and among New Millennium Media International, Inc., a Colorado corporation ("Parent" or "NMNI"), New Millennium Media, Inc., a Colorado corporation and wholly-owned subsidiary of Parent ("Sub"), and UNERGI, Inc., a Nevada corporation ("Target" or "UNERGI") (Sub and Target being hereinafter collectively referred to as the "Constituent Corporations"). RECITALS -------- A. The Parent, Sub and Target entered into an Agreement and Plan of Merger dated June __, 1999 ("Agreement"), whereby, the Parent would acquire Target by the merger of Target into the Sub, in a transaction intended to qualify as a tax-free reorganization under Section 386(a) of the Internal Revenue Code of 1986, as amended (the "Code"), no later than July 30, 1999, as subsequently amended by the parties. B. Although the Agreement has terminated by its terms, the Boards of Directors of Parent, Sub and Target deem it advisable for the mutual benefit of Parent, Sub and Target, and their respective stockholders, to amend and restate the Agreement and waive any and all claims for breach thereunder. C. The Boards of Directors of Parent, Sub and Target expect that this transaction will further certain of their business objectives and have adopted resolutions authorizing the transactions contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and of the mutual agreements, representations, warranties and covenants contained herein, the parties hereto, intending to be legally bound, hereby agree as follows: Section 1. The Merger --------------------- 1.1 Actions to be Taken. Subject to the terms and conditions of this Agreement, including the fulfillment (or waiver) of all conditions to the obligations of the parties contained herein, at the Effective Date (as hereinafter defined) and pursuant to the laws of the States of Colorado and Nevada, the following shall occur: (a) Target shall be merged with: and into Sub (such transaction hereafter referred to as the "Merger"), and Sub shall be the surviving corporation (the "Surviving Corporation"). The separate existence and corporate organization of Target shall cease upon filing of the Articles of Merger with the Colorado Secretary of State and the Nevada Secretary of State, and thereupon Sub and Target shall be a single corporation and will continue to be governed by the laws of the State of Colorado. (b) The Articles of Incorporation of Sub shall be the Articles of Incorporation of the Surviving Corporation from and after the Effective Date, subject to the right of the Surviving Corporation to amend its Articles of Incorporation in accordance with the laws of the State of Colorado. (c) The By-Laws of Sub as they shall exist on the Effective Date shall be and remain the bylaws of the Surviving Corporation until the same shall be altered, amended and repealed as therein provided. (d) The officers and directors of Parent and Sub shall resign as of the Effective Date and the persons set forth on Schedule 1.1(d) shall be the officers and directors, respectively, of the Parent and the Surviving Corporation until their successors shall have been elected and qualified. (e) As soon as practicable following fulfillment or waiver of the conditions specified in Sections 7 and 8 hereof, and provided that this Agreement has not been terminated or abandoned pursuant to Section 12, the Constituent Corporations will cause this Agreement and Plan of Merger ("Merger Agreement") to be filed with the office of the Secretary of State of the State of Colorado, and will cause a copy of this Agreement certified by the Secretary of State of Colorado to be filed with the office of the Secretary of State of the State of Nevada. Subject to and in accordance with the laws of the States of Colorado and Nevada, the Merger will become effective at the date and time the Article of Merger is filed with the office of the Secretary of State of Colorado or such later time or date as May be specified in the Article of Merger (the "Effective Date"). Each of the parties will use its best efforts to cause the Merger to be consummated, as soon as practicable following the fulfillment or waiver of the conditions specified in Sections 7 and 8 hereof, but no later than August 31, 1999 ("Closing Date"). 1.2 Conversion of Target Securities. The mode of carrying the merger into effect and the manner and basis of converting the shares of Target into shares of Parent are as follows: (a) At the Effective Date all of the issued and outstanding shares of Target Common Stock (as defined in Section 2.2) shall, by virtue of the Merger and without any action on the part of the respective holders thereof, become and be converted into the right to receive an aggregate of 16,566,667 shares of Parent Common Stock (as defined in Section 3.2) (the "Merger Consideration") and each share of Target Common Stock shall become and be converted into the right to receive its pro rata portion of the Merger Consideration. (b) Each certificate evidencing ownership of shares of Parent Common Stock issued and outstanding on the Effective Date shall continue to evidence ownership of the number of shares of Parent Common Stock represented thereto. 1.3 Exchange of Certificates. As promptly as practicable after the Effective Date, each holder of an outstanding certificate or certificates theretofore representing shares of Target Common Stock shall surrender the same to American Securities Transfer, Inc., Denver, Colorado ("Exchange Agent"), and shall receive in exchange a certificate or certificates representing the number of full of Parent Common Stock into which the shares of Target Common Stock represented by the certificate or certificates so surrendered shall have been converted pursuant to Section 1.2. The name, address and amount of shares owned by each holder of Target Common Stock is set forth on Schedule 1.3. 1.4 Fractional Shares. Fractional shares of Parent Common Stock shall not be issued. 1.5 Unexchanged Certificates. Until surrendered, each outstanding certificate which, prior to the Effective Date, represented Target Common Stock shall be deemed for all purposes, other than the payment of dividends or other distributions, to evidence ownership of the whole number of shares of Parent Common Stock into which it is to be converted, and no dividend or other distribution payable to holders of Parent Common Stock as of any date subsequent to the Effective Date shall be paid to the holders of unexchanged certificates. There shall be paid to the record holders of the certificates issued in exchange therefor the amount, without interest thereon, of dividends and other distributions which would have been payable with respect to the shares of Parent Common Stock represented thereby. 2 1.6 Legend on Parent Certificates Issued in Conversion of the Target Common Stock. Each of the certificates representing shares of Parent Common Stock issued upon conversion of the Target Common Stock as provided for herein shall bear the following legend: The securities represented by this Certificate have not been registered under the Securities Act of 1933 (the "Act") and are "restricted securities" as that term is defined in Rule 144 under the Act. The securities May not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of the Corporation. 1.7 Filing of Merger Documents. As soon as practicable after the Closing Date, Sub and Target shall, in accordance with Section 1.1(e), cause the Merger Agreement to be filed with the Secretary of State of the State of Colorado and will cause a copy of the Merger Agreement certified by the Colorado Secretary of State, to be filed with the office of the Secretary of State of the State of Nevada. Target, Sub and Parent will take such other and further actions as May be required by the applicable laws of Colorado and Nevada in connection with such filing and in order to complete the Merger. Section 2. Representations and Warranties of Target --------------------------------------------------- Target represents and warrants that: 2.1 Corporate Organization and Good Standing. Target is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is duly qualified or licensed as a foreign corporation in each other jurisdiction where it owns or leases substantial properties. Target has no subsidiaries. Target has the requisite corporate power and authority to own, operate and lease its properties and to conduct its business as it is now being conducted. Target has previously delivered to Parent a true and complete copy of its Articles of Incorporation and Bylaws. 2.2 Capitalization. The authorized capital stock of Target consists of: (i) 20,000,000 shares of Common Stock, $.0001 par value per share ("Target Common Stock"), of which 20,000,000 shares are issued and outstanding, fully paid and nonassessable, which include the obligation pursuant to subscription agreements, to issue shares of its capital stock as disclosed in Schedule 2.2 which shall be provided to Parent no later than August 30, 1999; and (ii) 1,000,000 shares of Series A Convertible Preferred Stock, $.0001 par value per share ("Target Preferred Stock"), none of which are issued and outstanding. Except as set forth above, Target does not have any shares of its capital stock issued or outstanding. 2.3 Authorization, Execution and Delivery. Target has the corporate power to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its Board of Directors and shareholders, and no other corporate proceedings on the part 3 of Target are necessary to authorize this Agreement and the transactions contemplated hereby. Target is not subject to or obligated under any charter, by-law or contract provision or any note, mortgage, lease, agreement, bond, indenture, instrument, license, franchise or permit, or subject to any order, judgment, injunction, writ or decree, which would be breached or violated by the execution or consummation of this Agreement. Other than in connection with or in compliance with the provisions and requirements of the laws of the State of Nevada, the 1933 Act, and the securities or blue sky laws of the various states, no authorization, consent or approval of, or filing with, any public body or authority is necessary for the completion by Target of the transactions contemplated by this Agreement, except for such authorizations, consents, approvals or filings, the failure to obtain or make which would not have a material adverse effect on Target's business. 2.4 Financial Statements. Target's balance sheet as of April 30, 1999, fairly presents the financial condition of Target as of said date and in conformity with generally accepted accounting principles consistently applied. 2.5 Absence of Undisclosed Liabilities. Except as disclosed on Schedule 2.5, and to the extent reflected or reserved against in Target's balance sheet as of April 30, 1999, Target did not have at that date any liabilities or obligations (secured, unsecured, contingent or otherwise) of a nature customarily reflected in a corporate balance sheet prepared in accordance with generally accepted accounting principles ("Liabilities"). 2.6 Absence of Certain Changes. Except as disclosed on Schedule 2.6, there has been no material adverse change in the business, properties or financial condition of Target since April 30, 1999. 2.7 Litigation, Etc. Except as disclosed on Schedule 2.7, there is no litigation, proceeding or investigation pending or, to the knowledge of Target, threatened against Target which if successful might result in a material adverse change in the business, properties or financial condition of Target or which questions the validity or legality of this Agreement or of any action taken or to be taken by Target in connection with this Agreement. 2.8 Contracts. Schedule 2.8 sets forth all material contracts to which Target is a party. Except as disclosed on Schedule 2.8, none of the contracts are in default. 2.9 Title. Target has good and marketable title to all property included in the balance sheet of Target as of April 30, 1999, other than property disposed of in the ordinary course of business after said date. Except as disclosed on Schedule 2.9, the properties of Target as previously disclosed in writing to Parent, including its rights to all patents, know how and intellectual property relating to the products it distributes, are not subject to any mortgage, encumbrance or lien of any kind except minor encumbrances which do not materially interfere with the use of the property in the conduct of the business of Target. 2.10 Tax Returns. No required federal, state and local tax returns are delinquent. 2.11 No Violation. Consummation of the merger will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease or agreement, or any order, judgment, decree, law or regulation to which any property of Target is subject or by which is bound, except for breaches or defaults which in the aggregate would not have a 4 materially adverse effect on Target's properties, business operations or financial condition. 2.12 Books and Records. The corporate minute books, stock certificate books, stock registers and other corporate records of Target are correct and complete in all material respects, and the signatures appearing on all documents contained therein are the true signatures of the persons purporting to have signed the same. 2.13 Disclosure. Neither this Agreement nor any Schedule, Exhibit or certificate delivered in accordance with the terms hereof, or any document or statement in writing which, has been supplied by or on behalf of Target or by any of Target's directors or officers, in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits any statement of a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact or circumstance known to Target which could be reasonably expected to materially and adversely affect its business, prospects or financial condition or its assets, which has not been set forth in this Agreement, the Schedules, Exhibits, certificates or statements furnished in writing to Parent in connection with the transactions contemplated by this Agreement. 2.14 Broker's or Finder's Fees. No broker, finder or similar intermediary is entitled to fees in connection with the transactions contemplated by this Agreement by virtue of any action or agreement of Target. Section 3. Representations and Warranties of Parent and Sub ----------------------------------------------------------- Parent and Sub represent and warrant that: 3.1 Corporate Organization. Parent and Sub, the sole subsidiary of Parent, are corporations duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation and each has all requisite corporate power and authority to own, operate and lease its properties and to conduct its business as it is now being conducted. Parent is duly qualified or licensed as a foreign corporation in each other jurisdiction where it owns or leases substantial properties, except where the failure to be so qualified or licensed would not have a material adverse effect on the financial condition, properties or businesses of Parent taken as a whole Parent and Sub have each delivered to Target a true and complete copy of their Articles of Incorporation and By-Laws. 3.2 Capitalization. (a) Parent's authorized capital stock consists of: (i) 25,000,000 shares of Common Stock, $.001 par value per share ("Parent Common Stock"), of which 7,533,214 shares are issued and outstanding, fully paid and nonassessable; and, (ii) 10,000,000 shares of Preferred Stock, $.001 par value per share, ("Parent Preferred Stock"), none of which are issued and outstanding. There are 1,050,000 options, warrants or rights outstanding to purchase shares of Parent Common Stock from Parent. (b) Except as set forth above, Parent does not have any shares of its capital stock issued or outstanding. (c) The authorized capital stock of Sub consists of 1,000,000 shares of Common Stock, par value $.01 per share, of which 100,000 shares are 5 issued and outstanding, all of which are owned of record and beneficially by Parent. (d) To the best knowledge of Parent's management, Parent's outstanding securities have been issued in compliance with all applicable federal and state securities laws. 3.3 Authorization, Execution and Delivery. Parent and Sub each have the corporate power to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement by Parent and Sub and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action; no other corporate proceedings on the part of Parent are necessary to authorize this Agreement and the transactions contemplated hereby. 3.4 Financial Statements. Parent's balance sheet and statement of operations, shareholder's equity and cash flow as of April 30, 1999, copies of which have been provided to Target, fairly presents the financial condition of Parent as of said date and in conformity with generally accepted accounting principles consistently applied. 3. 5 Absence of Undisclosed. Liabilities. Except as disclosed on Schedule 3.5 and to the extent reflected or reserved against in Parent's balance sheet as of April 30, 1999, Parent did not have at that date any liabilities or obligations (secured, unsecured, contingent or otherwise) of a nature customarily reflected in a corporate balance sheet prepared in accordance with generally accepted accounting principles ("Liabilities"). 3.6 Absence of Certain Changes. There has been no material adverse change in the business, properties or financial condition of Parent since April 30, 1999. 3.7 Litigation There is no litigation, proceeding or investigation pending or, to the knowledge of Parent, threatened against Parent which if successful might result in a material adverse change in the business, properties or financial condition of Parent or Sub or which questions the validity or legality of this Agreement or of any action taken or to be taken by Parent or Sub in connection with this Agreement. 3.8 Contracts. Parent is not a party to any material contract not in the ordinary course of business which is to be performed in whole or in part at or after the date of this Agreement. 3.9 Title. Parent has good and valid title to all property included in the balance sheet of Parent as of April 30, 1999, other than property disposed of in the ordinary course of business after said date. The properties of Parent are not subject to any mortgage, encumbrance or lien of any kind. 3.10 Tax Returns. Parent has timely filed all required federal, state and local tax returns and has no outstanding tax liabilities, including but not limited to income, withholding, property and corporate franchise taxes. 3.11 No Violation. Consummation of the merger will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease or agreement, or any order, judgment, decree, law or regulation to which any property of Parent is subject or by which Parent is bound, except for breaches or defaults which in the aggregate would not have a materially adverse effect on Parent's properties, business operations or financial condition. 6 3.12 Books and Records. The corporate minute books, stock certificate books, stock registers and other corporate records of Parent are correct and complete in all material respects, and the signatures appearing on all documents contained therein are the true signatures of the persons purporting to have signed the same. 3.13 Continuity of Business Enterprise. Parent will continue at least one significant historic business line of Target, or use at least a significant portion of Target's historic business assets in a business, in each case within the meaning of Treasury Reg. [section] 1.368-1(d) 3.14 Compliance with Law. There has been no default under any laws applicable to Parent and Parent has not received notice from any governmental entity regarding any alleged defaults under any laws. There has been no default with respect to any court order applicable to Parent. 3.15 Disclosure. Neither this Agreement nor any Schedule, Exhibit or certificate delivered in accordance with the terms hereof, or any document or statement in writing which has been supplied by or on behalf of Parent or by any of Parent's directors or officers in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits any statement of a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact or circumstance known to Parent which could be reasonably expected to materially and adversely affect its business, prospects or financial condition or its assets, which has not been set forth in this Agreement, the Schedules, Exhibits, certificates or statements furnished in writing to Target in connection with the transactions contemplated by this Agreement. 3.16 Broker's or Finder's Fees. No broker, finder or similar intermediary is entitled to fees in connection with the transactions contemplated by this Agreement by virtue of any action or agreement of Parent. Section 4. Conduct of Target Pending the Effective Date ------------------------------------------------------- Target covenants that between the date of this Agreement and the Effective Date: 4.1 Regular Course of Business. Except as otherwise consented to in writing by Parent, prior to the Effective Date, Target will carry on its business in the ordinary course only, and, without limiting the generality of the foregoing, Target will use its best efforts to preserve its present business organization intact, keep available the services of its present officers and employees, and preserve its present relationships with persons having business dealings with it including, but not limited to, the contracts as set forth in Schedule 2.8(b). 4.2 Restricted Activities and Transactions. Except as otherwise consented to in writing by Parent, or contemplated by this Agreement, prior to the Effective Date, Target will not: (a) amend its certificate or articles of incorporation or bylaws; (b) issue, sell or deliver, or agree to issue, sell or deliver, any shares of any class of capital stock or any securities convertible into any such shares or convertible into securities in turn so convertible, or any options, warrants or other rights calling for the issuance, sale or delivery of 7 any such shares or convertible securities, declare or pay any dividend or make any distribution on its capital stock in cash, stock or property, subdivide shares of capital stock into a greater number of shares, or redeem, repurchase or otherwise acquire any shares of capital stock; (c) discharge or satisfy or pay any lien, encumbrance, debt or obligation other than in the ordinary course of business; (d) sell, transfer or otherwise dispose of any of its assets otherwise than in the normal course of business; (e) incur or assume or authorize or commit to any expenditure(s) in excess of $25,000 in the aggregate other than in the ordinary course of business; (f) assume or guarantee, or agree to assume or guarantee, any debt, liability or other obligation of any person, firm or corporation; or (g) acquire control of any other corporation, association, joint venture, partnership, business trust or other business entity, or acquire control or ownership of all or a substantial portion of the assets of any of the foregoing or merge, consolidate or otherwise combine with any other corporation (except as provided for in this Agreement), or enter into any agreement providing for any of the foregoing. 4.3 Advice of Changes. Until the Closing Date, Target will promptly advise Parent in writing after acquiring knowledge thereof, of (i) any event occurring subsequent to the date of this Agreement which would render any representation or warranty of Target contained in this Agreement, if made on or as of the date of such event or the Effective Date, untrue or inaccurate in any material respect; and, (ii) any material adverse change in Target's business. 4.4 Access to Records and Properties. Parent May, prior to the Closing Date, through its employees, agents and representatives, make or cause to be made a detailed review of the business and financial condition of Target, and make or cause to be made such investigation as it deems necessary or advisable of the properties, assets, businesses, books and records of Target. Target agrees to furnish such assistance as Parent reasonably may request in conducting such review and investigation and will provide, and will cause its independent public accountants to provide, Parent and its employees, agents and representatives full access to all books, records (including tax returns filed or in preparation), personnel and premises of Target and the work papers and other records of its independent public accountants and shall provide to Parent such other information concerning the business of Target as Parent reasonably may request Any such review described in this section shall be undertaken during normal business hours following reasonable notice to Target. Section 5. Conduct of Parent and Sub Pending the Effective Date --------------------------------------------------------------- Parent and Sub covenant that between the date of this Agreement and the Effective Date: 5.1 Regular Course of Business. Except as otherwise consented to in writing by Target, prior to the Effective Date, Parent and Sub will carry on its business in the ordinary course only, and, without limiting the generality of the foregoing, Parent will use its best efforts to preserve its present business organization intact, keep available the services of its present officers and employees, and preserve its present relationships with persons having business dealings with it. 8 5.2 Restricted Activities and Transactions. Except as otherwise consented to in writing by Target, or contemplated by this Agreement, prior to the Effective Date, neither Parent nor Sub will: (a) amend its certificate or articles of incorporation or bylaws; (b) issue, sell or deliver, or agree to issue, sell or deliver, any shares of any class of capital stock or any securities convertible into any such shares or convertible into securities in turn so convertible, or any options, warrants or other rights calling for the issuance, sale or delivery of any such shares or convertible securities, declare or pay any: dividend or make any distribution on its capital stock in cash, stock or property, subdivide shares of capital stock into a greater number of shares, or redeem, repurchase or otherwise acquire any shares of capital stock; (c) discharge or satisfy or pay any lien, encumbrance, debt or obligation other than in the ordinary course of business; (d) sell, transfer or otherwise dispose of any of its assets otherwise than in the normal course of business; (e) incur or assume or authorize or commit to any expenditure(s) in excess of $25,000 in the aggregate other than in the ordinary course of business; (f) assume or guarantee, or agree to assume or guarantee, any debt, liability or other obligation of any person, firm or corporation; or (g) acquire control of any other corporation, association, joint venture, partnership, business trust or other business entity, or acquire control or ownership of all or a substantial portion of the assets of any of the foregoing or merge, consolidate or otherwise combine with any other corporation (except as provided for in this Agreement), or enter into any agreement providing for any of the foregoing. 