0001012709-01-500847.txt : 20011030
0001012709-01-500847.hdr.sgml : 20011030
ACCESSION NUMBER: 0001012709-01-500847
CONFORMED SUBMISSION TYPE: SB-2/A
PUBLIC DOCUMENT COUNT: 28
FILED AS OF DATE: 20011026
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NEW MILLENNIUM MEDIA INTERNATIONAL INC
CENTRAL INDEX KEY: 0001108967
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310]
IRS NUMBER: 841463284
STATE OF INCORPORATION: CO
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SB-2/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-45722
FILM NUMBER: 1767369
BUSINESS ADDRESS:
STREET 1: 101 PHILIPPE PARKWAY
STREET 2: SUITE 300
CITY: SAFETY HARBOR
STATE: FL
ZIP: 34695
BUSINESS PHONE: 727-797-6664
MAIL ADDRESS:
STREET 1: 101 PHILIPPE PARKWAY
STREET 2: STE 300
CITY: SAFTETY HARBOR
STATE: FL
ZIP: 34695
SB-2/A
1
sb2a-1001.txt
NEW MILLENNIUM MEDIA, INC.
As filed with the Securities and Exchange Commission on October 24, 2001
Registration No. 333-45722
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT
to
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 of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
200 9th Avenue North, Suite 210
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.
200 9th Avenue North, Suite 210
Safety Harbor, Florida 34695
----------------------------
(Name, Address and Telephone Number of Agent for Service)
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. |X|
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If 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 class Amount to be Proposed maximum Proposed Amount of
of securities to be registered* offering price per maximum registration
registered unit aggregate fee**
offering
price
---------------------------------------------------------------------------------------
Common stock 432,000 (1) $1.50 648,000
---------------------------------------------------------------------------------------
Common stock(a) 3,436,364 (2) $1.50 5,154,546
---------------------------------------------------------------------------------------
Common stock(b) 220,000 (3) $1.50 330,000
---------------------------------------------------------------------------------------
Common stock(c) 343,636 (4) $1.50 515,454
---------------------------------------------------------------------------------------
Common stock(d) 600,000 (1)(5) $1.50 900,000
---------------------------------------------------------------------------------------
Totals 5,032,000 7,548,000
---------------------------------------------------------------------------------------
*Note: Subsequent to the filing of the SB-2 registration statement the issuer
shares split 1:5. The Amounts stated in this schedule reflect this reverse
split.
**Note: The registration fee was paid in full with the filing of the SB-2
Registration Statement. 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 issued upon conversion.
2
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
October 23, 2001 (within 5 business days of the SB-2 Post Effective
Amendment 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 3,436,364 (post split number of shares) 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. There is no assurance that the
$25,000,000 maximum will ever be reached.
(3) Swartz has already received a "commitment warrant" ((b) above) to purchase
200,000 (post split number of shares) shares at signing the letter of
intent for an initial price of $1.50 (calculated to reflect post split
amount) 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 (b) 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 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) Issued upon conversion of Series A Convertible Preferred stock issued to
Investment Management of America, Inc. The conversion ratio was 1:1.
3
PROSPECTUS
New Millennium Media International, Inc.
200 9th Avenue North, Suite 210
Safety Harbor, Florida 34695
(727) 797-6664
The Resale of 5,032,000 (post split number of shares) 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
5,032,000 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 432,000 (post split number of shares) shares are presently outstanding
to accredited investors,
o up to 3,436,364 (post split number of shares) shares are issuable to
Swartz Private Equity, LLC over a three year period based on an
Investment Agreement dated as of May 19, 2000,
o up to 220,000 (post split number of shares) 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 343,636 (post split number of shares) shares are issuable to
Swartz Private Equity, LLC upon the exercise of warrants issued to
Swartz under the Investment Agreement as "Purchase Warrants",
o 600,000 (post-split number of shares) shares were issued to Investment
Management of America, Inc. to convert 600,000 post-split 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 consideration from the transfer of the
Series A Preferred shares that have been converted to common shares that are
presently outstanding and we 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. There is no assurance that this $25,000,000 maximum will
ever be reached.
Our common stock is quoted on the over-the-counter Electronic Bulletin Board
under the symbol NMMG; prior to the stock split the symbol was NMMI. On October
23, 2001, the average of the bid and asked prices of the common stock on the
Bulletin Board was $1.50 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 11 of this prospectus.
4
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.
The date of this prospectus is October 24, 2001.
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.
5
Table of Contents
Page Page
Prospectus Summary................ 7 Where You Can Find More
Summary Financial Data............10 Information....................31
Risk Factors......................11 Description of Business..........31
Use of Proceeds...................21 Management's Discussion and
Price Range of Common Stock.......21 Analysis or Plan of Operation..35
Dilution..........................22 Description of Property..........39
Selling Security Holders..........23 Plan of Certain Relationships and
Distribution......................24 Related Transactions...........39
Swartz Investment Agreement.......24 Market for Common Equity and
Additional Securities Being Related Stockholder Matters 40
Registered......................26 Executive Compensation...........40
Legal Proceedings.................28 Index to Financial Statements....41
Directors and Officers............28 Indemnification of Directors
Security Ownership of Certain and Officers...................57
Beneficial Owners and Expenses of Issuance and
Management......................29 Distribution...................57
Description of Securities.........29 Recent Sales of Unregistered
Interest of Named Experts Securities.....................57
and Counsel.....................30 Exhibits Index...................59
Disclosure of Commission Undertakings.....................60
Position of Indemnification Signatures.......................62
For Securities Act
Liabilities.....................31
6
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.