5.3 Advice of Changes. Parent will promptly advise Target in writing after acquiring knowledge thereof, of (i) any event occurring subsequent to the date of this Agreement which would render any representation or warranty of Parent contained in this Agreement, if made on or as of the date of such event or at the Effective Date, untrue or inaccurate in any material respect; and, (ii) any material adverse change in the business of Parent and/or its Sub. 5.4 Access to Records and Properties. Target may, prior to the Closing Date, through its employees, agents and representatives, make or cause to be made a detailed review of the business and financial condition of Parent, and make or cause to be made such investigation as it deems necessary or advisable of the properties, assets, businesses, books and records of Parent. Parent agrees to furnish such assistance as Target reasonably may request in conducting such review and investigation and will provide, and will cause its independent public accountants to provide, Target and its employees, agents and representatives full access to all books, records (including tax returns filed or in preparation), personnel and premises of Parent and the work papers and other records of its independent public accountants and shall provide to Target such other information concerning the business of Parent as Target reasonably may request. Any such review described in this section shall be undertaken during normal business hours following reasonable notice to Parent. 9 5.5 Guarantee of Sub Obligations. Parent shall cause Sub to perform in a timely manner all its obligations, and to comply with all its agreements, in this Agreement and in the Articles of Merger. Section 6 MUTUAL COVENANTS -------------------------- 6.1 Confidentiality. Parent and Target will use their best efforts to keep confidential any and all information furnished to one of them by the other or such other's representatives or independent public accountants in connection with the transactions contemplated by this Agreement, and the business and financial review and investigation referred to in Section 4.4 and Section 5.4, except to the extent any such information may be generally available to the public, and Parent and Target have instructed their respective officers, employees and other representatives having access to such information to comply with the obligation of confidentiality. In the event of termination of this Agreement, each of Parent and Target will promptly deliver to the other all originals and copies of documents, work papers and other material containing information concerning the other that was obtained from the other or its agents, employees or representatives in connection with such transactions or business and financial review and investigation, whether so obtained before or after the execution hereof, will not use any information so obtained, will not disclose or divulge such information to any other person and will keep confidential any information so obtained; provided, however, that (after reasonable measures have been taken to maintain confidentiality and after giving reasonable notice to the other parties to this Agreement specifying the information involved and the manner and extent of the proposed use of disclosure thereof) (i) any disclosure of such information may be made by a party hereto to the extent required by applicable law or regulation or judicial or regulatory process and (ii) such information may be used by such party as evidence in or in connection with any pending or threatened litigation relating to this Agreement or any transaction contemplated hereby. The obligations arising under this Section 6.1 shall survive any termination or abandonment of this Agreement. 6.2 Expenses. Whether or not the Merger is consummated, each party hereto shall be responsible for its own legal, accounting and other fees; costs and expenses regarding this Agreement and the transactions contemplated hereby. Notwithstanding any other provision in this Agreement, in the event of any dispute or controversy, in addition to any other remedies the prevailing party may obtain in such dispute, the prevailing party in such dispute shall be entitled to recover from the other party all of its reasonable legal fees and out-of-pocket costs incurred by such party in enforcing or defending its rights hereunder. 6.3 Further Assurances. Each party hereto agrees to execute and deliver such instruments and take such other actions as any other party may reasonably require in order to carry out the intent of this Agreement. 10 Section 7. Conditions Precedent to Obligation of Target ------------------------------------------------------- Target's obligation to consummate this Merger shall be subject to fulfillment on or before the Closing Date of each of the following conditions, unless waived in writing by Target: 7.1 Parent and Sub Representations and Warranties. The representations and warranties of Parent and Sub set forth in Section 3 hereof shall be true and correct at the Closing Date as though made at and as of that date, except as affected by transactions contemplated hereby. 7.2 Parent and Sub Covenants. Parent and Sub shall have performed all covenants required by this Agreement to be performed by it on or before the Closing Date. 7.3 Guarantee of Sub Obligations. Parent shall cause Sub to perform in a timely manner all of its obligations, and to comply with all its agreements; in this Agreement. Section 8. Conditions Precedent to Obligation of Parent ------------------------------------------------------- Parent's obligation to consummate this merger shall be subject to fulfillment on or before the Closing Date of each of the following conditions, unless waived in writing by Parent: 8.1 Target's Representations and Warranties. The representations and warranties of Target set forth in Section 2 hereof shall be true and correct at the Closing Date as though made at and as of that date, except as affected by transactions contemplated hereby. 8.2 Target's Covenants. Target shall have performed all covenants required by this Agreement to be performed by it on or before the Closing Date. 8.3 Funding. Target will have completed a private placement of its securities which shall result in gross proceeds of not less than $500,000 no later than August 30, 1999. The Private Placement will be made under the provisions of Regulation D promulgated under the Securities Act of 1933, as amended. The offering will be made only to "Accredited Investors" as that term is defined in Regulation D. Section 9. Designation of Agent for Service ------------------------------------------- The Surviving Corporation hereby: (1) agrees that it may be served with process in the State of Nevada in any proceeding for the enforcement of any obligation of Target and in any proceeding for the enforcement of the rights of a dissenting shareholder of Target; (2) irrevocably appoints the Secretary of State of the State of Nevada as its agent to accept service or process in any such proceedings; and (3) agrees that it will promptly pay to dissenting shareholders, if any, of Target the amount, if any, to which they shall be entitled pursuant to the laws of the State of Nevada. 11 Section 10 Stand-still Agreement and Break-off Fee -------------------------------------------------- From and after the date of this Agreement and up to and including the Closing Date both parties agree to conduct their respective businesses in the ordinary course and agree that during such period each shall have the exclusive right to negotiate with the other with respect to the Merger and during such period each party agrees not to directly or through intermediaries solicit, entertain or otherwise discuss with any person or entity any other offer and neither Parent nor Target will issue or agree to issue, except as otherwise disclosed in this Agreement, any additional securities without the consent of the other party. Without the consent of the other party, neither party will, except in the ordinary course of business, transfer assets or create liabilities other than those contemplated herein. All reasonable expenses incurred in connection with the completion of the transactions contemplated herein shall be deemed to be in the ordinary course of business. Should any party be in violation of this provision, it shall pay the other party the greater of: (i) its expenses on an accountable basis, including time of its personnel and representatives reasonably incurred in connection with the Transactions; or, (ii) the sum of $25,000 as a Break-Off Fee within ten (10) days of written notice from the other party and if any party fails to pay such fee, it shall be liable to the other party for interest at the rate of eighteen percent (18%) per annum together with reasonable attorneys fees for collection. Section 11. Notice of Events ---------------------------- Each party shall promptly notify each other party of (a) any event, condition or circumstance occurring from the date hereof through the Effective Date that would constitute a violation or breach of this Agreement, or (b) any event, occurrence, transaction or other item which would have been required to have been disclosed on any Schedule, Exhibit or statement delivered hereunder, had such event, occurrence, transaction or item existed on the date hereof, other than items arising in the ordinary course of business which would not render a change in any of the representations, warranties or other agreements of said party. Section 12. Termination ----------------------- 12.1 Circumstances of Termination. This Agreement may be terminated (notwithstanding approval by the shareholders of Target hereof): (a) By the mutual consent in writing of the Boards of Directors of Target and Parent. (b) By the Board of Directors of Target if any condition provided in Section 7 hereof has not been satisfied or waived on or before the Closing Date. (c) By the Board of Directors of Parent if any condition provided in Section 8 hereof has not been satisfied or waived on or before the Closing Date. (d) By the Board of Directors of either Parent or Target if the Effective Date has not occurred by September 10, 1999. 12.2 Effect of Termination. In the event of a termination of this Agreement pursuant to Section 12.1 (a) hereof, each party shall pay the costs and expenses incurred by it in connection with this Agreement and no non-breaching party (or any of its officers, directors and shareholders) shall be liable to any 12 other party for any costs, expenses, damage or loss of anticipated profits hereunder. In the event of a termination of this Agreement pursuant to Sections 12.1(b), (c) and (d) hereof, the party at fault shall be liable to the other party for all reasonable costs and expenses, but shall not be liable for damage or loss of anticipated profits hereunder. Section 13. General Provisions ------------------------------ 13.1 Further Assurances. At any time, and from time to time, after the Effective Date, each party will execute such additional instruments and take such action as may be reasonably requested by the other party to confirm or perfect title to any property transferred hereunder or otherwise to carry out the intent and purposes of this Agreement. 13.2 Waiver. Any failure on the part of either party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived in writing by the party to whom such compliance is owed. 13.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation, or communication, whether oral or written between the parties hereto relating to the transactions contemplated herein or the subject matter hereof. 13.4 Headings. The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 13.5 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado, without regard to conflict of laws. This Agreement shall be subject to the jurisdiction and venue of the state and federal courts situated in Denver, Colorado. 13.6 Assignment. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns; provided, however, that any assignment by either party of its rights under this Agreement without the written consent of the other party shall be void. Section 14. Survival of Representations, Warranties and Agreements ------------------------------------------------------------------ All of the representations and warranties of the parties contained in this Agreement shall survive for a period of two years after the Effective Date. 13 Section 15. Indemnity Agreements of Parent and Target ----------------------------------------------------- Parent and Target each shall indemnify, defend, reimburse and hold harmless the other from and against any and all Losses resulting from: (a) Any inaccuracy in, or breach of, any representation and warranty or nonfulfillment of any covenant on the part of Parent or Target, respectively; contained in this Agreement. (b) Any misrepresentation in or omission from or nonfulfillment of any covenant on the part of Parent or Target, respectively, contained in any other agreement, certificate or other instrument furnished or to be furnished to the other party by that party pursuant to this Agreement. Section 16. Other Agreements ---------------------------- 16.1 Public Disclosure. None of the parties hereto shall issue any press release or otherwise make any public statement with respect to the transactions contemplated hereby not required by law except upon the written consent of the other party hereto. Such approval shall not be unreasonably withheld. 16.2 Notices. All consents, waivers, notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or sent by facsimile transmission or by overnight courier to the parties at the following addresses or at such other addresses as shall be specified by the parties by like notice: (1) If to Parent or Sub to: Troy H. Lowrie New Millennium Media International 1601 W. Evans Ave. Denver, CO 80223 (303) 934-2424 (Telephone) (303) 922-0746 (Fax) With a copy to: A. Thomas Tenenbaum, Esq. Brenman Bromberg & Tenenbaum, P.C. 1775 Sherman Street, Suite 1001 Denver, Colorado 80203 (303) 894-0234 (Telephone) (303) 839-1633 (Fax) (2) If to Target to: UNERGI, Inc. 7820 South Holiday Drive, Suite 300 Sarasota, Florida 34231 With a copy to: Jorge L. Freeland White & Case LLP 200 S. Biscayne Blvd. Miami, Florida 33131 (305) 371-2700 (Telephone) (305) 358-5744 (Fax) 14 Any party may change the address to which notices, requests, demands and other communications hereunder are to be sent to such party by giving the other parties hereto written notice thereof in accordance with this Section 16.2. 16.3 Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns; provided that this Agreement may not be assigned by any party without the consent of the other parties. 16.4 Entire Agreement. This Agreement (including the Exhibits and Schedules referred to herein) constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 16.5 Schedules and Exhibits. The Schedules and Exhibits referred to in this Agreement shall be construed as an integral part of this Agreement as if the same had been set forth herein and shall be satisfactory in form and substance to each party hereto. 16.6 Applicable Law and Jurisdiction. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Colorado without regard to conflict of law. This Agreement shall be subject to the jurisdiction and venue of the state and federal courts situated in Denver, Colorado. 16.7 No Benefit to Third Parties. No provision of this Agreement is intended to confer any rights or remedies upon any person not a party of this Agreement. 16.8 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original but all of which, when taken together, shall constitute only one document. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 16.9 Acknowledgments. (a) The parties represent and acknowledge that each has been represented and advised by counsel in connection with this Agreement. (b) The parties acknowledge that Target shall assume all liabilities of Parent and Sub following the Closing and Effective Date of the Merger. [SIGNATURES ON NEXT PAGE] 15 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written. New Millennium Media International, a Colorado corporation ("Parent") By /s/ Troy H. Lowrie ------------------------------------- Troy H. Lowrie, President New Millennium Media, Inc., a Colorado corporation ("Sub") By /s/ Troy H. Lowrie ------------------------------------- Troy H. Lowrie, President UNERGI, Inc., a Nevada corporation ("Target") By /s/ Michael Miksch ------------------------------------- Michael Miksch, President 16 SCHEDULE 1.1(d) --------------- OFFICERS AND DIRECTORS OF SURVIVING CORPORATION Gerald Parker Director Chairman of the Board Andrew Badolato Director Vice President-Corporate Finance Michael Miksch Director President John Muczko Director Christy Brandon Controller Tony Gomes Director Vice President-Marketing SCHEDULE 1.3 ------------ UNERGI'S SHAREHOLDER INFORMATION Investment Management of America, Inc. 15,250,000 shares 7820 South Holiday Drive Suite 320 Sarasota, FL 34231 Michael Miksch 3,250,000 shares 4841 Inverness Ct. #101 Palm Harbor, FL 34685 Mark Western 500,000 shares 4364 S. Kirkman Rd. #302 Orlando, FL 32811 Cole Leary 500,000 shares 812 Riverbend Blvd. Longwood, FL 32779 Dual Cooper 500,000 shares 712 Carbonne Ct Las Vegas, NV 89117 Total 20,000,000 shares Unassigned 1,000,000 preferred shares SCHEDULE 2.2 ------------ OBLIGATIONS TO ISSUE SHARES PURSUANT TO SUBSCRIPTION AGREEMENTS None SCHEDULE 2.5 ------------ LIST OF TARGET LIABILITIES IMA $650,000 SCHEDULE 2.6 ------------ CHANGES OF UNERGI There have been no significant changes since the merger was agreed to. SCHEDULE 2.7 ------------ LITIGATION There is no litigation pending with regards to UNERGI. 17 SCHEDULE 2 8 ------------ CONTRACTS OF UNERGI BETWEEN & FOR: SIGNED: NOTES: Showcase Mall Joint Venture And 02/05/99 Assigned to UNERGI. Dynamic Media Group. For the Showcase Garage site in Las Vegas. One face. Champion Outdoor Media Services 02/08/99 Assigned to UNERGI. And Dynamic Media Group. For the I-595 billboard site in Ft Lauderdale, FL. Two faces. Champion Outdoor media Services 02/08/99 Assigned to UNERGI. And Dynamic Media-Group. For the I-95 billboard site in Ft. Lauderdale, FL. Two faces. Below are additional sites that are in the process of being secured but contracts have not been signed. The rights to all of these potential contracts are being assigned to UNERGI, INC. Island Plaza Joint Venture in Las Vegas. A site in front of the Showcase facing the corner of Las Vegas Blvd. (the strip) and Tropicana. Las Vegas Airport property. NW corner of Tropicana and Paradise. Maxim Hotel and Casino in Las Vegas. Side Wall. Freemont Street in Las Vegas. End of the walkway. Argosy Riverboat in Cincinnati. Inside the Atrium. All-Star Sports Cafe in Manhattan. Side of the building. NJ Turnpike heading towards the Holland tunnel. Billboard with Champion Outdoor. Cleveland, Ohio at the Point with PlayHouse Square. Reno Airport baggage area with Reno Airport. Los Angeles billboard. Corner of Burbank and Sepulveda with owners. SCHEDULE 2.9 ------------ PROPERTIES OF UNERGI None SCHEDULE 3.5 LIST OF PARENT LIABILITIES Sid Lucero $234,860 Joe Menza $ 54,000 Troy Lowrie $641,152 EX-10.5 16 0016.txt MERGER AGREEMENT WITH SCOVEL AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER between SCOVEL CORPORATION, a Delaware corporation ("Scovel"), and NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Colorado corporation ("New Millennium"), Scovel and New Millennium being sometimes referred to herein as the "Constituent Corporations." WHEREAS, the board of directors of each Constituent Corporation deems it advisable that the Constituent Corporations merge into a single corporation in a transaction intended to qualify as a reorganization within the meaning of Section 368 (a)(1)(A) of the Internal Revenue Code of 1986, as amended ("the Merger"); NOW, THEREFORE, in consideration of the premises and the respective mutual covenants, representations and warranties herein contained, the parties agree as follows: 1. SURVIVING CORPORATION. Scovel shall be merged with and into New Millennium, which shall be the surviving corporation in accordance with the applicable laws of its state of incorporation. 2. MERGER DATE. The Merger shall become effective (the" Merger Date") upon the completion of: 2.1. Adoption of this agreement by Scovel pursuant to the General Corporation Law of Delaware and by New Millennium pursuant to Colorado Revised Statutes and the Colorado General Corporation Law. 2.2. Execution and filing by New Millennium of Articles of Merger with the Department of State of the State of Colorado in accordance with the Colorado Revised Statutes. 2.3. Execution and filing by Scovel of a Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the General Corporation Law of Delaware. 3. TIME OF FILINGS. The Articles of Merger shall be filed with the Department of State of the State of Colorado and the Certificate of Merger shall be filed with the Secretary of State of Delaware upon the approval, as required by law, of this agreement by the Constituent Corporations and the fulfillment or waiver of the terms and conditions herein. These filings will be completed within two weeks from the execution of this Agreement. 4. GOVERNING LAW. The surviving corporation shall be governed by the laws of the State of incorporation of New Millennium. 5. CERTIFICATE OF INCORPORATION. The Articles of Incorporation of New Millennium shall be the Articles of Incorporation of the surviving corporation from and after the Merger Date, subject to the right of New Millennium to amend its Articles of Incorporation in accordance with the laws of the State of its incorporation. 6. BYLAWS. The Bylaws of the surviving corporation shall be the Bylaws of New Millennium as in effect on the date of this agreement. 7. BOARD OF DIRECTORS AND OFFICERS. The officers and directors of New Millennium, or such other persons as shall be selected by it, shall be the officers and directors of the surviving corporation following the Merger Date. 8. NAME OF SURVIVING CORPORATION. The name of the surviving corporation will continue as "New Millennium Media International, Inc." unless changed by New Millennium. 9. CONVERSION. The mode of carrying the Merger into effect and the manner and basis of converting the shares of Scovel into shares of New Millennium are as follows: 9.1. The aggregate number of shares of Scovel Common Stock issued and outstanding on the Merger Date shall, by virtue of the Merger and without any action on the part of the holders thereof, be converted into an aggregate of 500,000 shares of New Millennium Common Stock adjusted by any increase for fractional shares and reduced by any Dissenting Shares (defined below). The New Millennium Common Stock to be issued hereunder ("the New Millennium Shares") will be issued pursuant to Rule 506 of the General Rules and Regulations of the Securities and Exchange Commission, will be restricted as to transferability pursuant to Rule 144 thereof, and will bear substantially the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. 9.2. Upon completion of the Merger, there shall be 24,500,000 shares of New Millennium Common Stock issued and outstanding, subject to such adjustments, held as follows: 500,000 common shares held by Gerald Ghini and 24,000,000 common shares held by the other shareholders of New Millennium. The management of New Millennium will not consolidate, reverse split or rollback the common shares of New Millennium during the one-year period in which Gerald Ghini is restricted from selling the 500,000 shares of New Millennium stock. Such dilution would have an adverse effect on the amount and value of shares issued to Gerald Ghini by New Millennium. 9.3. All outstanding Common or Preferred Stock of Scovel and all warrants, options or other rights to its Common or Preferred Stock shall be retired and canceled as of the Merger Date. 9.4. Each share of Scovel Common Stock that is owned by Scovel as treasury stock shall, by virtue of the Merger and without any action on the part of Scovel, be retired and canceled as of the Merger Date. 9.5. Each certificate evidencing ownership of shares of New Millennium Common Stock issued and outstanding on the Merger Date or held by New Millennium in its treasury shall continue to evidence ownership of the same number of shares of New Millennium Common Stock. 9.6. New Millennium Common Stock shall be issued to the holders of Scovel Common Stock in exchange for their shares on a prorata bases in accordance with each holder's relative ownership of the Scovel Common Stock that is being exchanged. 9.7. The shares of New Millennium Common Stock to be issued in exchange for Scovel Common Stock hereunder shall be proportionately reduced by any shares owned by Scovel shareholders who shall have timely objected to the Merger (the" Dissenting Shares") in accordance with the provisions of the General Corporation Law of Delaware, as provided therein. 10. EXCHANGE OF CERTIFICATES. As promptly as practicable after the Merger Date, each holder of an outstanding certificate or certificates theretofore representing shares of Scovel Common Stock (other than certificates representing Dissenting Shares) shall surrender such certificate(s) for cancellation to the party designated herein to handle such exchange (the "Exchange Agent"), and shall receive in exchange a certificate or certificates representing the number of full shares of New Millennium Common Stock into which the shares of Scovel Common Stock represented by the certificate or certificates so surrendered shall have been converted. Any exchange of fractional shares will be rounded up to the next highest number of full shares. New Millennium may, in its discretion, require a bond in customary form before issuing any share certificate where a corresponding share certificate has not been delivered by a shareholder of Scovel because of loss or other reason. 2 11. UNEXCHANGED CERTIFICATES. Until surrendered, each outstanding certificate that prior to the Merger Date represented Scovel Common Stock (other than certificates representing Dissenting Shares) shall be deemed for all purposes, other than the payment of dividends or other distributions, to evidence ownership of the number of shares of New Millennium Common Stock into which it was converted. No dividend or other distribution payable to holders of New Millennium Common Stock as of any date subsequent to the Merger Date shall be paid to the holders of outstanding certificates of Scovel Common Stock; provided, however, that upon surrender and exchange of such outstanding certificates (other than certificates representing Dissenting Shares), there shall be paid to the record holders of the certificates issued in exchange therefore the amount, without interest thereon, of dividends and other distributions that would have been payable subsequent to the Merger Date with respect to the shares of New Millennium Common Stock represented thereby. 12. EFFECT OF THE MERGER: On the Merger Date, the separate existence of Scovel shall cease (except insofar as continued by statute), and it shall be merged with and into New Millennium. All the property, real, personal and mixed, of each of the Constituent Corporations, and all debts due to either of them, shall be transferred to and vested in New Millennium, without further act or deed. New Millennium shall thenceforth be responsible and liable for all the liabilities and obligations, including liabilities to holders of Dissenting Shares, of each of the Constituent Corporations, and any claim or judgment against either of the Constituent Corporations maybe enforced against New Millennium. 13. REPRESENTATIONS AND WARRANTIES OF SCOVEL. Scovel represents and warrants that: 13.1. CORPORATE ORGANIZATION AND GOOD STANDING. Scovel is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is qualified to do business as a foreign corporation in each jurisdiction, if any, in which its property or business requires such qualification. 13.2. REPORTING COMPANY STATUS. Scovel has filed with the Securities and Exchange Commission a registration statement in form 10-SB, which became effective pursuant to the Securities Exchange Act of 1934 on February 9, 2000 and is a reporting company pursuant to Section (g) thereunder. 13.3. REPORTING COMPANY FILINGS. Scovel has timely filed and is current on all reports required to be filed by it pursuant to Section 13 of the Securities Exchange Act of 1934. 13.4. CAPITALIZATION. Scovel's authorized capital stock consists of 100,000,000 shares of Common Stock, $.0001 par value, of which 5,000,000 shares are issued and outstanding. 13.5. ISSUED STOCK. All the outstanding shares of its Common Stock are duly authorized and validly issued, fully paid and non-assessable. 13.6. STOCK RIGHTS. Except as set out by attached schedule, there are no stock grants, options, rights, warrants or other rights to purchase or obtain Scovel Common or Preferred Stock issued or committed to be issued. 13.7. CORPORATE AUTHORITY. Scovel has all requisite corporate power and authority to own, operate and lease its properties, to carry on its business as it is now being conducted and to execute, deliver, perform and conclude the transactions contemplated by this agreement and all other agreements and instruments related to this agreement. 13.8 COMPLIANCE WITH RULE 12g-3. As a result of the merger and in accordance with Rule 12g-3, NEW MILLENNIUM will be the successor company and the common stock will be deemed qualified for listing on the Bulletin Board. 13.9. FINANCIAL STATEMENTS. Scovel's financial statements dated January 21, 2000, copies of which will have been delivered by Scovel to New Millennium prior to the Merger Date (the "Scovel Financial Statements"), fairly present the financial condition of Scovel as of the date therein and the results of its operations for the periods then ended in conformity with generally accepted accounting principles consistently applied. 3 13.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or reserved against in the Scovel Financial Statements, Scovel did not have at that date any liabilities or obligations (secured, unsecured, contingent, or otherwise) of a nature customarily reflected in a corporate balance sheet prepared in accordance with generally accepted accounting principles. 13.11. NO MATERIAL CHANGES. There has been no material adverse change in the business, properties or financial condition of Scovel since the date of the Scovel Financial Statements. 13.12. LITIGATION. There is not, to the knowledge of Scovel, any pending, threatened, or existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or investigation, threatened or contemplated against Scovel or against any of its officers. 13.13. CONTRACTS. Scovel is not a party to any material contract not in the ordinary course of business that is to be performed in whole or in part at or after the date of this agreement. 13.14. TITLE. Scovel has good and marketable title tall the real property and good and valid title to all other property included in the Scovel Financial Statements. The properties of Scovel are not subject to any mortgage, encumbrance or lien of any kind except minor encumbrances that do not materially interfere with the use of the property in the conduct of the business of Scovel. 13.15. TAX RETURNS. All required tax returns for federal, state, county, municipal, local, foreign and other taxes and assessments have been properly prepared and filed by Scovel for all years for which such returns are due unless an extension for filing any such return has been filed. Any and all federal, state, county, municipal, local, foreign and other taxes and assessments, including any and all interest, penalties and additions imposed with respect to such amounts have been paid or provided for. The provisions for federal and state taxes reflected in the Scovel Financial Statements are adequate to cover any such taxes that may be assessed against Scovel in respect of its business and its operations during the periods covered by the Scovel Financial Statements and all prior periods. 13.16. NO VIOLATION. Consummation of the Merger will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree, law, or regulation to which any property of Scovel is subject or by which Scovel is bound. 14. REPRESENTATIONS AND WARRANTIES OF NEW MILLENNIUM. New Millennium represents and warrants that: 14.1. CORPORATE ORGANIZATION AND GOOD STANDING. New Millennium is a corporation duly organized, validly existing, and in good standing under the laws of the State of Colorado and is qualified to do business as a foreign corporation in each jurisdiction, if any, in which its property or business requires such qualification. 14.2. CAPITALIZATION. New Millennium's authorized capital stock consists of 35,000,000 shares of Common Stock, $.001 par value, of which 24,000,000 shares are issued and outstanding, and 10,000,000 shares of preferred stock, of which none are issued and outstanding. 14.3. ISSUED STOCK. All the outstanding shares of its Common Stock are duly authorized and validly issued fully paid and nonassessable. 14.4. STOCK RIGHTS. There are no stock grants, options, rights, warrants or other rights to purchase or obtain New Millennium Common or Preferred Stock issued or committed to be issued. 14.5 CORPORATE AUTHORITY. New Millennium has all Requisite corporate power and authority to own, operate and lease its properties, to carry on its business as it is now being conducted and to execute, deliver, perform and conclude the transactions contemplated by this Agreement and all other agreements and instruments related to this agreement. 4 14.6. SUBSIDIARIES. Except as set out in Disclosure Schedule 14.6, New Millennium has no subsidiaries. 14.7. FINANCIAL STATEMENTS. New Millennium's Financial Statements fairly present the financial condition of New Millennium as of the date therein and the results of its operations for the periods then ended in conformity with generally accepted accounting principles consistently applied. 14.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or reserved against in the New Millennium Financial Statements, New Millennium did not have at that date any liabilities or obligations (secured, unsecured, contingent, or otherwise) of nature customarily reflected in a corporate balance sheet prepared in accordance with generally accepted accounting principles. 14.9. NO MATERIAL CHANGES. There has been no material adverse change in the business, properties or financial condition of New Millennium since the date of the New Millennium Financial Statements. 14.10. LITIGATION. Except as set out in Disclosure Schedule 14.10, there is not, to the knowledge of New Millennium, any pending, threatened, or existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or investigation, threatened or contemplated against New Millennium or against any of its officers. 14.11. CONTRACTS. New Millennium is not a party to any material contract not in the ordinary course of business or in the course of its proposed acquisitions that is to be performed in whole or in part at or after the date of this Agreement. 14.12. TITLE. New Millennium has good and marketable title to all the real property and good and valid title to all other property included in the New Millennium Financial Statements. The properties of New Millennium are not subject to any mortgage, encumbrance or lien of any kind except minor encumbrances that do not materially interfere with the use of the property in the conduct of the business of New Millennium. 14.13. TAX RETURNS. All required tax returns for federal, state, county, municipal, local, foreign and other taxes and assessments have been properly prepared and filed by New Millennium for all years for which such returns are due unless an extension for filing any such return has been filed. Any and all federal, state, county, municipal, local, foreign and other taxes and assessments, including any and all interest, penalties and additions imposed with respect to such amounts have been paid or provided for. The provisions for federal and state taxes reflected in the New Millennium Financial Statements are adequate to cover any such taxes that maybe assessed against New Millennium in respect of its business and its operations during the periods covered by the New Millennium Financial Statements and all prior periods. 14.14. NO VIOLATION. Consummation of the Merger will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree, law, or regulation to which any property of New Millennium is subject or by which New Millennium is bound. 15. CONDUCT OF SCOVEL PENDING THE MERGER DATE. Scovel covenants that between the date of this Agreement and the Merger Date: 15.1. No change will be made in Scovel's Articles of Incorporation or bylaws. 15.2. Scovel will not make any change in its authorized or issued capital stock, declare or pay any dividend or other distribution or issue, encumber, purchase, or otherwise acquire any of its capital stock other than as provided herein. 15.3. Scovel will use its best efforts to maintain and preserve its business organization, employee relationships and goodwill intact, and will not enter into any material commitment except in the ordinary course of business. 5 16. CONDUCT OF NEW MILLENNIUM PENDING THE MERGER DATE. New Millennium covenants that between the date of this Agreement and the Merger Date: 16.1. No change will be made in New Millennium's Articles of incorporation or bylaws. 16.2. New Millennium will not make any change in its authorized or issued capital stock, declare or pay any dividend or other distribution or issue, encumber, purchase, or otherwise acquire any of its capital stock otherwise than as provided herein. 16.3. New Millennium will use its best efforts to maintain and preserve its business organization, employee relationships and goodwill intact, and will not enter into any material commitment except in the ordinary course of business. 17. CONDITIONS PRECEDENT TO OBLIGATION OF NEW MILLENNIUM. New Millennium's obligation to consummate the Merger shall be subject to fulfillment on or before the Merger Date of each of the following conditions, unless waived in writing by Scovel: 17.1. NEW MILLENNIUM'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of New Millennium set forth herein shall be true and correct at the Merger Date as though made at and as of that date, except as affected by transactions contemplated hereby. 17.2. NEW MILLENNIUM'S COVENANTS. New Millennium shall have performed all covenants required by this agreement to be performed by it on or before the Merger Date. 17.3. APPROVAL. New Millennium shall have approved this agreement in such manger as is required by law including all appropriate action by directors and, if required, by shareholders. 17.4. SUPPORTING DOCUMENTS OF NEW MILLENNIUM. New Millennium shall have delivered to Scovel supporting documents in form and substance satisfactory to Scovel to the effect that: (i) New Millennium is a corporation duly organized, validly existing, and in good standing. (ii) New Millennium's authorized and issued capital stock is asset forth herein. (iii) The execution and adoption of this agreement have been duly authorized by New Millennium in such manner as is required bylaw including all appropriate action by directors and, if required, by shareholders. 18. CONDITIONS PRECEDENT TO OBLIGATION OF NEW MILLENNIUM. New Millennium's obligation to consummate the Merger shall be subject to fulfillment by Scovel on or before the Merger Date of each of the following conditions, unless waived in writing by New Millennium: 18.1. SCOVEL'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of Scovel set forth herein shall be true and correct at the Merger Date as though made at and as of that date, except as affected by transactions contemplated hereby 18.2. SCOVEL'S COVENANTS. Scovel shall have performed all covenants required by this agreement to be performed by it on or before the Merger Date. 18.3. APPROVAL. Scovel shall have approved this Agreement in such manner as is required by law including all appropriate action by directors and, if required, by shareholders. 18.4. SUPPORTING DOCUMENTS OF SCOVEL. Scovel shall have delivered to New Millennium supporting documents in form and substance satisfactory to New Millennium to the effect that: (i) Scovel is a corporation duly organized, validly existing, and in good standing. 6 (ii) Scovel's authorized and issued capital stock is as set forth herein. (iii) The execution and adoption of this Agreement have been duly authorized by Scovel in such manner as is required bylaw including all appropriate action by directors and, if required, by shareholders. 19. ACCESS. From the date hereof to the Merger Date, New Millennium and Scovel shall provide each other with such information and permit each other's officers and representatives such access to its properties and books and records as the other may from time to time reasonably request. If the Merger is not consummated with the intended results as defined hereafter, all documents and consideration received in connection with this agreement shall be returned to the party furnishing such documents and consideration, and all information so received shall be treated as confidential. The results intended from this merger are that NEW MILLENNIUM will emerge with fully reporting status. 20. CLOSING. 20.1. The transfers and deliveries to be made pursuant to this agreement (the "Closing") shall be made by and take place at the offices of the Exchange Agent or other location designated by the Constituent Corporations without requiring the meeting of the parties hereof. All proceedings to be taken and all documents to be executed at the Closing shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed. 20.2. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission required by this agreement or any signature required thereon may be used in lieu of an original writing or transmission or signature for any and all purposes for which the original could be used, provided that such copy, facsimile telecommunication or other reproduction shall be complete reproduction of the entire original writing or transmission or original signature. 20.3. At the Closing, Scovel shall deliver to the Exchange Agent in satisfactory form, if not already delivered to New Millennium: (i) A list of the holders of record of the shares of Scovel Common Stock being exchanged, with an itemization of the number of shares held by each, the address of each holder, and the aggregate number of shares of New Millennium Common Stock to be issued to each holder; (ii) Evidence of the execution and adoption of this Agreement in such manner as is required by law including all appropriate action by directors and, if required, by shareholders; (iii) Certificate of the Secretary of State of Delaware as of a recent date as to the good standing of Scovel; (iv) Certified copies of the resolutions of the board of directors of Scovel authorizing the execution of this agreement and the consummation of the Merger; (v) The Scovel Financial Statements; (vi) Secretary's certificate of incumbency of the officers and directors of Scovel; (vii) Any document as may be specified herein or required to satisfy the conditions, representations and warranties enumerated elsewhere herein; and (viii) The share certificates for the outstanding Common Stock of Scovel to be exchanged hereunder or, where any such certificate is not delivered, an affidavit of lost certificate or other reason for non-delivery. 20.4. At the Closing, New Millennium shall deliver to the Exchange Agent in satisfactory form, if not already delivered to Scovel: (i) A list of its shareholders of record; 7 (ii) Evidence of the execution and adoption of this Agreement in such manner as is required by law including all appropriate action by directors and, if required, by shareholders; (iii) Certificate of the Secretary of State of its state of incorporation as of a recent date as to the good standing of New Millennium; (iv) Certified copies of the resolutions of the board of directors of New Millennium authorizing the execution of this agreement and the consummation of the Merger; (v) The New Millennium Financial Statements; (vi) Secretary's certificate of incumbency of the officers and directors of New Millennium; (vii) Any document as may be specified herein or required to satisfy the conditions, representations and warranties enumerated elsewhere herein; and (viii) The share certificates of New Millennium to be delivered to the shareholders of Scovel hereunder, in proper names and amounts, and bearing legends, if any, required and appropriate under applicable securities laws. 21. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Constituent Corporations set out herein shall survive the Merger Date. 22. ARBITRATION. 22.1. SCOPE. The parties hereby agree that any and all claims (except only for requests for injunctive or other equitable relief) whether existing now, in the past or in the future as to which the parties or any affiliates may be adverse parties, and whether arising out of this agreement or from any other cause, will be resolved by arbitration before the American Arbitration Association within the state of Florida. 22.2. CONSENT TO JURISDICTION, SITUS AND JUDGMENT. The parties hereby irrevocably consent to the jurisdiction of the American Arbitration Association and the situs of the arbitration (and any requests for injunctive or other equitable relief) within the state of Florida. Any award in arbitration may be entered in any domestic or foreign court having jurisdiction over the enforcement of such awards. 22.3. APPLICABLE LAW. The law applicable to the arbitration and this agreement shall be that of the State of Colorado, determined without regard to its provisions, which would otherwise apply to question of conflict of laws. 22.4. DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion, allow the parties to make reasonable disclosure and discovery in regard to any matters which are the subject of the Arbitration and to compel compliance with such disclosure and discovery order. The arbitrator may order the parties to comply with all or any of the disclosure and discovery provisions of the Federal Rules of Civil Procedure, as they then exist, as may be modified by the arbitrator consistent with the desire to simplify the conduct and minimize the expense of the arbitration. 22.5. RULES OF LAW. Regardless of any practices of arbitration to the contrary, the arbitrator will apply the rules of contract and other law of the jurisdiction whose law applies to the arbitration so that the decision of the arbitrator will be, as much as possible, the same as if the dispute had been determined by a court of competent jurisdiction. 22.6. FINALITY AND FEES. Any award or decision by the American Arbitration Association shall be final, binding and non-appealable except as to errors of law or the failure of the arbitrator to adhere to the arbitration provisions contained in this agreement. Each party to the arbitration shall pay its own costs and counsel fees except as specifically provided otherwise in this agreement. 8 22.7. MEASURE OF DAMAGES. In any adverse action, the parties shall restrict themselves to claims for compensatory damages and\or securities issued or to be issued and no claims shall be made by any party or affiliate for lost profits, punitive or multiple damages. 22.8. COVENANT NOT TO SUE. The parties covenant that under no conditions will any party or any affiliate file any action against the other (except only requests for injunctive or other equitable relief) in any forum other than before the American Arbitration Association, and the parties agree that any such action, if filed, shall be dismissed upon application and shall be referred for arbitration hereunder with costs and attorney's fees to the prevailing party. 22.9. INTENTION. It is the intention of the parties and their affiliates that all disputes of any nature between them, whenever arising, whether in regard to this Agreement or any other matter, from whatever cause, based on whatever law, rule or regulation, whether statutory or common law, and however characterized, be decided by arbitration as provided herein and that no party or affiliate be required to litigate in any other forum any disputes or other matters except for requests for injunctive or equitable relief. This Agreement shall be interpreted in conformance with this stated intent of the parties and their affiliates. 22.10. SURVIVAL. The provisions for arbitration contained herein shall survive the termination of this agreement for any reason. 23. FAILURE TO MAINTAIN BULLETIN BOARD LISTING. If as a result of the merger described herein New Millennium shall fail to be deemed a successor issuer and its securities shall not continue to be listed on the Bulletin Board, the merger transaction shall be unwound and all shares issued to each party shall be cancelled. 24. GENERAL PROVISIONS. 23.1. FURTHER ASSURANCES. From time to time, each party will execute such additional instruments and take such actions as may be reasonably required to carry out the intent and purposes of this agreement. 23.2. WAIVER. Any failure on the part of either party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived in writing by the party to whom such compliance is owed. 23.3. BROKERS. Each party agrees to indemnify and hold harmless the other party against any fee, loss or expense arising out of claims by brokers or finders employed or alleged to have been employed by the indemnifying party. 23.4. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been given if delivered in person or sent by prepaid first-class certified mail, return receipt requested, or recognized commercial courier service, as follows: If to Scovel, to: Scovel Corporation 128 April Rd. Port Moody, B.C. Canada V3H-3M5 If to New Millennium, to: New Millennium Media International, Inc. 101 Philippe Parkway, Suite 305 Safety Harbor, Florida 34695 9 24. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Colorado. 25. ASSIGNMENT. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns; provided, however, that any assignment by either party of its rights under this agreement without the written consent of the other party shall be void. 26. COUNTERPARTS. This agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures sent by facsimile transmission shall be deemed to be evidence of the original execution thereof. 27. EXCHANGE AGENT AND CLOSING DATE. The Exchange Agent shall be Raymond Rayder, Safety Harbor, Florida. The Closing shall take place upon the fulfillment by each party of all the conditions of Closing required herein, but not later than 15 days following execution of this Agreement unless extended by mutual consent of the parties. 28. REVIEW OF AGREEMENT. Each party acknowledges that it has had time to review this Agreement and, as desired, consult with counsel. In the interpretation of this agreement, no adverse presumption shall be made against any party on the basis that it has prepared, or participated in the preparation of, this Agreement. 29. SCHEDULES. All schedules attached hereto, if any, shall be acknowledged by each party by signature or initials thereon. 30. EFFECTIVE DATE. The effective date of this agreement shall be March 9, 2000. IN WITNESS WHEREOF, the parties have executed this Agreement. SCOVEL CORPORATION ____________________________ This 9th day of March 2000 By: Gerald Ghini President NEW MILLENNIUM MEDIA INTERNATIONAL, INC. ____________________________ This 9th day of March 2000 By: John Thatch, President & CEO. EXCHANGE AGENT ____________________________ This 8th day of March 2000 By: Raymond Rayder, Esq. 10 EX-10.6 17 0017.txt DISTRIBUTION AGREEMENT WITH MULTIADD EXCLUSIVE DISTRIBUTION AGREEMENT between Multiadd Ltd and New Millennium Media International Inc. Multiadd Ltd, hereinafter referred to as the "Company", and New Millennium Media International Inc., hereinafter referred to as the "Distributor", in consideration of the promises made herein and intending to be legally bound, agree as follows: ARTICLE 1. RECITALS 1.01 The Company is a corporation duly organised, validly existing, and in good standing under the Laws of England. The Company has its registered office at Faulkner House, Victoria Street, St. Albans, Herts, ALI 3SE. 1.02 The Distributor is a corporation duly organised, validly existing, and in good standing under the law of the State of Colorado. The Distributor has its principle office and place of business at 101 Philippe Parkway, Suite 305, Safety Harbor, Florida, 34695, USA 1.03 The Company is engaged in the manufacture and sale of poster display machines, commonly known as "Eyecatcher" and "MultiAdd display units". The Company is in possession and control of a Patent Licence Agreement between Maurice Grosse ("Licensor") and Multiadd Ltd ("Licensee"). 1.04 (a) The Distributor represents that they possess the technical facilities and ability to promote the sale and use of the products manufactured by the Company and is desirous of developing demand for and selling and leasing such Product on an exclusive basis in the Territory hereinafter described. (b) The Company is desirous of having the Distributor develop demand for and sell and lease its Product in such Territory on the Terms and Conditions set forth herein. INTERPRETATION 1.05 In this Agreement, unless the context otherwise requires: "FORCE MAJEURE" means, in relation to either party, any circumstances beyond the reasonable control of that party (including, without limitation, any strike, lockout or other form of industrial action) "PRODUCT" means a poster changing machine incorporating elements of 1 the United States Patent No. 4901460 (and including any casings, containers, attachments or accessories housing, or sold, in conjunction with the poster changing machine and together comprising the total of the product required by the customer) and "Products" shall be construed accordingly "INTELLECTUAL PROPERTY" means any patent, copyright, registered design, trade mark or other industrial or intellectual property right subsisting in the Territory in respect of the Product, and applications for any of the foregoing "RESTRICTED INFORMATION" means any information which is disclosed to either Party by the other party pursuant to or in connection with this Agreement (whether orally or in writing, and whether or not such information is expressly stated to be confidential or marked as such) "TERRITORY" means the 50 United States "TRADE MARKS" means: (a) the trade marks registered in the name of the Company of which particulars are given in Schedule C; and (b) such other trade marks as are used by the Company on or in relation to the Product at any time during this Agreement 1.06 Any reference in this Agreement to "writing" or cognate expressions includes a reference to telex, cable, facsimile transmission or comparable means of communication. 1.07 Any reference in this Agreement to any provision of a statute shall be construed as a reference to that provision as amended, re-enacted or extended at the relevant time. 1.08 The headings in this Agreement are for convenience only and shall not affect its interpretation. ARTICLE 2. DISTRIBUTORSHIP 2.01 (a) The Company appoints the Distributor as the exclusive distributor for the sale and lease of the Product at either wholesale or retail within the Territory. The Territory so described may be subsequently enlarged, reduced, or otherwise changed in area with the mutual written consent of the parties hereto. (b) During the continuance of this Agreement, the Company shall not appoint any other or different person, firm, organisation, entity, or corporation to sell or lease the Product in the Territory. 2 (c) During the continuance of this Agreement, the Company shall use its best endeavours to restrict all of its distributors or agents from selling or leasing the Product in the territory of another distributor or agent. 2.02 The Distributor accepts the appointment to develop demand for and to sell and lease the Product within the Territory and will make all sales and leases hereunder in accordance with this Agreement. 2.03 Unless terminated as hereinafter provided in Section 10, this Agreement and the appointment of the Distributor hereunder shall, continue in force until December 31, 2001 and shall be automatically renewed annually thereafter and govern all transactions between the parties hereto. 2.04 The Distributor shall be entitled to describe itself as the Company's "Authorised Distributor" for the Product, but shall not hold itself out as the Company's agent for sales or leases of the Product or as being entitled to bind the Company in any way. 2.05 The Distributor shall not sell any of the Product which it purchases from the Company through a sales agent or to a sub-distributor without the express written permission of the Company, such consent not to be unreasonably withheld, PROVIDED THAT the Distributor shall at all times be responsible to the Company for the acts deeds or occasions of any such agent or sub-distributor. 2.06 Nothing in this Agreement shall entitle the Distributor to: (a) any priority of supply in relation to the Product as against the Company's other distributors or customers; or (b) any right or remedy against the Company if any of the Product are sold in the Territory by any person or entity outside the Territory other than the Company. 2.07 If in any period of this Agreement the number of units ordered and paid for falls short of the values for such period as shown in Section 5.08 then, the Company shall be entitled, by giving not less than one weeks written notice to the Distributor within one month after the end of that period of this Agreement, to: (a) terminate the restrictions on the Company specified in Section 2.01(b); or (b) terminate this Agreement. 2.08 The Distributor shall not during the continuance of this Agreement: (a) obtain the Product (or any goods which compete with the Product) for resale or lease from any person or entity other than the Company; (b) be concerned or interested, either directly or indirectly, in the 3 manufacture or distribution in the Territory of any goods which compete with the Product; (c) seek customers, establish any branch or maintain any distribution depot for the Product in any country which is outside the Territory; or (d) sell the Product to any customer which is: (1) outside the Territory; or (2) within the Territory if to the knowledge of the Distributor that customer intends to resell the Product in any country which is outside the Territory. ARTICLE 3. ORDERS 3.01 (a) All orders the Company receives for the Product from the Distributor are subject to acceptance by the Company, and the Company shall promptly notify the Distributor of any orders that it rejects or cannot fulfil. (b) The Company will use its best endeavours to supply the Product to the Distributor in accordance with the Distributor's orders. (c) The Company shall not be under any obligation to continue the manufacture of all or any of the Product, and shall be entitled to make such alterations to the specifications of the Product as it may think fit. (d) Each of the orders for the Product shall constitute a separate contract, and any default by the Company in relation to any one order shall, except in the event of Force Majeure or Section 3.03, entitle the Distributor to terminate this Agreement in the manner hereunder. (e) The Distributor shall, in respect of each order for the Product to be supplied hereunder, be responsible for: (1) ensuring the accuracy of the order; (2) providing the Company with any information which is necessary in order to enable the Company to fulfil the order and to comply with all labelling, marketing and other applicable legal requirements in the Territory; and (3) obtaining any necessary import licences, certificates of origin or other requisite documents, and paying all applicable customs, duties and taxes in respect of the importation of the Product into the Territory and their sale or lease in the Territory. 3.02 The Distributor shall give the Company not less than one month's written notice of its estimated requirements of the Product for each month, and shall promptly notify the Company of any changes in circumstances that may affect its requirements. 3.03 Upon receipt and confirmation of each order the Company shall as soon as is practicable inform the Distributor of the Company's estimated delivery 4 date for the consignment. The Company shall use all reasonable endeavours to meet the delivery date and the Company shall have no liability to the Distributor if, notwithstanding such endeavours, there is any unforeseen delay in delivery. 3.04 The title to any consignment of the Product shall not pass to the Distributor until the Company has received payment in full of the price thereof. 3.05 Risk of loss of or damage to any consignment of the Product shall pass to the Distributor from the time the Company notifies the Distributor that such consignment has been placed in a despatch area, clearly labelled for delivery and is available for collection or from the time of delivery to the carrier at the Company's premises, whichever is earlier. 3.06 The standard conditions of sale of the Company from time to time shall apply to all sales of the Product to the Distributor pursuant to this Agreement, except to the extent that any of the same is inconsistent with any of the provisions of this Agreement, in which case the latter shall prevail. ARTICLE 4. PRICING AND PAYMENT 4.01 All of the Product to be supplied to the Distributor pursuant to this Agreement shall be sold on an Ex-Works basis, and accordingly the Distributor shall, in addition to the price, be liable for arranging and paying all costs of packaging, transport and insurance of each consignment. 4.02 Where the Company agrees to arrange for transport and insurance as agent for the Distributor the Company does so as the agent and the Distributor shall be responsible for acts, deeds or omissions of the Company whilst acting in this capacity as if such acts, deeds or omissions were that of the Distributor, the Company shall provide the Distributor with a schedule of costs prior to making final arrangements for shipment and insurance coverage, and the Distributor shall not unreasonably withhold its approval of such costs, and the Distributor shall reimburse to the Company the full costs thereof and all the applicable provisions of this Agreement shall apply with respect to the payment of such costs as they apply to payment of the price of the Product. 4.03 The prices for the Product to be supplied hereunder shall be the Company's Ex-Works net wholesale prices as described in Schedule A, and accordingly the Company shall: (a) supply to the Distributor up to date Ex-Works price lists from time to time; and (b) give the Distributor not less than ninety days notice in writing of any alteration in such price lists, and the prices as so altered shall apply to all of the Product ordered on or after the applicable 5 date of the increase. 4.04 Full payment of any order must be received by MultiAdd within 7 days of the order being placed. 4.05 If the Distributor fails to pay for any of the Product within 15 (fifteen) days after the date of the invoice thereof, the Company shall be entitled (without prejudice to any other right or remedy it may have) to: (a) cancel or suspend any further delivery to the Distributor under any order; (b) sell or otherwise dispose of any of the Product which are the subject of any order by the Distributor, whether or not appropriated thereto, and apply the proceeds of sale to the overdue payment; and (c) charge the Distributor interest on the price at the rate of 10% (ten per cent) per annum above the National Westminster Bank plc base rate in force from time to time from the date the payment became due until actual payment is made (irrespective of whether the date of payment is before or after any judgement or award in respect of the same). 4.06 All prices for the Product are exclusive of any applicable value added or any other sales tax, for which the Distributor shall be additionally liable. 4.07 All payments shall be made by the Distributor in sterling (GBP), at the option of the Company, by: (a) cash; (b) SWIFT payment to such bank account as the Company may from time to time notify in writing to the Distributor; ARTICLE 5. MARKETING AND SUPPORT 5.01 The Distributor shall use its best endeavours to promote the sale and lease of the Product throughout the Territory and, subject to compliance by the Company of its obligations under Section 3.01(b), to satisfy market demand therefor. 5.02 The Distributor shall be entitled, subject as provided in this Agreement, to promote and market the Product in the Territory in such manner as it may think fit, and in particular shall be entitled to resell or lease the Product to its customers at such prices as it may determine. 6 5.03 The Distributor shall maintain such stocks of the Product as may be necessary to meet its customers' requirements. 5.04 In connection with the promotion and marketing of the Product the Distributor shall: (a) make clear, in all dealings with customers and prospective customers, that it is acting as distributor of the Product and not as an agent of the Company; (b) comply with all legal requirements from time to time in force relating to the storage and sale or lease of the Product; (c) provide to the Company copies of its up to date price lists; (d) provide the Company on a quarterly basis with a report, in such form as the Company may reasonable require, of sales and leases of the Product which it has made in the preceding quarter and containing such other information as the Company may reasonably require; (e) from time to time consult with the Company's representatives for the purpose of assessing the state of the market in the Territory and permit them to inspect any premises or documents used by the Distributor in connection with the sale or lease of the Product; (f) at the request of the Company provide to it copies of such sales aids, including (without limiting the foregoing) catalogues, sales brochures and sales manuals, as relate to the Product; (g) use in relation to the Product only such advertising, promotional and selling materials as are approved in writing by the Company, and if the Company does not reject submitted advertising within 48 (forty-eight) hours of receipt then the submitted advertising shall be deemed approved; (h) maintain an active and suitably trained sales force; (i) provide and maintain at their own expense an efficient installation and maintenance service on all of the Product installed in the Territory to the minimum specification as described in Schedule D, and in accordance with any additional reasonable instructions issued from time to time by the Company; and (j) in connection with the maintenance of service on the Product, the Distributor shall carry in stock an adequate quantity of repair and replacement parts, as the Company may reasonably require, and provide at a reasonable price to the Distributor. In determining the number of parts that the Distributor is expected to stock, the Company will be governed by the number of its products in the Distributor's Territory to be serviced. 5.05 (a) The Company shall from time to time provide the Distributor with such samples, catalogues, brochures and up to date information concerning the 7 Product in the Company's standard format as the Company may consider appropriate in order to assist the Distributor to produce same in their own format for the sale or lease of the Product in the Territory, and the Company shall endeavour to answer as soon as practicable any technical enquiries concerning the Product which are made by the Distributor or its customers. (b) The Company agrees to provide at the Company's expense operating, marketing and technical and customer service support to the Distributor to the minimum as described in Schedule B hereinafter, and the Distributor may reasonably request further marketing and technical support from the Company at the expense of the Distributor. 5.06 The Distributor may charge to and collect from each person or entity that it sells or leases the Product acquired hereunder the following items, with no additional royalties or fees payable to the Company: (a) freight charges; and (b) installation, service, maintenance charges to be set forth on the invoice they render to the purchaser or lessee. 5.07 Notwithstanding the obligations of the Company in Section 2.01(c), where the sale or lease of the Product is made in the territory of one distributor and installation is made in the territory of another distributor: (a) Subject to the provisions of Subsection (b) the gross profit, being the difference between the selling distributor's regular cost and the actual selling price, resulting from the sale or lease shall be divided as follows: 30% of the gross profit to the selling distributor and 70% to the distributor in whose territory the installation is made PROVIDED THAT the Company shall have no responsibility to determine the accuracy of a distributor's report of gross profit nor in any manner for the debt of one distributor to another distributor. (b) In case of removal or resale of the Product by the purchaser for use in another territory, Subsection (a) shall not apply. (c) If any dispute arises between the distributors over the division of gross profits as referred to in Subsection (a) they shall submit the dispute to the Company, and its decision thereon shall be binding and final. (d) Nothing in this Section shall be construed so as to allow any distributor the right to sell, transfer, assign, lease, or license the Product in the Territory without the express prior written consent of the Distributor. 5.08 In the event that the Distributor's purchases from the Company are less than the minimum value hereinafter set forth, the Company shall have the right to terminate this Agreement as provided in Section 10. The minimum quotas are: 8 Through the period January 1st 2000 - 31st March 2000 (pound) 30,000.00 Through the period 1st April 2000 - 31st June 2000 (pound) 30,000.00 Through the period 1st July 2000 - 31st September 2000 (pound) 30,000.00 Through the period October 1st - 31st December 2000 (pound) 30,000.00 The minimum value for each succeeding quarter thereafter will be (pound) 30,000.00. 5.09 The Company agrees to provide Product to the Distributor at the minimum rate of 20 units per month, providing the Distributor has ordered and paid for such Product in the manner herein described. SECTION 6. INTELLECTUAL PROPERTY 6.01 The Company hereby authorises the Distributor to use any Trade Marks held by the Company from time to time in the Territory on or in relation to the Product for the purposes only of exercising its rights and performing its obligations under this Agreement and, subject as provided in Section 5.08, the Company shall not so authorise any other person or entity. 6.02 The Distributor shall ensure that each reference to and use of any Trades Marks by the Distributor is in a manner from time to time approved by the Company and accompanied by an acknowledgement, in a form approved by the Company, that the same is a trade mark (or registered trade mark) of the Company. 6.03 The Distributor shall not: (a) make any modifications to the Product or their packaging; (b) alter, remove or tamper With any Trade Marks, Patent Labels, numbers, or other means of identification used on or in relation to the Product; (c) use any of the Trade Marks in any way which might prejudice their distinctiveness or validity or goodwill of the Company therein; (d) use in relation to the Product any trade marks other than the Trade Marks without obtaining the prior written consent of the Company; or (e) use in the Territory any trade marks or trade names so resembling any trade mark or trade names of the Company as 9 to be likely to cause confusion or deception. 6.04 Except as provided in Section 7.01 the Distributor shall have no rights in respect of any trade names or Trade Marks used by the Company in relation to the Product or the other Intellectual Property rights of or the goodwill associated therewith, and the Distributor hereby acknowledges that, except as expressly provided in this Agreement, it shall not acquire any rights in respect thereof and that all such rights and goodwill are, and shall remain, vested in the Company. 6.05 The Distributor shall, at the expense of the Company, after prior written consent, take all such steps as the Company may reasonably require to assist the Company in maintaining the validity and enforceability of the Intellectual Property of the Company during the term of this Agreement. 6.06 The Distributor shall at the request of the Company execute such registered user Agreements or licenses in respect of the use of any Trade Marks in the Territory as the Company may reasonably require, provided that the provisions thereof shall not be more onerous or restrictive than the provisions of this Agreement. 6.07 The Distributor shall not do or authorise any third party to do any act which would or might invalidate or be inconsistent with any Intellectual Property of the Company and shall not omit or authorise any third party to omit to do any act which, by its omission, would have that effect or character. 6.08 The Distributor shall promptly and fully notify the Company of any actual, threatened or suspected infringement in the Territory of any Intellectual Property of the Company which comes to the Distributors notice, and any claim by any third party so coming to its notice that the importation of the Product into the Territory, or their sale therein, infringes any rights of any other person, and the Distributor shall at the request and expense of the Company do all such things as may be reasonably required to assist the Company in taking or resisting any proceedings in relation to any such infringement or claim. ARTICLE 7. CONFIDENTIALITY 7.01 Except as provided by sections 7.02 and 7.03, the Parties to this Agreement shall at all times during the continuance of this Agreement and after its termination: (a) use its best endeavours to keep all Restricted Information confidential and accordingly not to disclose any Restricted Information to any other person; and (b) not use any Restricted Information for any purpose other than 10 the performance of the obligations under this Agreement. 7.02 Any Restricted Information may be disclosed by the Distributor to: (a) any customers or prospective customers; (b) any governmental or other authority or regulatory body; or (c) any employees of the Distributor or any of the aforementioned persons, to such extent only as is necessary for the purposes contemplated by this Agreement, or as is required by law and subject in each case to the Distributor using its best endeavours to ensure that the person in question keeps the same confidential and does not use the same except for the purposes for which the disclosure is made. 7.03 Any Restricted Information may be used by the Distributor for any purpose, or disclosed by the Distributor to any other person, to the extent only that: (a) it is at the date hereof, or hereafter becomes, public knowledge through no fault of the Distributor (provided that in doing so the Distributor shall not disclose any Restricted Information which is not public knowledge); or (b) it can be shown by the Distributor, to the reasonable satisfaction of the Company, to have been known to it prior to its being disclosed by the Company to the Distributor. ARTICLE 8. WARRANTIES, LIABILITY AND INSURANCE 8.01 Subject as herein provided the Company warrants to the Distributor that: (a) all of the Product supplied hereunder will be of merchantable quality and will comply with any specification agreed for them; (b) the Trade Marks of which registration particulars are given in Schedule C are registered in the name of the Company and that it has disclosed to the Distributor all trade marks and trade names used by the Company in relation to the Product at the date of this Agreement; and (c) it is not aware of any rights of any third party in the Territory which would or might render the sale of the Product, or the use of any of the Trade Marks on or in relation to the Product, unlawful. 8.02 In the event of any breach of the Company's warranty in Section 8.01(a) (whether by reason of defective materials, production faults or otherwise) the Company's liability shall be limited to: (a) replacement of the Product in question; or (b) at the Company's option, repayment of the price (where this has been paid). 11 8.03 Notwithstanding anything to the contrary in this Agreement, the Company shall not, except in respect of death or personal injury caused by the negligence of the Company, be liable to the Distributor by reason of any representation or implied warranty, condition or other term or any duty at common law, or under the express terms of this Agreement, for any consequential loss or damage (whether for loss of profit or otherwise and whether occasioned by the negligence of the Company or its employees or agents or otherwise) arising out of or in conjunction with any act or omission of the Company relating to the manufacture or supply of the Product, their resale by the Distributor or their use by any customer. 8.04 Except for a fraudulent act by an employee, officer or director of either party related to this Agreement, the parties to this Agreement agree that any claim or dispute arising out of or related to this Agreement shall not subject the Company's nor the Distributor's individual employees, officers or directors to any personal legal exposure for the risks associated with this Agreement. Therefore, and notwithstanding anything to the contrary contained herein, the Company and the Distributor agree that as their sole and exclusive remedy, any claim, demand or suit shall be directed and/or asserted only against the Company or the Distributor and not against any of its employees, officers or directors. 8.05 Within 30 days of the execution of this Agreement the Distributor shall take out Product Liability Insurance for the Company's products within the Territory of an appropriate value, subject to any State Laws, providing such value has a minimum initial cover of $1,000,000.00 and which shall rise to a minimum of $2,500,000.00 after 1000 units have been installed and $5,000,000.00 after 2000 units have been installed, within the Territory, and the Distributor shall furnish the Company with evidence that such cover has been taken out. 8.06 Each party to this Agreement shall not be responsible for the other party's legal costs however such costs are incurred. ARTICLE 9. FORCE MAJEURE 9.01 If either party is affected by Force Majeure it shall forthwith notify the other party of the nature and extent thereof. 9.02 Neither party shall be deemed to be in breach of this Agreement, or otherwise be liable to the other, by reason of any delay in performance, or non-performance, of any of its obligations hereunder to the extent that such delay or 12 non-performance is due to any Force Majeure; and the time for performance of that obligation shall be extended accordingly. 9.03 If the Force Majeure in question prevails for a continuous period in excess of six months, the parties shall enter into bona fide discussions with a view to alleviating its effects, or to agreeing upon such alternative arrangements as may be fair and reasonable. ARTICLE 10. DURATION AND TERMINATION 10.01 This Agreement shall come into force on the day specified in Section 15 and, subject as provided in Sections 2.03, 10.02 and 10.03, shall continue in force until December 31 2001 and thereafter unless or until terminated by either party giving to the other not less than 3 (three) months' written notice expiring at or at any time after the end of that period. 10.02 The Company shall be entitled to terminate this Agreement: (a) as provided in Section 2.07; or (b) by giving not less than thirty days' written notice to the Distributor if: (1) there is at any time any material change in the management, ownership or control of the Distributor; or (2) the Distributor at any time challenges the validity of any Intellectual Property of the Company. 10.03 Either party shall be entitled forthwith to terminate this Agreement by written notice to the other if: (a) the other party commits any breach of any of the provisions of this Agreement and, in the case of a breach capable of remedy (except for non-payment by the Distributor) fails to remedy the same within 30 days after receipt of a written notice giving full particulars of the breach and requiring it to be remedied (b) an encumbrancer takes possession or a receiver is appointed over any of the property or assets of that other party; (c) that the other party becomes subject to an administration order; (d) that the other party goes into liquidation (except for the purposes of amalgamation or reconstruction and in such manner that the company or entity resulting therefrom effectively agrees to be bound by or assume the obligations imposed on that other party under this Agreement); (e) anything analogous to any of the foregoing under the law of any jurisdiction occurs in relation to that other party; or 13 (f) that other party ceases, or threatens to cease, to carry on business. 10.04 For the purpose of Section 10.03(a), a breach shall be considered capable of remedy if the party in breach can comply with the provision in question in all respects other than as to the time of performance (provided that time of performance is not of the essence). 10.05 Any waiver by either party of a breach of any provision of this Agreement shall not be considered as a waiver of any subsequent breach of the same or any other provision thereof. 10.06 The rights to terminate this Agreement given by this Section shall be without prejudice to any other right or remedy of either party in respect of the breach concerned (if any) or any other breach. ARTICLE 11. CONSEQUENCES OF TERMINATION 11.01 Upon the termination of this Agreement for any reason: (a) the Company shall be entitled (but not obliged) to repurchase from the Distributor all or part of any stocks of the Product then held by the Distributor at the price paid by the Distributor to the Company for such stocks or the value at which they stand in the books of the Distributor, whichever is lower; provided that: (1) the Company shall be responsible for arranging and for the cost of, transport and insurance; and (2) the Distributor may sell stocks for which it has accepted orders from customers prior to the date of termination, or in respect of which the Company does not, by written notice given to the Distributor within seven days after the date of termination exercise its right to repurchase, and for those purposes and to that extent the provisions of this Agreement shall continue in full force and effect; (b) the Distributor shall, except where the breach causing the termination has been committed by the Company, at its own expense within 30 days send to the Company or otherwise dispose of in accordance with the directions of the Company all samples of the Product and any advertising, promotional or sales material relating to the Product then in the possession of the Distributor; (c) outstanding unpaid invoices rendered by the Company in respect of its products shall become immediately payable by the Distributor and invoices in respect of the Product ordered prior to termination but for which an invoice has not been submitted shall be payable immediately upon submission of the invoice; (d) the Distributor shall cease to promote, market or advertise the 14 Product or to make any use of any of the Trade Marks other than for the purpose of selling stock in respect of which the seller does not exercise its right to repurchase; (e) the Distributor shall at its own expense, except where the breach causing the termination has been committed by the Company, join with the Company in procuring the cancellation of any registered user agreements entered into pursuant to Section 6.06; (f) the provisions of Sections 7 and 8 shall continue in force in accordance with their respective terms; (g) the Distributor shall have no claim against the Company for compensation for loss of distribution rights, loss of goodwill or any similar loss; and (h) subject as otherwise provided herein and to any rights or obligations which have accrued prior to termination, neither party shall have any further obligation to the other under this Agreement. ARTICLE 12. NATURE OF AGREEMENT 12.01 The Company shall be entitled to perform any of the obligations undertaken by it and to exercise any of the rights granted to it under this Agreement through any other company which at the relevant time is its holding company or subsidiary (as defined by s736 of the Companies Act 1985) or the subsidiary of any such holding company and any act or omission of any such company shall for the purposes of this Agreement be deemed to be the act or omission of the Company. 12.02 The Company may assign this Agreement and the rights and obligations thereunder. 12.03 This Agreement is personal to the Distributor, which (subject to the provisions of Section 2.05) may not without the written consent of the Company whose approval shall not be unreasonably withheld, assign, mortgage, charge (otherwise than by floating charge) or dispose of any of its rights hereunder, or subcontract or otherwise delegate any of its obligations hereunder. 12.04 Subject as provided in section 4.02, nothing in this Agreement shall create, or be deemed to create, a partnership or the relationship of principle and agent or employer and employee between the parties. 12.05 This Agreement contains the entire agreement between the parties with respect to the subject matter thereof, supersedes all previous agreements and understandings between the parties with respect thereto, and may not be modified except by an instrument in writing signed by the duly authorised representatives of the parties. 15 12.06 Each party acknowledges that, entering into this Agreement, it does not do so on the basis of, and does not rely on, any representation, warranty or other provision except as expressly provided herein, and all conditions, warranties or other terms implied by statute or common law are hereby excluded to the fullest extent permitted by law. 12.07 If any provision of this Agreement is held by any court or other competent authority to be void or unenforceable in whole or part, this Agreement. shall continue to be valid as to the other provisions thereof and the remainder of the affected provision. ARTICLE 13. ARBITRATION AND PROPER LAW 13.01 Any dispute arising out of or in connection with this Agreement shall be referred to the arbitration in London of a single arbitrator appointed by agreement between the parties or, in default of agreement, nominated on the application of either party by the President for the time being of The Law Society. 13.02 This Agreement shall be governed by and construed in all respects in accordance with the Laws of England, and each party hereby submits to the exclusive jurisdiction of the English Courts. ARTICLE 14. NOTICES AND SERVICE 14.01 Any notice or other information required or authorised by this Agreement to be given by either party to the other may be given by hand or sent (by first class pre-paid post, telex, cable, facsimile transmission or comparable means of communication) to the other party at the address referred to in Section 14.04. 14.02 Any notice or other information given by post pursuant to Section 14.01 which is not returned to the sender as undelivered shall be deemed to have been given on the day after the envelope containing the same was so posted: and proof that the envelope containing any such notice or information was properly addressed, pre-paid, registered and posted, and that it has not been so returned to the sender, shall be sufficient evidence that such notice has been duty given. 14.03 Any notice or other information sent by telex, cable, facsimile transmission or comparable means of communication shall be deemed to have been duly sent on the date of transmission, provided that a confirming copy thereof is sent by first class pre-paid post to the other party at the address referred to in Section 14.04 within 24 hours after transmission. 16 14.04 Service of any legal proceedings concerning or arising out of this Agreement shall be effected by causing the same to be delivered to the Company Secretary of the party to be served at its registered office or to such address within England and Wales as may from time to time be notified in writing by the party concerned. ARTICLE 15. NOTIFICATION. 15.01 As soon as practicable after the execution, of this Agreement the Company shall procure that particulars of this Agreement are duly furnished to the Director General or Fair Trading in accordance with the provisions of the Restrictive Trade Practices Act 1976 and accordingly none of the provisions of this Agreement other than this provision shall come into force, and none of the parties shall give effect thereto, until the day after such step has been taken. SCHEDULE A PRICE 1117 (pound) 770.00 1722 (pound) 820.00 2030 (pound) 1637.00 3040 (pound) 2346.00 4060 (pound) 3011.00 4872 (pound) 3406.00 The following volume discounts can be applied to each individual order placed. 2-10 units 10%, 11-50 units, 20%, 51-100 units 30%, 100 units+ 40% SCHEDULE B SUPPORT None SCHEDULE C TRADE MARKS 17 none SCHEDULE D Provide: (1) a Customer Warranty similar to that set by the Company's customer commitment in the U.K. anywhere within the Territory: "Multiadd Ltd warrants to the user that if this Machine is or becomes defective and the defect results from faulty materials and or workmanship and not in any way from accident, misuse or mishandling by the user or other we shall, at our sole option, repair or replace such defective machines or part thereof free of charge on the following basis A. In the case of components, parts and workmanship for a period of 12 months from the date of purchase and B. provided that the glass screen, poster carriers and fluorescent lamps shall be excluded from this warranty. This warranty is valid in the United Kingdom only and is not transferable. For non UK please refer to your Distributor. This warranty shall be null and void if the Machine is tampered with, misused or abused, or if the serial number plate is defaced or removed. This does not affect your statutory right. " ; and (2) A Maintenance / Service Operation offering regular routine visits to any Product installed anywhere within the Territory. (3) A 3 (three) working day response to a breakdown call-out for the Product anywhere within the Territory. SIGNED /s/ ............................. for and on behalf of the Company. Print Name (illegible) ......................... Date 9th December, 1999 ............................... SIGNED by: /s/ John Thatch ......................... for and on behalf of the Distributor. Print Name John Thatch, Pres. ......................... Date 12-09-99 ............................... 18 EX-10.9 18 0018.txt CARSON-JENSEN-ANDERSON ENTERPRISES, INC. AGREEMENT CARSON-JENSEN-ANDERSON ENTERPRISES, Inc. ---------------------------------------- d/b/a ----- EYECATCHER MARKETING COMPANY ---------------------------- Marketing Agreement ------------------- THIS AGREEMENT, is effective on the 10th day of May 2000 between New Millennium Media International, Inc., (a Colorado Corporation) (hereafter referred to as "NMMI") with its principal place of business at 101 Philippe Parkway, Suite 300, Safety Harbor, FL 34695 and Carson-Jensen-Anderson Enterprises, Inc. (a Florida Corporation) d/b/a Eyecatcher Marketing Company, (hereafter referred to as "CJE") with its principal place of business at 235 Four Knot Lane, Osprey, FL 34229. WHEREAS, NMMI is in the business of supplying, distributing and placing electronic and static display boards (including casings, containers, attachments, accessories and artwork contained in the display boards) hereafter referred to as Eyecatcher Display Boards. WHEREAS, CJE is a marketing company that intends to locate and place the Eyecatcher Display Boards within various locations, stores, offices and businesses in select locations throughout the (50) United States as defined below and with the limitations as shown on Exhibit A attached hereto, in consideration for the payment by CJE to NMMI of a monthly usage fee; NOW THEREFORE, for in consideration of the mutual covenants and undertakings described herein and one dollar and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Location(s) NMMI grants to CJE, subject to the limitations contained in Exhibit A attached hereto, the exclusive right to market and place Eyecatcher Display Boards in any location, store, business, office, venue both indoors and outdoors throughout much the United States by utilizing a dealer network or in-house CJE personnel. CJE has the right to determine suitable locations for the Eyecatcher Display Boards. CJE will provide NMMI a quarterly inventory of all Eyecatcher Display Boards along with a precise listing of all site locations and addresses, property owner consents and copies of all site location contracts. Subject to the limitations contained in Exhibit A attached hereto, CJE will have the exclusive right throughout the United States to sell advertising for the Eyecatcher Display Boards both at the local and national level to any suitable advertiser. NMMI shall retain a veto authority relative to suitability of ads and locations. It being agreed that morality, legality and good taste as well as good business sense shall be major factors of consideration. 1 2. Advertising and Marketing NMMI will provide to CJE all necessary and pertinent information relating to NMMI and the Eye Catcher display boards to assist CJE and/or the dealer network in marketing the Eyecatcher Display Boards. CJE will be responsible for all printing and marketing sales and solicitational literature. All such sales and solicitational literature shall contain, prominently displayed, the official NMMI logo. Any and all leads or referrals from any advertisements that are placed or running at the execution date of this Agreement or until the termination date of such ads by NMMI or its previous subsidiaries, dealers or affiliates will be provided to CJE. 3. Usage Fees NMMI will supply to CJE Eyecatcher Display Boards in the quantities as hereinafter stated for which CJE will pay NMMI a monthly usage fee as listed in Exhibit B attached hereto. Such usage fees are to be paid no later than thirty (30) days from the date of receipt by CJE of the Machine(s) at dealer(s) or CJE(s) location(s). There will be no exception to the time of payment and no grace period is granted. Time is of the essence regarding all payments. 4. Poster/ad Policies CJE shall to be responsible for all ad sales in the Eyecatcher Display Boards and to contract with NMMI for all creative services. CJE will supply to NMMI sufficient raw information and data and advertisers' logo and other advertising material so as to enable NMMI to create the necessary posters for the display boards. NMMI will perform this service within a reasonable period of time so as to not incapacitate the business of CJE or its dealers. CJE and/or its dealers will compensate NMMI an hourly rate, as shown on Exhibit B attached hereto, for all creative services, artwork, layout, animation and all other creative work that is required to make the advertisement suitable for display on NMMI's Machine(s). CJE and its dealers shall notify NMMI at least seventy two (72) hours in advance of any content or advertising changes intended. If NMMI does not timely perform the creative service regarding ads, CJE and its dealers, at their own expense and without liability to NMMI, may contract with an outside creative services company to provide the ads which ads shall comply with the specifications of NMMI and NMMI shall have the singular and absolute discretion as to rejection or approval of ads regarding artistic aesthetics, layout, material onto which the art is printed, material weight and substance type so as to not damage or impair the performance of the Machine(s). If the advertiser supplies its own posters or artwork that merely needs to be enlarged or copied onto the poster material by NMMI without necessity for any touchup, the flat fee rate shall be as shown on Exhibit B attached hereto. Any poster space not otherwise rented to third parties may be used by NMMI at no charge, to promote NMMI and or it's programs (including one charitable organization to be named by NMMI. CJE must give permission for use of space, which shall not be unreasonably withheld. 2 5. Installation All Eyecatcher Display Boards shall be delivered in good working condition by NMMI to CJE, or any authorized dealer of CJE, f.o.b. Clearwater, Florida. It is the responsibility of CJE to transport and install the Eyecatcher Display Boards. CJE shall be responsible for all maintenance and repairs subsequent to delivery except for the warranty as stated hereinafter. CJE will be responsible for all Displays and will insure that each location and or dealer has proper insurance to cover each board against fire or theft up to the amount of $5000. for each Display and shall indemnify such. CJE shall produce upon request proof of coverage for all Displays under CJE control. 6. Returns If Machine(s) arrive at installation site defective, inoperable or broken, CJE will pay all return shipping costs from dealer or CJE location back to NMMI's warehouse or principal place of business. 7. Service CJE and its dealers agree to properly service and maintain at all times the Eyecatcher Display Boards at site locations. All Eyecatcher Display Boards are warranted by NMMI against nonperformance caused by manufacturer defect for a period of one (1) year from delivery date. For said one-year term, NMMI agrees to supply all necessary parts and/or replace any Machine that is not in operable condition caused by manufacturer defect. NMMI will not be responsible for any damage caused by electrical surge or any other electrical inadequacy. All labor for the repairs, replacement or reinstallation shall be supplied by CJE. NMMI shall train CJE personnel in Clearwater, Florida for all logical repair issues. After the one (1) year warranty period, CJE and its dealers will be responsible for parts and labor for repairing, servicing and maintaining the Eyecatcher Display Boards in excellent condition. All repairs shall be timely so as not to cause any negative appearance within the Machine location sites. NMMI agrees to maintain an inventory of all parts and supplies for CJE and its dealers. 8. Ownership The Eyecatcher Display Boards installed at any and all locations contracted by CJE and its dealers will at all times remain the property of NMMI. CJE and its dealers acknowledge that the Eyecatcher Display Boards are owned by NMMI and CJE merely has the temporary limited beneficial use of the Eyecatcher Display Boards for which CJE receives a fee from the advertiser and pays a usage fee to NMMI. By having executed, signed and returned to NMMI the Consent form attached hereto as Exhibit D, CJE shall inform all of its dealers and the site location owners that the Eyecatcher Display Boards are owned by NMMI. Each Machine shall have prominently displayed on its front the NMMI logo with the NMMI address and phone numbers; all legally necessary patent information and data; and CJE logo. Said names, logo and address shall be maintained in "like new" appearance at all times and shall be of such size, location and appearance so as to not detract from the primary advertising display intent, i.e., the ads of the paying advertisers. 3 9. Operation CJE and its dealers agree that the Eyecatcher Display Boards will at all times be connected to an electrical power source sufficient to operate the Machine and that electrical power will be supplied by the site location owner to the Machine(s) during normal business hours. 10. Nonpayment of usage fee NMMI, at its sole discretion, may remove any Machine(s) at the expense of CJE if the monthly usage fee payment for the specified Machine is not received by NMMI within thirty (30) days from installation. There is no grace period and time is of the essence. CJE hereby releases and holds harmless NMMI from any and all liability and/or legal action and damage resulting from removal of any Machine because of non-payment. The written contract between CJE, CJE's dealers, the advertisers and the site location owners shall state that the Eyecatcher Display Boards are owned by NMMI and if the monthly usage fee is not timely paid by CJE to NMMI, NMMI reserves the right to collect from the advertisers and site owners all fees as they become due. With the intent of this paragraph in mind as well as paragraph 13, CJE hereby assigns to NMMI all rights to collect any money due from any and all of the advertisers, dealers and/or site owners upon properly executed affidavit of any officer or director of NMMI stating that there has been a nonpayment of money as required by this contract or a termination as stated in paragraph 13 of this contract. 11. Copy CJE and its dealers agree that it will not install a Machine unless at least four (4) display ads have been sold or are installed in the machine. CJE and its dealers represent that they have and/or at the time of display to the public will have full authority from the advertiser to utilize any trademark, logo, or copyrighted material used in the proposed advertisement. CJE and its dealers agree to hold harmless and defend NMMI against any and all legal actions that arise from any such dispute and/or infringement. NMMI reserves the right to refuse or withdraw any advertisement copy that, in its sole discretion, is considered unlawful, detrimental or otherwise in the discretion of NMMI is determined to be objectionable. 12. Notices Any notice, demand or request required or permitted to be given hereunder shall be in writing and shall be deemed effective five (5) business days after having been deposited in the United States Mail, postage prepaid, registered or certified and addressed to CJE or NMMI to the addresses listed in this Agreement. Either party may change its address for purposes of this Agreement by written notice given in accordance herewith. 13. Termination Either party shall have the right to terminate this Agreement upon the occurrence of any of the following events: a. Breach or default by the other party of any of the terms, obligations, covenants, representations or warranties under this Agreement. In such case, the non-defaulting party shall notify the other party of 4 such alleged breach or default and that party shall have ten (10) days to cure the default except for the payment of money which shall be deemed to be a default if not promptly paid when due as heretofore stated herein. b. The other party is declared insolvent or bankrupt or makes an assignment for the benefit of creditors or a receiver is appointed or any proceeding is demanded by, for or against the other party under any provision of the Bankruptcy Code or any amendment thereof. c. If CJE does not meet its quotas as agreed to in Para 15. and CJE loses the exclusivity to the U.S., NMMI will allow CJE to still operate it's existing boards, as long as all other terms and conditions of this contract are in force and all payments are current. Upon termination of this Agreement CJE will immediately supply to NMMI up-to-date documents, books of account, leases, invoices and all records pertinent and relevant for NMMI to determine the then present status of the leases, payments, receipts and all terms of all agreements with dealers and site location owners. 14. Advertiser(s) NMMI agrees that all advertisers that advertise on the NMMI Machine(s) are the clients of CJE and its dealers. In the event of termination of this Agreement other than for cause as stated in paragraph 13 or because of nonpayment, NMMI will not contact said advertising clients for a period of one (1) year after the Agreement termination date. Other than when termination for cause, all monies or advertising revenue will be paid to CJE and/or its dealers until such Machine(s) are removed from specified locations or no more than one year after the Agreement termination date. Other than as permitted herein in the event of a default and during the term of this Agreement, NMMI agrees at no time to contact CJE's advertising clients without the written permission of CJE. NMMI reserves the right to purchase advertisements on all boards under CJE control or CJE dealers control, at a flat rate of $40.00 per display poster, based on availability. The purpose of this is to sell space to national accounts CJE agrees to not contact any of the strategic partners of New Millennium Media International, Inc., including the suppliers and/or manufacturers of the Eyecatcher Display Boards or such other national advertising clients of NMMI as are advertisers or potential advertisers of NMMI. CJE will have the ability to recruit National Advertisers on a non-exclusive basis, and will inform NMMI of such contacts. Once a National account is contacted by CJE, NMMI will issue a Letter of Protection to CJE on each account, so that CJE can pursue such account. 15. Term This Agreement shall become effective June 15, 2000 and shall expire on December 31, 2001 after which date this contract may be 5 renewed for three terms of one year each provided that CJE shall achieve the following performance milestones: a. within the first 60 days from the effective date of this Agreement CJE accepts for delivery 20 Eyecatcher Display Boards and is in full compliance with all of the terms of this Agreement; and b. within the second 60 days from the effective date of this Agreement CJE accepts for delivery 40 additional Eyecatcher Display Boards and is in full compliance with all of the terms of this Agreement; and c. within the third 60 days from the effective date of this Agreement CJE accepts for delivery 40 additional Eyecatcher Display Boards and is in full compliance with all of the terms of this Agreement (at the end of this 180 day period CJE has 100 Eyecatcher Display Boards); and d. within the next following 180 days after paragraph "c" above, CJE accepts for delivery 200 Eyecatcher Display Boards (at the end of this 360 day period CJE has 300 Eyecatcher Display Boards) and CJE is in full compliance with all of the terms of this Agreement; and e. within the next 90 days after paragraph "d" above, CJE accepts for delivery an additional ten percent of the total number of Eyecatcher Display Boards heretofore delivered (30 additional Eyecatcher Display Boards) and CJE is in full compliance with all of the terms of this Agreement; and f. thereafter CJE accepts for delivery every ninety (90) days an additional ten percent (10%) of the prior ninety-day term total number of Eyecatcher Display Boards accepted for delivery and is in full compliance with all of the terms of this Agreement. The Order Form attached hereto as Exhibit C completed in full shall be used by CJE for all Machine orders. CJE may return any Eyecatcher Display Boards at any time. At which time the billing will stop, as long as the Display is returned in good working order and CJE has met its quotas, as referenced in Para 15. The customary delivery of Eyecatcher Display Boards by NMMI is four to six weeks from time of placing the order. Presently CJE has in its possession seven (7) Eyecatcher Display Boards The usage fee for these Eyecatcher Display Boards will not begin to accrue until June 15, 2000. 15. Entire Agreement This Agreement constitutes the entire Agreement between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous Agreements between the parties. Neither party is relying upon any warranties, representations or inducements not set forth herein. 16. Successors This Agreement shall be binding on and inure to the benefit of NMMI and its successors and assigns and any person or entity acquiring, 6 whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the NMMI assets and business. CJE shall not assign any of its rights nor obligations provided in this Agreement without the prior written consent of NMMI. Said consent shall be in the sole discretion of New Millennium Media International, Inc. 17. Applicable Law & Venue This Agreement shall be construed in accordance with the laws of the State of Florida and all actions and or disputes involving or surrounding this Agreement shall have the venue of Pinellas County, Florida. WHEREFORE, the parties have entered into this Agreement as of the date set forth above. New Millennium Media International, Inc. Carson-Jensen-Anderson Enterprises, Inc. d/b/a Eyecatcher Marketing Company By: /s/ John Thatch By: /s/ Peter Jensen ------------------------------------- ---------------------------- It's President/CEO I It's President John Thatch Peter Jensen Date: 5-10-00 Date: 5-10-00 ----------------------------------- -------------------------- 7 Exhibit A (Marketing Area) The marketing area granted to CJE shall encompass the entire (50)United States except for Pinellas County and Hillsborough County, Florida, which are under contract prior to this agreement, if such contracts become available CJE will have first right of refusal to acquire these territories, upon terms to be negotiated, and the following are entities that NMMI has been discussing accounts with and/or have agreements with as follows: Denis Harker - The Florida Keys, exclusive and, first right of refusal of Dade County. Monicca Denissen - The Milwaukee Area, non exclusive. Ken Patel - Orlando, Lakeland, Leesburg (Florida)area, non exclusive. Ron Thomas - Gulf Breeze, Florida, non exclusive. Rich Schemenaur - Cincinnati, Ohio, non exclusive. Scott Majeras - Hawaii, exclusive limited time left on quota. Mark Western - Las Vegas hotels, exclusive to MGM, Harra's, Treasure Island, Rio, Golden Nugget, Four Queens, Ballys. Dick Collett - Marroit Hotels. Dave Wright - Maryland/Baltimore area, non exclusive. Exclusive includes Safeway Stores, Shop Rite stores, A&P/Superfresh, Ames, Wards, Bradlees, Sears, K-Mart, Bally Fitness Centers, DC/Philadelphia/Boston Metro Systems, Caldor, Wal Mart, Konls, JC Penny, Family Dollars, Dollar General, National Institutes of Health, National Naval Medical center, The Javits Convention Center, GBC Restaurants, and Wegmann's. Will have six months lead time to establish accounts or they will turn back over to CJE if no progress is being made. and all United States national retail accounts. It is also noted that the manufacturer of the Eyecatcher Display Boards in the past sold several Eyecatcher Display Boards to individuals and/or entities other than New Millennium Media International, Inc. These Eyecatcher Display Boards are presumed to be in use somewhere in the United States. The rights of CJE under the terms of this contract are subject to these Eyecatcher Display Boards. 8 Exhibit B (Fee Schedule) Eyecatcher Display Unit Poster Size in Inches Usage Fee per Month 11 x 17 $350 17 x 22 $400 20 x 30 $475 30 x 40 $500 40 x 60 $550 48 x 72 $600 All posters displayed in the Eyecatcher Display Boards must be printed by NMMI. The charge for sizing (static enlargement of existing reproducible artwork) and printing without any touchup is $25.00 per poster for the 11 x 17 and 17 x 22 sizes. The sizing and printing charge for 20 x 30 and 30 x 40 is $45.00 and all larger sizes listed above is $75.00 per poster. NMMI reserves the right in its sole discretion to reject any unsuitable artwork. Creative artwork services supplied by NMMI in designing, compiling and/or touchup of existing artwork shall be billed to CJE at the hourly rate of $45.00 in minimum increments of 30 minutes each. These prices for usage fees, sizing/printing and creative artwork shall be subject to an annual increase at a rate of five percent (5%) over the prior year's rate beginning January 1, 2002. 9 Exhibit C (Order Form) Date of order: ____________________________________________________________ Name of site of Machine location: _________________________________________ Address of Machine location: ______________________________________________ Machine size: _____________________________________________________________ Machine serial number: ____________________________________________________ I hereby order from NMMI the above described Machine intended to be located at the site described above. If this Machine is located anywhere else, I will immediately notify NMMI in writing. The site owner or lessee of the site has been notified and has signed the Owner/Lessee Consent Form. Carson-Jensen Enterprises, Inc. d/b/a Eyecatcher Marketing Company By: __________________________ (authorized representative) Date: ________________________ 10 Exhibit D (Owner/Lessee Consent Form) Date of order: ____________________________________________________________ Name of site of Machine location: _________________________________________ Address of Machine location: ______________________________________________ Machine size: _____________________________________________________________ Machine serial number: ____________________________________________________ I hereby state that I am the owner/lessee of the above named site at the above address and I have full individual and corporate authority to grant permission for the installation of the Illummisign "Eyecatcher" Machine at the above-described location. I hereby grant permission to install the Illummisign "Eyecatcher" Machine at the above-described location. I acknowledge and understand that the above-described Machine is the property of New Millennium Media International, Inc., 101 Philippe Parkway, Suite 300, Safety Harbor, Florida 34695, phone (727) 797-6664. I agree that if any dispute arises because of the placement of the above described Machine, I hold harmless the owner of said Machine, New Millennium Media International, Inc., and will cooperate with the said owner, New Millennium Media International, Inc., for the return of said Machine to said owner and grant permission to said owner to enter the above described property/premises to take possession of said Machine. I further understand that I have no right of claims against said Machine now or in the future and should any such right arise because of any law in the future, I hereby waive all such possessory rights or claims. ________________________________ (name of location) ________________________________ (name of corporate entity) ________________________________ (Corporate capacity, pres, sec, treas, etc.) ________________________________ (name of individual signing) 11 Addendum to Carson Jensen Anderson Enterprises, Inc., d/b/a Eyecatcher Marketing Company, Marketing Agreement effective May 10, 2000 and entered into May 10, 2000 with New Millennium Media International, Inc. The undersigned parties mutually agree in all respects to the terms of this Addendum as follows: 1. The Carson Jensen Anderson Enterprises, Inc., d/b/a Eyecatcher Marketing Company, Marketing Agreement effective May 10, 2000 and entered into May 10, 2000 with New Millennium Media International, Inc. (hereafter "Agreement") is hereby appended by including an additional paragraph designated as follows in its entirety: 19. Indemnification and Hold Harmless Carson Jensen Anderson Enterprises, Inc., d/b/a Eyecatcher Marketing Company (hereafter "Indemnifying Party") covenants and agrees to defend, indemnify and hold harmless New Millennium Media International, Inc. and its officers, directors, employees, attorneys, accountants, affiliates and agents (collectively, the 'Indemnified Party") from and against, and pay or reimburse the Indemnified Party for any and all liabilities, obligations, losses, costs, deficiencies or damages (whether absolute or accrued) including interest, penalties and reasonable attorneys' fees and expenses incurred in the investigation or defense of any of the same or in asserting any of their respective rights hereunder (collectively, "Losses") resulting from or arising out of (i) the incorrectness or breach of any representation or warranty made by the indemnifying Party in this Agreement or (ii) the failure of such indemnifying Party to perform any covenant or fulfill any other obligation contained in this Agreement. In the case of any claim asserted by a third party against an Indemnified Party, notice shall be given by the Indemnified Party to the Indemnifying Party promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought and the Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any claim or any litigation resulting therefrom, provided that (i) counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be reasonably satisfactory to the Indemnified Party, and the Indemnified Party may participate in such defense, but only at such Indemnified Party's expense and without any indemnification for such expense pursuant to this Section, and (ii) the omission by any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except to the extent that such omission results in a failure of actual notice to the Indemnifying 12 Party and such Indemnifying Party is damaged as a result of such failure of actual notice to the Indemnifying Party. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of the Indemnified Party: (i) consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation or (ii) pursue any course of defense of any claim subject to indemnification hereunder, if the Indemnified Party shall reasonably and in good faith determine that the conduct of such defense might be expected to affect adversely the Indemnified Party's tax liability or ability to conduct its business. In the event that the Indemnified Party shall reasonably and in good faith determine that any proposed settlement of any claim subject to indemnification hereunder by the Indemnifying Party might be expected to affect adversely the Indemnified Party's tax liability or ability to conduct its business, the Indemnified Party shall have the right at all times to take over and assume control over the settlement, negotiations or lawsuit relating to any such claim at the sole cost of the Indemnifying Party, provided that if the Indemnified Party does so take over and assume control, the amount of the indemnity required to be paid by the Indemnifying Party shall be limited to the amount the Indemnifying Party is able to reasonably demonstrate that it could have settled the matter for immediately prior to the time of assumption. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand, and shall be entitled to settle or agree to pay in full such claim or demand, in its sole discretion. In any event all parties shall cooperate in the defense of any action or claim subject to this Agreement and the records of each shall be available to the other with respect to such defense." 2. In all other respects all terms and conditions of the May 10, 2000 Agreement remain unchanged and are hereby ratified and approved. WHEREFORE, the parties have entered into this Agreement as of the 19th day of May 2000. New Millennium Media International, Inc. Carson Jensen Anderson Enterprises, Inc. d/b/a Eyecatcher Marketing Company By: /s/ By: /s/ ------------------------------------- ---------------------------- Date: 6-13-00 Date: 6-13-00 ----------------------------------- -------------------------- EX-10.10 19 0019.txt OFFICE LEASE AGREEMENT WITH ST. JAMES PARTNERS ST. JAMES OFFICE CENTER STANDARD SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT, made and entered into this 1st day of May, 2000, by and between ST. JAMES PARTNERS, a Florida Company, hereinafter referred to as the "Lessor" and NEW MILLENNIUM MEDIA INTERNATIONAL, INC., a Florida Company, hereinafter referred to as the "Lessee". 1. PREMISES Lessor hereby subleases to Lessee and Lessee hereby rents from Lessor, approximately two thousand five hundred and four (2504) square feet of tenable space, and an additional outside patio space at no charge to lessee and will pay half the use of the Conference Room & Reception Area which is approximately six hundred and eighteen (618) square feet as defined herein and shown on Exhibit "A" attached hereto and made a part hereof by reference, hereinafter referred to as the "Premises", in the hereinafter referred to as the "Building", located at 101 Philippe Parkway, Safety Harbor, Florida 34695. For the purposes of this Lease, rentable area shall be the area actually occupied and used exclusively by the Lessee. Lessee shall also have unrestricted access to all Common Areas of the Building. Once Lessee shall move into the property it is Lessee's responsibility to provide Lessor with a key for entry in case of fire or any such emergency in compliance with the standard Fire Marshall Code. 2. TERM (a) The term of this Lease shall be for a period of one (1) years, commencing on the 1st day of May, 2000, and expiring at midnight on the 2nd day of May, 2001. (b) 2 year option renewal - 5% 3. USE Lessee covenants that the Premises will be continuously used and occupied during the full term of this Lease for the purpose(s) of general office use and will not use and occupy the Premises for any other purpose without prior written consent of Lessor, except as stated herein. 4. RENTAL (a) Base Rent: In consideration for this Lease and subject to the adjustments hereinafter specified in this Lease, as rental for the Premises, the Lessee hereby agrees to pay to the Lessor, without deduction, setoff, prior notice or demand, except as per paragraph 5 hereunder and in the event of being canceled as provided in Paragraph 2 hereunder, the sum of eleven dollars and fifty cent ($11.50) per square foot plus one dollar fifty cent ($1.50) per square foot for Common Area Maintenance for the terms of this Lease, plus applicable sales tax, in advance, on the first day of the month during the entire Lease term. Suites 312, 313, 311, 310 Amount Year Term Monthly Payment Yearly $13.00 sqft 1 5/1/2000 through 5/2/2001 $2,902.55 $34,830.64 including tax Conference Room & Reception Area Amount Year Term Monthly Payment Yearly $13.00 sqft 1 5/1/2000 through 5/2/2001 $716.36 $8,596.38 including tax Out side Storage Amount Year Term Monthly Payment Yearly $0.00 sqft 1 4/1/2000 through 5/2/2001 $535.00 $6,955.00 (b) Common Area Maintenance shall include exterior of building, all H.V.A.C., windows, doors, electricity, pest control, any taxes or assessments, roof, water, sewer, trash pickup, and any other maintenance required to the building. (c) All rental installments will be paid by Lessee as herein provided to Lessor at their place of business until written notice to the contrary is given by Lessor. Other remedies for non-payment of rent notwithstanding, if the monthly rental payment is not received by Lessor on or before the first (1st) day of the month for which rent is due, or if any other payment due Lessor by Lessee is not received by Lessor on or before the fifth (5th) day of the month in which Lessee was invoiced, a service charge of five percent (5%) of such past due amount shall become due and payable in addition to such amounts owed under this Lease. (d) Security Deposit. At the time of the signing of this Lease, Lessee will pay to Lessor the sum of zero dollars ($0.00). 5. PAYMENT OF EXPENSES Lessor and Lessee acknowledge that the costs and expenses listed below shall be paid as follows: (a) Utilities: Lessor will be responsible for water, sewer, electricity and all costs associated thereof. Lessee shall be responsible for phones and all costs associated thereof. Lessee shall also be responsible for office cleaning of their Premises. 6. PEACEFUL ENJOYMENT Lessee shall, and may peacefully have, hold and enjoy the Premises subject to the terms of the lease and this sublease, and provided Lessee pays the rentals herein recited and Lessee also hereby covenants and agrees to comply with all the rules and regulations of the Officers or Boards of the City, County and State having jurisdiction over the Premises, and with all ordinances and regulations of governmental authorities wherein the Premises are located, but only insofar as any such rules, ordinances and regulations pertain to the manner in which the Lessee shall use the Premises; the obligation to comply in every other case and also all cases where such rules, regulations and ordinances require repairs, alterations, changes or equipment, or any part of either, being hereby expressly assumed by Lessor. 7. PAYMENTS Lessee will pay all rents and sums provided to be paid to Lessor hereunder at the time and in the manner herein provided. Time is of the essence as regards all rents and other sums provided to be paid to Lessor by Lessee. 8. REPAIRS AND RE-ENTRY Lessee will, at Lessee's own cost and expense, repair or replace any damage or injury done to the Building, the Premises, or any part thereof, caused by Lessee or Lessee's agents, employees, invitees, or visitors. If Lessee fails to make such repairs or replacements promptly, or within fifteen (15) days of occurrence, Lessor, may, at its option, make such repairs or replacements, and Lessee shall repay the cost thereof to Lessor on demand. Lessee will not commit or allow any waste or damage to be committed on any portion of the Premises or the Building and shall at the termination of the Lease by lapse of time or otherwise, deliver the Premises to Lessor broom clean and in as good condition as at date of possession of Lessee, ordinary wear and tear excepted, and upon such termination of Lease, Lessor shall have the right to re-enter and resume possession of Premises. 9. ASSIGNMENT OR SUBLEASE Lessee shall have the right to transfer and assign, in whole or part, its rights and obligations in the Building and property that are the subject of this Lease. Only with the prior written consent of the Lessor, which consents, shall not be unreasonably withheld. 2 10. LEGAL USE AND VIOLATIONS OF INSURANCE COVERAGE Lessee will not occupy or use, or permit any portion of the Premises to be occupied or used, or do or permit to be done in or about the Building, for any business or purpose which is unlawful or immoral, in part or in whole, or deemed to be hazardous in any manner, or which will be disreputable or harmful to the character or reputation of the Building or which will be bothersome to other tenants of the Building or visitors to the Building, or which will be a nuisance. Lessee will not do anything or permit anything to be done in or about the Premises or Building which will, in any way, increase the rate of insurance on the Building and/or its contents; and, in the event, that by reason of acts or omission of Lessee, there shall be an increase in rate of any insurance on the Building or its contents, then Lessee hereby agrees to pay such increase in full and to remedy such condition upon five (5) days written demand by Lessor. 12. INDEMNITY LIABILITY Lessee hereby agrees to indemnify and hold harmless Lessor of and from any and all fines, suits, claims, demands and action of any kind (including expenses and attorney's fees) by reason of any breach, violation, or nonperformance of any condition hereof, including failure to abide by the Rules of the Building or any act or omission on the part of the Lessee, its agents, invitees, or employees. Lessee is familiar with the Premises and acknowledges that the same are received by Lessee in a good state of repair and accepted by Lessee in the condition in which they are now or shall be when ready for occupancy and that Lessor has not made any representations as to the Premises except as set forth herein. Lessor shall not be liable to Lessee or Lessee's agents, employees, invitees or visitors for any damage to persons or property due to condition, design, or defect in the Building, or its mechanical systems on the Premises, which may now exist or hereafter occur. Lessee accepts the Premises as suitable for the purposes for which the same are leased and assumes all risks of damages to persons or property, and agrees that no representations except such as are contained herein or endorsed hereon have been made to the Lessee respecting the conditions of the Premises 13. ENTRY FOR REPAIRS AND INSPECTION Lessee will permit Lessor or its officers, agents or representatives the right to enter into and upon any and all parts of the Premises, at all reasonable hours to inspect same or make repairs or alterations or additions as Lessor may deem necessary or desirable, and Lessee shall not be entitled to any abatement or reduction of rent by reason thereof. Lessor shall be entitled to enter upon the Premises at any time to make emergency repairs. 14. USE OF BUILDING NAME The Lessee shall not, except to designate the Lessee's business address (and then only in a conventional manner and without emphasis or display) use the name of the Building or any simulation or abbreviation of such name for any purpose whatsoever. The Lessor reserves the right to change the name of the Building at any time. The Lessee will discontinue using such name and any simulation or abbreviation thereof for the purpose of designating the Lessee's business address within thirty-days (30) after the Lessor shall notify the Lessee that the Building is no longer known by such name. 15. GRAPHICS Lessor shall provide and install, at Lessee's cost, all signs, letters and numerals on doors in the Premises. All such signs, letters and numerals shall be in the standard graphics for the Building and reasonably acceptable to Lessor and no others shall be used or permitted on the Premises without Lessor's prior written consent. 16. DEFACING PREMISES AND OVERLOADING Lessee shall not place anything or allow anything to be placed on or near any door, partition, will or window which might be unsightly from outside the Premises, and Lessee shall not place or permit to be 3 placed any article of any kind on any window ledge or on the exterior walls, windows, blinds, shades, awnings or any other forms of inside or outside window coverings. No inside or outside window coverings or window ventilators or other devices, shall be placed in or about the outside windows in the Premises except to the extent, if any, that the character, shape, color, material or make thereof is first approved by the Lessor, and Lessee shall not do any painting or decorating in the Premises or make, paint, cut or drill into, or in any way deface any part of the Premises or Building without prior written consent of the Lessor. Lessee shall not overload any floor or part thereof in the Premises, or any facility in the Building or any public corridors or elevators therein, and shall not bring in or remove any large or heavy articles, without Lessor's prior written consent. Lessor may direct and control the locations of safes and all other heavy articles. Furniture and other large or heavy articles, may be brought into the Building, removed therefrom or moved from place to place within the Building only at times and in the manner designated in advance by Lessor. Lessee agrees not to place any load on any portion of the Premises or other portions of the Building or its equipment that would exceed the allowable load limits for the Building, as specified by Lessor. 17. LIABILITY INSURANCE Lessee shall, at its sole cost and expense, obtain and maintain in full force and effect for the mutual benefit of Lessor and Lessee, comprehensive public liability insurance in the minimum amount of $1,000,000.00, combined single limit coverage, against claims for bodily injury, death or property damage arising out of the use and occupancy of the Premises. A certificate of such insurance shall be furnished to the Lessor at the commencement of the Lease term and each renewal certificate of such policy shall be furnished to Lessor at least thirty-days (30) prior to the expiration of the policy it renews. Each such policy of insurance shall contain an agreement by the insurer that such policy shall not be canceled without thirty-days (30) prior written notice to Lessor. Such insurance may be in the form of general coverage, floater policy, or so-called blanket policy issued by insurers of recognized responsibility. The nature and scope of such policy of insurance and the insurer thereunder shall be subject to Lessor's approval, which shall not be unreasonably withheld or delayed. Should the Lessee fail to procure policies as is provided in this Lease, the Lessor may obtain such insurance and the premiums on such insurance shall be deemed additional rental to be paid by the Lessee unto the Lessor upon demand. 18. CASUALTY INSURANCE Lessor shall, at all times during the term of this Lease, maintain a policy or policies of insurance with the premiums paid in advance, issued by and binding upon some solvent insurance company, insuring the Building against loss or damage by fire, explosion or other hazards and contingencies for the full insurable value; provided, that the Lessor shall not be obligated in any way or manner to insure any personal property (including, but not limited to, any furniture, machinery, goods or supplies) of Lessee or which Lessee may have upon or within the Premises or any fixtures installed by or paid for by Lessee upon or within the Premises or any additional improvements which Lessee may construct, or which Lessor may construct for Lessee on the Premises. Lessee shall, at all times during the term of this Lease, at Lessee's expense, maintain a policy or policies of insurance with the premiums paid in advance, insuring Lessee's furniture, machinery, goods or supplies, any additional improvements which Lessee may construct on the Premises, furnishings, removable floor coverings, trade equipment, signs and all other decorations placed by Lessee in or upon the Premises. 19. CONDEMNATION If the Premises, or any part thereof, or any interest therein, be taken by virtue of (or sold under threat of) eminent domain or for any public or quasi-public use or purpose, this Lease and the estate hereby granted, at the option of the Lessor, shall terminate as of the date of such taking. If any part of the Building other than the Premises be so taken, the Lessor shall have the right to terminate this Lease within six (6) months thereafter by giving the Lessee thirty (30) days prior written notice of the date of such termination. Any interest, which Lessee may have or claim to have in any award resulting from the condemnation proceeding, shall be limited to removal expenses for Lessee's furniture, movable fixtures, and other personal property 20. LOSS OR DAMAGE 4 Lessor shall not be liable or responsible for any loss or damage to any property or person occasioned by theft, fire, water, wind, vandalism, rain, snow, leakage of Building and/or sprinkler system, act of God, public enemy, injunction, riot, strike, insurrection, war, court order, requisition, or order of governmental body or authority, unavailability of fuel or energy, or other matter beyond the control of Lessor, or for any damage or inconvenience which may arise through repair or alteration of any part of the Building, or failure to make such repairs, or from any cause whatever, unless caused by Lessor's gross negligence. 21. ABANDONMENT If the Premises is abandoned by Lessee, except as provided in Paragraph 2 hereof, Lessor shall have the right but not the obligation, to re-let same for the remainder of the period covered hereby; and if the rent is not received through such re-letting at least equal to the rent provided for hereunder, Lessee shall pay and satisfy any deficiencies between the amount of the rent called for and that received through re-letting, and all expenses incurred by such other re-letting, including but not limited to the cost of Realtor's fees, renovating, and altering and decorating for a new occupant. Nothing herein shall be construed as in any way denying Lessor the right, in case of abandonment of the Premises, or other breach of this contract by Lessee, to treat the same as an entire breach of this contract and any and all damages occasioned Lessor thereby, or pursue any other remedy provided by law or this Lease. 22. LOSS BY FIRE OR OTHER CAUSES Lessee shall; in case of fire, or loss or damage to the Premises from other causes, give immediate notice thereof to Lessor. In the event of damage to the Premises by fire or other causes resulting from fault or negligence of Lessee or Lessee's agents, employees, invitees or visitors, the same shall be repaired by and at the sole expense of Lessee under the direction and supervision of Lessor. If the Premises shall be damaged by fire or other casualty covered by Lessor's insurance and not resulting from the fault or negligence of Lessee or Lessee's agents, employees, invitees or visitors, the damages shall be repaired by and at the expense of Lessor and the rent, until such repairs shall be made, shall be apportioned according to the part of the Premises which is usable by Lessee. Lessor agrees, at its expense, to repair promptly any damage of the Premises not resulting from the fault or negligence of Lessee or Lessee's agents, employees, invitees, or visitors, except that Lessee agrees to repair and replace its own furniture, furnishings, fixtures, personal property, and equipment, and except that, if such damage is so extensive that the replacement of more than fifty percent (50%) of the Building be required, then and in that event, at the option of Lessor and by giving written notice to Lessee within forty-five (45) days after said occurrence or damage, this Lease will be canceled, and of no force and effort from and after the date of occurrence of such damage. No penalty shall accrue for reasonable delay, which may arise by reason of adjustment of insurance on the part of Lessor, and for reasonable delay on account of causes beyond Lessor's control (such as described in Paragraphs 5 and 20 hereof). 23. WAIVER OF SUBROGATION RIGHTS Anything in this Lease to the contrary notwithstanding, Lessor and Lessee each hereby waives any and all rights of recovery, claim, action or cause of action against each other, its agents, officers or employees, for any loss or damage that may occur to the Premises, or any improvements thereto, or the Building of which the Premises are a part, or any improvements thereto, or any personal property of such party therein, by reason of fire, the elements, or any other cause(s) which are insured against policies referred to in Paragraph 19 hereof, regardless of cause or origin, including negligence of the other party hereto, its agents, officers, or employees. Lessor and Lessee will both exert their best effort to cause all insurance policies to include an endorsement to the effect the provisions of this Section. 24. ATTORNEY'S FEES In the event that Lessee or Lessor defaults in the performance of any of the terms, covenants, agreements or conditions contained in this Lease and Lessor or Lessee places the enforcement of this Lease, or any part thereof; or the collection of any rent or other sum due, or to become due hereunder, or 5 recovery of the possession of the Premises, in the hands of an attorney, or it files suit upon the same, then the prevailing party shall pay all Attorney's Fees and costs. 25. AMENDMENT OF LEASE This Agreement may not be altered, changed, or amended, except by an instrument in writing, signed by all parties hereto. 26. TRANSFER OF LESSOR'S RIGHTS Lessor shall have the right to transfer and assign in whole or in part all and every feature of its rights and obligations hereunder and in the Building and property referred to herein. Such transfers or assignments may be made either to a corporation, partnership, trust, individual or group of individuals, and, howsoever made, are to be in all things respected and recognized by Lessee. Lessor shall turn over any security deposits or advance rents held by Lessor to the grantee and said grantee assumes, subject to the limitation of this Lease paragraph, all the terms, covenants and conditions of this Lease to be performed on the part of Lessor. 27. DEFAULT BY LESSEE The following shall be deemed to be events of default under this Lease: (a) Lessee shall fail to pay when due any installment of rent or any other payment required pursuant to this Lease or within five (5) days written notice by Lessor. (b) Lessee shall abandon any substantial portion of the Premises except as noted in Paragraph 2 hereof. (c) Lessee shall fail to comply with any term, provision or covenant of this Lease, other than the payment of rent, and the failure is not cured within thirty-days (30) after written notice to Lessee. (d) Lessee shall file a petition or be adjudged bankrupt or insolvent under the Bankruptcy Reform Act of 1978, as amended, or any similar law or statute of the United States or any state; or a receiver or trustee shall be appointed for all or substantially all of the assets of Lessee; or Lessee shall make a transfer in fraud of creditors or shall make an assignment for the benefit of creditors. (e) Lessee shall do or permit to be done any act, which results in a lien being fled against the Premises. 28. REMEDIES FOR LESSEE'S DEFAULT All rights and remedies of the Lessor herein enumerated in the event of default shall be cumulative and nothing herein shall exclude any other right or remedy allowed by law. Upon the occurrence of any Event of Default set forth in this Lease Agreement, Lessor shall have the option, if Lessor so elects but not otherwise, to pursue any one or more of the following remedies without any notice or demand: (a) Terminate this Lease, in which event Lessee shall immediately surrender the Premises to Lessor, and if Lessee fails to surrender the Premises, Lessor may, without prejudice to any other remedy which it may have for possession or arrearage in rent, enter any other person who may be occupying all or any part of the Premises without being liable for prosecution of any claim for damages. Lessee agrees to pay on demand the amount of all loss and damage which Lessor may suffer by reason of the termination of the Lease under this subparagraph, whether through inability to re-let the Premises on satisfactory terms or otherwise. 6 (b) Enter upon and take possession of the Premises, and lock out, expel or remove Lessee from any other person who may be occupying all or any part of the Premises without being liable for any claim for damages, and re-let the Premises on behalf of Lessee and receive directly the rent by reason of the re-letting. Lessee agrees to pay Lessor on demand any deficiency that may arise by reason of any re-letting of the Premises. Further, Lessee agrees to reimburse Lessor for any expenditure made by it for remodeling or repairing, as well as the cost of Realtor's fees, in order to re-let the Premises. (c) Enter upon the Premises, without being liable for prosecution of any claim for damages, and do whatever Lessee is obligated to do under the terms of this Lease. Lessee agrees to reimburse Lessor on demand for any expenses which Lessor may incur in effecting compliance with Lessee' obligations under this Lease. Further, Lessee agrees that Lessor shall not be liable for any damages resulting to Lessee from effecting compliance with Lessee's obligations under this Subparagraph caused by the negligence of Lessor or otherwise. (d) In the event that litigation is necessary to enforce the provisions of this Lease, both Lessor and Lessee hereby waive their respective rights to a jury trial. 29. WAIVER OF DEFAULT OR REMEDY Failure of Lessor to declare an Event Of Default immediately upon its occurrence, or delay in taking any action in connection with an Event Of Default, shall not constitute a waiver of the default, but Lessor shall have the right to declare the default at any time and take such action as is lawful or authorized under this Lease. Pursuit of any one or more of the remedies set forth in Paragraph 28 above shall not preclude pursuit of any one or more of the other remedies provided elsewhere in this Lease by reason of the violation of any of the terms, provisions or covenants of this Lease. Failure by Lessor to enforce one or more of the remedies provided upon an Event Of Default shall not be deemed or construed to constitute a waiver of the default or of any violation or breach of any of the terms, provisions and covenants contained in this Lease. 30. RIGHTS OF MORTGAGE AND OWNER Lessee accepts this Sublease subject and subordinate to any rights of the Owner and the recorded mortgage, deed of trust or other lien presently existing upon the Premises. Lessor is hereby irrevocably vested with full power and authority to subordinate Lessee's interest under this Lease to the Owner's interest and any mortgage, deed or trust or other lien hereafter placed on the Premises and Lessee agrees upon demand to execute additional instruments subordinating this Lease as Lessor or Owner may require. If the interest of Lessor or Owner under this Lease shall be transferred by reason of foreclosure or other proceedings for enforcement of any mortgage on the Premises, Lessee shall be bound to the transferee (sometimes called the "Purchaser") under the terms, covenants and conditions of this Lease for the balance of the term remaining, and any extensions or renewals, with the same force and effect as if the Purchaser were Lessor under this Lease, and Lessee agrees to attorn to the Purchase, including the mortgagee under any such mortgage if it be the Purchaser, as its Lessor, the attornment to be effective and self-operative without the execution of any further instruments upon the Purchaser succeeding to the interest of Lessor under this Lease. The respective rights and obligations of Lessee and the Purchaser upon the attornment, to the extent of the then remaining balance of the term of this Lease, and any extensions and renewals, shall be and are the same as those set forth in this Lease. 31. ESTOPPEL CERTIFICATES Lessee agrees to furnish at any time, and from time to time, with seven (7) days after request of Lessor, Owner or Lessor's mortgagee, a statement certifying that Lessee is in possession of the Premises; the Premises are acceptable; the Lease is in full force and effect; the Lease is unmodified; Lessee claims no present charge, lien or claim of offset against rent; the rent is paid for the current month, but is not paid and will not be paid for more than one (1) month in advance; there is not existing default by reason of some act or omission by Lessor; and such other matters as may be reasonably required by Lessor or Lessor's mortgagee. 7 32. SUCCESSORS This Lease shall be binding upon and inure to the benefit of Lessor and Lessee and their respective heirs, personal representatives, successors and assigns. It is hereby covenanted and agreed that should Lessor's interest in the Premises cease to exist for any reason during the term of this Lease, then notwithstanding the happening of such event, this Lease nevertheless shall remain unimpaired and in full force and effect and Lessee hereunder agrees to attorn to the then owner of the Premises. 33. RENT TAX Lessee shall pay and be liable for all rental, sales, indigent and use taxes or other similar taxes, if any, levied or imposed by any city, state, county or other governmental body having authority, such payments to be in addition to all other payments required to be paid to Lessor by Lessee under the terms of this Lease. Any such payment shall be paid concurrently with the payment of the rent upon which the tax is based as set forth above. 34. PARKING During the term of this Lease, Lessee shall have the non-exclusive use in common with Lessor, other tenants of the Building, their guests and invitees, of the non-reserved common automobile parking areas, driveways, and walkways, subject to the rules and regulations for the use thereof as prescribed from time to time by Lessor. 35. NOTICES Any rental payment, notice or document required or permitted to be delivered hereunder shall be deemed to be delivered or given when (a) actually received, or (b) signed for or "refused" as indicated on the U.S. Postal Service Return Receipt. Delivery may be made by personal delivery or by United States mail, postage prepaid, Certified or Registered Mail, addressed to the parties hereto at the respective addresses set out opposite their names below, or at such other addresses as they may hereafter specify by written notice delivered in accordance herewith: LESSOR: ST. JAMES PARTNERS, INC. 101 Philippe Parkway, Suite 300 Safety Harbor, FL 34695 LESSEE: MILLENNIUM MEDIA INTERNATIONAL, INC 101 Philippe Parkway, Suites 312, 313, 311, 310 Safety Harbor, FL 34695 36. SCHEDULES All schedules initialed by both parties hereto and attached to this Lease shall be part of this contract whether or not said schedules are specifically referred to in this Lease. 37. SEPARABILITY In the event that any provisions of this Lease are held invalid, the other provisions shall remain in full force and effect. 38. GOVERNING LAWS This Lease shall be governed by and construed according to the laws of the State of Florida. 39. CAPTIONS AND CONSTRUCTION OF LANGUAGE 8 Captions are inserted for convenience only, and shall not affect or limit the construction of this Lease- The terms "Lease", "Lease Agreement", or "Agreement" shall be inclusive of each other, and will also include renewals, extensions, or modifications of this Lease. 40. NO LIENS Anything to the contrary, herein notwithstanding, if Lessee makes any repairs or alterations to the Premises, whether or not with Lessor's prior consent, Lessee will not allow any lien of any kind, whether for labor, material, or otherwise to be imposed or remain against the Building or. the Premises. Notwithstanding the foregoing, if any lien is filed against the Premises or the Building for work claimed to have been for, or materials furnished to Lessee, whether or not done pursuant to this paragraph, the same shall be discharged by Lessee within ten (10) days thereafter, at Lessee's expense, by transferring the lien to security pursuant to the applicable provisions of the Florida Mechanic's Lien Law. 41. SHOWING PREMISES Lessor shall have the right during normal business hours, and upon reasonable notice to Lessee, to show the Premises to prospective lessees or Purchasers of the Building or any part thereof at any time. 42. LEASING BROKER Lessee and Lessor warrant that they have had no dealings with any broker or agent in connection with this Lease and covenant to hold harmless and indemnify each other from and against any and all costs, expense or liability for any compensation, commissions and charges claimed by any other broker or agent with respect to this Lease or the negotiation thereof with whom Lessee or Lessor had dealings. 43. RECORDING Neither this Lease, nor any short form hereof, shall be recorded. 44. ATTACHMENTS TO THIS LEASE Attached hereto, and made a part hereof as fully as if occupied herein verbatim, and signed and/or initialed by the Lessor and Lessee as approved are the following: (a) Exhibit "A" - Floor Plan 9 LESSOR: ST. JAMES PARTNERS ATTEST: /s/ BY: /s/ - ----------------------------- -------------------------------- TITLE: VP ----------------------------- DATE: 5/1/00 ------------------------------ LESSEE: MILLENNIUM MEDIA INTERNATIONAL, INC ATTEST: /s/ BY: /s/ - ----------------------------- -------------------------------- TITLE: President /CEO ----------------------------- DATE: 5/1/00 ------------------------------ 10 EX-21.1 20 0020.txt SUBSIDIARIES LIST OF SUBSIDIARIES None EX-23.2 21 0021.txt CONSENT OF INDEPENDENT AUDITORS CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated June 1, 2000, relating to the financial statements of New Millennium Media International, Inc. and Subsidiaries which is contained in that Prospectus. Our report contains an explanatory paragraph regarding the Companies ability to continue as a going concern. We also consent to the reference to us under the caption "Experts" in the Prospectus. Richard J. Fuller, CPA, PA Clearwater, FL June 1, 2000 EX-99.1 22 0022.txt TRADEMARK "REGISTRATION PENDING" DOCUMENTATION IN THE UNITED STATES PATENT AND TRADEMARK OFFICE Trademark: IllumiSign EyeCatcher International Class No: 9 To the Assistant Secretary and Commissioner of Patents and Trademarks: From Applicant: NEW MILLENNIUM MEDIA INTERNATIONAL, INC. 1601 West Evans Denver, Colorado 80223 Telephone: (303) 934-2424 The Applicant, NEW MILLENNIUM MEDIA INTERNATIONAL, INC., is a corporation duly organized under the laws of the State of Colorado. Said applicant has adopted and is using the trademark shown in the accompanying drawing in commerce to identify its electric sign products and requests that said mark be registered in the United States Patent Office on the Principal Register established by the Act of July 5, 1946. The trademark was first used by applicant on or about October 1, 1996; was first used in interstate commerce among the several states which may lawfully be regulated by Congress on or about October 1, 1996; and is now in use in such commerce. The mark is used by applying it to the signs themselves and on flyers, brochures and other forms of advertisements and promotional materials associated with the applicant's signs. Three (3) specimens showing the mark as actually used are presented herewith. The undersigned declares that he is the President of the applicant corporation and is authorized to make this declaration on behalf of the corporation; that he believes said corporation to be the owner of the mark sought to be registered, that to the best of his knowledge and belief no other person, firm, corporation or association has the right to use said mark in commerce, either in the identical form or in such near resemblance thereto as may be likely, when applied to the goods of such other person, to cause confusion or to cause mistake, or to deceive. The undersigned further acknowledges that he has been warned that willful false statements and the like so made are punishable by fine or imprisonment, or both, under Section 1001 of Title 18 of the United States Code and that such willful false statements may jeopardize the validity of the application or any registration resulting therefrom, and he declares that the undersigned is an officer of the applicant corporation and is authorized to execute this application on behalf of the applicant corporation, that the facts set forth in this application are true and that all statements made on knowledge are true and that all statements made on information and belief are believed to be true. NEW MILLENNIUM MEDIA INTERNATIONAL, INC. By: /s/ Troy Lowrie ---------------------------- Troy Lowrie, President Dated: June 17, 1998 NEW MIUENNIUM MEDIA INTERNA TIONAL, INC. 1601 West Evans Denver, Colorado 80223 Telephone: (303) 934-2424 Date of First Use: October 1, 1996 Date of First Use In Interstate Commerce: October 1, 1996 Class No. International Class 9 For: Signs ILLUMISIGN EYECATCHER EX-99.2 23 0023.txt EMPLOYMENT AGREEMENT - JOHN THATCH EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement") is made and entered into as of the 1st day of April, 2000 by and between American Manufacturers.com, Inc., a Florida corporation (the "Employer"), and Leo Burch (hereinafter called the "Employee"). Whereas, Employee desires to serve as Vice President/CFO (Chief Financial Officer) of Employer; Whereas, Employee and Employer would like to structure a mutually beneficial business relationship whereby Employee serves in the capacities enumerated in this Agreement in exchange for compensation similarly enumerated; Whereas, Employee and Employer desire to clarify the nature of their business relationship and obligations to the other; Now therefore, in consideration of the premises and mutual covenants set forth herein, the parties hereto, intending to be legally bound, agree as follows: 1. Employment. 1.1 Employment. The Employer hereby agrees to employ the Employee and the Employee hereby agrees to serve the Employer on the terms and conditions set forth herein. 1.2 Duties of Employee. Employee shall act as Vice President/CFO of Employer and shall perform such duties as shall be reasonably assigned to him by the Chief Executive Officer of the Employer which are consistent with his office. Employee shall serve at the direction of and be responsible to the Chief Executive Officer of Employer. Throughout the period of his employment hereunder, the Employee shall: (i) devote his full business time, attention, knowledge and skills, faithfully , diligently and professionally, to the active performance of his duties and responsibilities hereunder on behalf of the Employer at a level at least equal to that generally expected of an employee of a business comparable to that of the Employer; having the rank and responsibilities of the Employee; (ii) observe and carry out such rules, regulations, policies, directions and restrictions of general application to all employees of the Employer having a rank comparable to that of the Employee as may reasonably be established from time to time by the Employer's Board of Directors, including but not limited to the standard policies and procedures of the Employer as in effect from time to time; and (iii) do such traveling as may reasonably be required in connection with the performance of such duties and responsibilities. 2. Term. The term of this Agreement, and the employment of the Employee hereunder, shall commence on the date hereof (the "Commencement Date") and shall expire on March 31, 2003 (the "Expiration Date") unless sooner terminated in accordance with the terms and conditions hereof (the "Term"). 1 3. Compensation. 3.1 Base Salary. The Employee shall receive a base salary at the annual rate of $110,000 (the "Base Salary") during the term of this Agreement, with such Base Salary payable in installments consistent with the Employer's normal payroll payment schedule, subject to applicable withholding and other taxes. The Base Salary shall be reviewed at least annually and may, by action and in the discretion of the Employer, be increased at any time or from time to time. 3.2 Bonuses. During the Term of this Agreement, the Employee shall be eligible to receive bonuses, at the discretion of the Employer, pursuant to any bonus plan established by the Employer for bonus compensation for employees of the Employer having a rank comparable to that of the Employee. 3.3 Stock Options. The Employer shall grant to Employee an option to acquire up to 200,000 shares of Employer's common stock pursuant to and subject to the terms of the Non-qualified Stock Option Plan. The Options shall be exercisable at the option price of $0.25 per share. The Option shall be subject to lock-ups and restrictions if required by an initial public offering (IPO) underwriter. The options shall vest as follows: Continuous Employment FROM SIGNING AGREEMENT PORTION EXERCISABLE ---------------------- ------------------- March 31, 2000 1/3 March 31, 2001 1/3 March 31, 2002 1/3 4. Expense Reimbursement and Other Benefits . 4.1 Reimbursement of Expenses. During the term of the Employee's employment hereunder, upon the submission of proper substantiation by the Employee, and subject to such rules and guidelines as the Employer may from time to time adopt, the Employer shall reimburse the Employee for all reasonable expenses actually paid or incurred by the Employee in the course of and pursuant to the business of the Employer. The Employee shall account to the Employer in writing for all expenses for which reimbursement is sought and shall supply to the Employer copies of all relevant invoices, receipts or other evidence reasonably requested by the Employer. 4.2 Compensation/Benefit Programs. During the term of this Agreement, the Employee shall be entitled to participate in all medical, dental, disability, and life insurance plans, and any and all other employee benefit plans as are presently and hereinafter offered by the Employer to its employees having rank comparable to that of the Employee, subject to the general eligibility and participation provisions set forth in such plans. 4.3 This paragraph intentionally left blank. 2 4.4 Other Benefits. The Employee shall be entitled to two weeks of vacation each calendar year during the term of this Agreement, to be taken at such times as the Employee and the Employer shall mutually determine and provided that no vacation time shall interfere with the material duties required to be rendered by the Employee hereunder. Any vacation time not taken by Employee during any calendar year may not be carried forward into any succeeding calendar year. 5. Termination. 5.1 Termination for Cause. The Employer shall at all times have the right, upon written notice to the Employee, to terminate the Employee's employment hereunder, for Cause. For purposes of this Agreement, the term "Cause" shall mean (i) an action or omission of the Employee which constitutes a breach of this Agreement which is not cured within 30 days of the Employer's giving notice of termination to the Employee specifying in reasonable detail the reasons for termination; (ii) the Employee's committing an act constituting fraud, theft, conversion, a crime, or breach of fiduciary duty; (iii) gross negligence in connection with the performance of the Employee's material duties hereunder; (iv) the material failure or refusal (other than as a result of a disability) by the Employee to perform his duties hereunder; (v) the Employee's abuse of drugs or alcohol that adversely affects the performance of the Employee's duties hereunder; (vi) the Employee's commission of an act of misconduct, to the extent that in the reasonable judgment of the Employer, the Employee's credibility and reputation no longer conform to the standards of the Employer's senior officers; and (vii) the Employee not being qualified in the Employer's reasonable judgment to discharge properly the duties of the Employee's employment hereunder. Upon any termination pursuant to this Section 5.1, the Employer shall pay to the Employee his Base Salary to the date of termination. The Employer shall have no further liability hereunder . 5.2 Disability. Subject to applicable law the Employer shall at all times have the right in its discretion, upon written notice to the Employee, to terminate the Employee's employment hereunder, if the Employee shall as the result of mental or physical incapacity , illness or disability , become unable to perform his obligations hereunder for a total of 120 days in any 180 day period, or any 90 consecutive days. Upon any termination pursuant to this Section 5.2, the Employer shall, (i) pay to the Employee any unpaid Base Salary through the effective date of termination specified in such notice, and (ii) pay to the Employee severance payments equal to three months of the Employee's Base Salary at the time of the termination of the Employee's employment with the Employer, payable on the Employer's normal payroll payment schedule. The Employer shall have no further liability hereunder (other than for (x) reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however to the provisions of Section 4.1, (y) payment of compensation for unused vacation days that have accumulated during the calendar year in which such termination occurs, and (z) issuance of Shares under Section 3.3, and (aa) payment of unpaid benefits that have accrued through the date of termination. 3 5.3 Death. In the event of the death of the Employee during the Term of his employment hereunder, the Employer shall pay to the estate of the deceased Employee any unpaid Base Salary through the Employee's date of death. The Employer shall have no further liability hereunder (other than for (x) reimbursement for reasonable business expenses incurred prior to the date of the Employee's death, subject, however to the provisions of Section 4.1, (y) payment of compensation for unused vacation days that have accumulated during the calendar year in which such termination occurs, (z) issuance of Shares under Section 3.3, and (aa) payment of unpaid benefits that have accrued through the date of termination). 5.4 Termination Without Cause. At any time the Employer shall have the right to terminate the Employee's employment hereunder by ten days prior written notice to the Employee. Upon any termination pursuant to this Section 5.4 (that is not a termination under any of Sections 5.1,5.2, or 5.3), Employer shall (i) pay to the Employee any unpaid Base Salary through the effective date of termination specified in such notice, and (ii) continue to pay the Employee's Base Salary for the term of this Agreement but not less than a period of six months following the termination of the Employee's employment with the Employer, in the manner and at such time as the Base Salary otherwise would have been payable to the Employee. The Employer shall have no further liability hereunder (other than for (x) reimbursement for reasonable business expenses incurred prior to the date of termination, subject, however, to the provisions of Section 4.1, (y) payment of compensation for unused vacation days that have accumulated during the calendar year in which such termination occurs, (z) issuance of Shares under Section 3.3, and (aa) payment of unpaid benefits that have accrued through the date of termination). 5.5 Resignation. Upon any termination of employment pursuant to this Section 5, the Employee shall be deemed to have resigned as an officer, and if he or she was then serving as a director of the Employer, as a director, and if required by the Board, the Employee hereby agrees to immediately execute a resignation letter to the Board. 6. Restrictive Covenants. 6.1 Non-Competition. At all times while the Employee is employed by the Employer and for a two year period after the termination of the Employee's employment with the Employer by the voluntary resignation of the Employee, the Employee shall not, directly or indirectly, engage in or have any interest in any sole proprietorship, partnership, corporation or business or any other person or entity (whether as an employee, officer, director, partner, agent, security holder, creditor, consultant or otherwise) that directly or indirectly (or through any affiliated entity) engages in competition with the Employer (for this purpose, any business that engages in the business of Internet vertical business to business product and manufacturer search shall be deemed to be in competition with the Employer); provided that such provision shall not apply to the Employee's ownership of Common Stock of the Employer or the acquisition by the Employee, solely as an investment, of securities of any issuer having securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, that are listed or admitted for trading on any United States national securities exchange or that are quoted on the National Association of Securities Dealers Automated Quotations System, or any similar system 4 of automated dissemination of quotations of securities prices in common use, so long as the Employee does not control, acquire a controlling interest in or become a member of a group which exercises direct or indirect control of, more than five percent of any class of capital stock of such corporation. 6.2 Nondisclosure. The Employee shall not at any time divulge, communicate, use to the detriment of the Employer or for the benefit of the Employee or any other person, or misuse in any way, any Confidential Information (as hereinafter defined) pertaining to the business of the Employer. Any Confidential Information or data now or hereafter acquired by the Employee with respect to the business of the Employer (which shall include, but not be limited to, information concerning the Employer's financial condition, prospects, technology, customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and unique asset of the Employer that is received by the Employee in confidence and as a fiduciary, and Employee shall remain a fiduciary to the Employer with respect to all of such information. For purposes of this Agreement, "Confidential Information" means information disclosed to the Employee or known by the Employee as a consequence of or through his employment by the Employer (including information conceived, originated, discovered or developed by the Employee) prior to or after the date hereof, and not generally known, about the Employer or its business. Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Employee from disclosing Confidential Information to the extent required by law. This Section 6.2 shall not apply to information that (i) is generally known to the Employee prior to its disclosure to the Employee; (ii) is or becomes publicly available other than by unauthorized disclosure by the Employee; or (iii) is received by the Employee from a third party who is rightfully in possession of such information free of any obligation to maintain its confidentiality; or (iv) is known by the Employee prior to his employment by the Employer. 6.3 Nonsolicitation of Employees and Clients. At all times while the Employee is employed by the Employer and for a two year period after the termination of the Employee's employment with the Employer for any reason, the Employee shall not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (a) employ or attempt to employ or enter into any contractual arrangement with any employee or former employee of the Employer, and/or (b) call on or solicit any of the Employer's actual or targeted prospective customers, suppliers, providers of products or services to the Employer or its customers, or comparable parties ("Customers/Providers") on behalf of any person or entity in connection with any business competitive with the business of the Employer as defined herein, nor shall the Employee make known the names and addresses of Customers/Providers or any information relating in any manner to the Employer's trade or business relationships with Customers/Providers, other than in connection with the performance of Employee's duties under this Agreement; provided however that this Section 6.3 shall not apply to any solicitation of users of the Internet generally through a web site that can be accessed by the public so long as such solicitation does not involve direct contact with Customers/Providers. 5 6.4 Ownership of Developments. All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by Employee during the course of performing work for the Employer or its clients (collectively, the "Work Product") shall belong exclusively to the Employer and shall, to the extent possible, be considered a work made by the Employee for hire for the Employer within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made by the Employee for hire for the Employer, the Employee agrees to assign, and automatically assigns at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest the Employee may have in such Work Product. Upon the request of the Employer, the Employee shall take such further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment. 6.5 Books and Records. All books, records, and accounts relating in any manner to the customers or clients of the Employer, whether prepared by the Employee or otherwise coming into the Employee's possession, shall be the exclusive property of the Employer and shall be returned immediately to the Employer on termination of the Employee's employment hereunder or on the Employer's request at any time. 6.6 Definition of Employer. Solely for purposes of this Section 6, the term "Employer" also shall include any existing or future subsidiaries of the Employer that are operating during the time periods described herein and any other entities that directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with the Employer during the periods described herein. 6.7 Acknowledgment by Employee. The Employee acknowledges and confirms that (a) the restrictive covenants contained in this Section 6 are reasonably necessary to protect the legitimate business interests of the Employer, and (b ) the restrictions contained in this Section 6 (including without limitation the length of the term of the provisions of this Section 6) are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Employee further acknowledges and confirms that his full,uninhibited and faithful observance of each of the covenants contained in this Section 6 will not cause him any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or otherwise to obtain income required for the comfortable support of him and his family and the satisfaction of the needs of his creditors. The Employee acknowledges and confirms that his special knowledge of the business of the Employer is such as would cause the Employer serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor or were to compete with the Employer in violation of the terms of this Section 6. The Employee further acknowledges that the restrictions contained in this Section 6 are intended to be, and shall be, for the benefit of and shall be enforceable by, the Employer's successors and assigns. 6.8 Reformation by Court. In the event that a court of competent jurisdiction shall determine that any provision of this Section 6 is invalid or more restrictive than permitted 6 under the governing law of such jurisdiction, then only as to enforcement of this Section 6 within the jurisdiction of such court, such provision shall be interpreted and enforced as if it provided for the maximum restriction permitted under such governing law. 6.9 Extension of Time. If the Employee shall be in violation of any provision of this Section 6, then each time limitation set forth in this Section 6 shall be extended for a period of time equal to the period of time during which such violation or violations occur. If the Employer seeks injunctive relief from such violation in any court, then the covenants set forth in this Section 6 shall be extended for a period of time equal to the pendency of such proceeding including all appeals by the Employee. 7. Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach by the Employee of any of the covenants contained in Section 6 of this Agreement will cause irreparable harm and damage to the Employer, the monetary amount of which may be virtually impossible to ascertain. As a result, the Employee recognizes and hereby acknowledges that the Employer shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any violation of any or all of the covenants contained in Section 6 of this Agreement by the Employee or any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Employer may possess. 8. Mediation. Except to the extent the Employer has the right to seek an injunction under Section 7 hereof, in the event a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties hereby agree first to attempt in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Employment Mediation Rules before resorting to litigation or some other dispute resolution procedure. 9. Assignment. Neither party shall have the right to assign or delegate his rights or obligations hereunder, or any portion thereof, to any other person. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. 11. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Employee and the Employer (or any of its affiliates) with respect to such subject matter. This Agreement may not be modified in any way unless by a written instrument signed by both the Employer and the Employee. 12. Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by confirmed facsimile transmission addressed as set forth herein. 7 Notices personally delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given upon the earlier of receipt by the addressee, as evidenced by the return receipt thereof, or three (3) days after deposit in the U. S. mail. Notice shall be sent (i) if to the Employer, addressed to 285B North Lake View Boulevard, Cocoa, Florida 32926-4333, and (ii) if to the Employee, to his address as reflected on the payroll records of the Employer, or to such other address as either party hereto may from time to time give notice to the other. 13. Benefits; Binding Effect. This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representatives, legal representatives, and successors. 14. Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that anyone or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted. If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such invalidity . 15. Waivers .The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation. 16. Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 17. No Third Party Beneficiary. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Employer, the parties hereto and their respective heirs, personal representatives, legal representatives, successors and assigns, any rights or remedies under or by reason of this Agreement. 18. Venue. In the event of litigation arising out of this Agreement, venue shall be in Brevard County, Florida. 19. Survival. The provisions of this Sections 6-18 hereof shall survive the termination of this Agreement, as applicable. 8 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written Employer: American Manufacturers.com, Inc. By:_________________________ Ronald E. Anderson, CEO/President: Employee: _____________________________ Leo Burch 9 ADDENDUM TO ----------- EMPLOYMENT AGREEMENT -------------------- This ADDENDUM TO EMPLOYMENT AGREEMENT, made and entered into as of the 1st day of June 2000, by and between New Millennium Media International, Inc., a Colorado corporation (the "CORPORATION"), and Mr. John Thatch, an individual residing in Clearwater, Florida (the "EXECUTIVE"). WITNESSETH THAT: --------------- WHEREAS, the Parties hereto entered into an Employment Agreement dated November 2, 1999 for a term of three years; WHEREAS, the Parties desire to change an element of the employee's compensation as stated in said Employment Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, it is hereby covenanted and agreed by the Corporation and the Executive as follows: 1. Paragraph 3.(a) of the Employment Agreement between the parties hereto is deleted in its entirety and substituted in its stead shall be the paragraph 3.(a) as follows: "3.(a) He shall receive, for the first 12-consecutive month period beginning on the beginning January 1, 2000 a rate of salary that is not less than $140,000 per year, payable in substantially equal monthly or more frequent installments. For the balance of the term of this Employment Agreement beginning on January 1, 2001 and for the balance of the employment term the EXECUTIVE shall receive a rate of salary that is not less than $120,000 per year, payable in substantially equal monthly or more frequent installments. The Corporation shall also provide an additional $10,000.yearly for non accountable expenses, payable at least monthly to Executive. During the Employment Period the Executive's salary rate shall be reviewed by the Board of Directors on or before each anniversary of the Commencement Date to determine whether an increase in his rate of compensation is appropriate." 2. In all other respects the said November 2, 1999 Employment Agreement shall remain unchanged and is hereby ratified and affirmed as modified herein. IN WITNESS WHEREOF, the Executive and the Corporation have executed this Employment Agreement as of the day and year first above written. ________________________________________ John Thatch ________________________________________ By: Gerald C. Parker Its: Chairman NEW MILLENNIUM MEDIA INTERNATIONAL, INC. -----END PRIVACY-ENHANCED MESSAGE-----