Our principal offices were located at 101 Philippe Parkway, Suite 300, Safety
Harbor, Florida 34695 until August 24, 2001 at which time the offices were
relocated to 200 9th Avenue North, Suite 210, Safety Harbor, Florida 34695,
(727) 797-6664, fax (727) 797-7770.
Some of the statements contained in this prospectus 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 "EyeCatcher" display boards.
In this prospectus, we refer to New Millennium Media International, Inc. as
"NMMI" or "we" or "Company". We refer to Swartz Private Equity, LLC as "Swartz".
Light emitting diode is abbreviated as "LED".
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.
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 order to obtain consulting services of
Scovel's corporate officer and in lieu of filing form 10 and bring current the
needed certified financial statements of NMMI by certified audit, the Company
elected to merge with a compliant shell corporation, Scovel 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. After the acquisition, Scovel was
liquidated. Thus, the Company completed the process of a merger with Scovel
Corporation wherein New Millennium Media International, Inc. was the surviving
entity; however, the intended OTC Bulletin Board trading listing was
7
not achieved until NASD Form 211 was filed by NMMI. This transaction was not
significant to the financial statements of NMMI. NMMI was relisted OTC BB on
September 6, 2000.
OUR BUSINESS
According to an article written by Diane Cimine, Executive V. P. Marketing of
Outdoor Advertising Association of America, Inc., in 1999 $4.8 billion dollars
were spent in outdoor advertising, up 9.4% over 1998. This continued growth
reflects the popularity and effectiveness of outdoor and indoor advertising from
both existing and new advertisers. This reported growth might not necessarily
continue. NMMI does not currently have significant revenues from its display and
advertising business and there is no assurance that NMMI will participate in any
such growth. NMMI plans to install LED (light emitting diode) outdoor displays
in high traffic areas and form joint ventures with strategic partners to place a
large number of indoor "IllumiSign-Eyecatcher" patented motion display boards.
NMMI intends to secure highly visible sites throughout the United States and
Canada 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 the exclusive United States and Canada rights to an indoor frontlit
advertising board called the Illumisign-EyeCatcher Display. This is a patented
product that ranges in size from 11" x 17" to 48" x 72" poster size. 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. From the sale of advertisements to be
displayed on the display boards, IllumiSign-EyeCatcher displays can generate
revenues up to $5,000 per month per display board. This revenue is predicated on
a maximum of at least 20 advertising posters sold at no less than $250 each per
month. Additionally, NMMI has the exclusive United States and Canada rights to
an indoor backlit advertising board designed and manufactured by AMS Controls,
Inc. There are a few minor exceptions to this exclusivity, namely, seventeen
accounts existing in the inventory of AMS Controls, Inc. at the time of
contracting with NMMI. We are marketing this new product as "EyeCatcher Powered
by Insight". This is a patented product, that ranges in size from 18" X 24" to
40" X 60" poster size. These signs can display up to 20 scrolling advertising
images. Each rotation can be set to run from three seconds to one hour. Like the
IllumiSign-EyeCatcher, this product has the potential to generate revenues from
the sale of advertisements up to $5,000 per month per display board. This
revenue is predicated on a maximum of 20 advertising posters sold at no less
than $250 each per month.
NMMI has a strategic partnership with E-Vision LED, Inc., a U.S. based company
whose affiliates manufacture LED displays. E-Vision will sell NMMI the LED
boards at manufacturer's cost and will be a strategic partner in the revenues
that the LED boards produce. This LED board alliance allows NMMI to purchase the
highest quality product at a greatly reduced cost.
E-Vision's supplier has the capability to manufacture any size LED board
including boards for sporting events. These LED boards can operate any
commercial format on any size board. Management believes
8
this gives NMMI a strong competitive advantage over other display boards for
which the advertisement must be reformatted that 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 national advertisers
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 strategic partner, E-Vision and its affiliates will supply NMMI,
free of charge, software upgrades as they become available.
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 the 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. There is no assurance that this
$25,000,000 maximum will ever be reached.
SHARES IN ADDITION TO SWARTZ 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 the registration statement. Subsequent to the filing of the
registration statement these 3,000,000 Series A Convertible Preferred Stock were
converted to 600,000 post-split Common shares.
Prior to the filing of the registration statement, we conveyed an aggregate of
432,000 post-split shares of common stock to certain qualified private
investors. This number includes options, see section entitled 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 7,116,863 as of June 30, 2001
to the offering, post split
Shares being offered for resale 4,000,000 (maximum)
to the public, post split
Total shares outstanding after 11,116,863
this offering, post split
Price per share to the public Market price at time of resale
9
Total proceeds raised by offering 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.
There is no assurance that this
$25,000,000 maximum will ever be reached.
Use of proceeds from the sale We plan to use the proceeds for
of the shares to Swartz working capital and general corporate
purposes.
OTC Bulletin Board Symbol NMMG
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
----------- -------
1999 2000 2000 2001
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenues 49,176 149,400 1,044 218,741
Operating Expenses 495,161 1,158,213 402,655 659,704
Net Loss (445,985) (1,008,813) (401,611) (440,963)
Loss per share (0.14) (0.19) (0.085) (0.069)
Weighted average number
Of common shares
outstanding (post split 3,111,988 5,255,050 4,717,934 6,403,493
number of shares)
June 30, 2001
-------------
(Unaudited)
Balance Sheet Data:
Total assets................................ 1,639,074
Total liabilities........................... 1,190,144
Shareholders' equity........................ 448,930
10
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.
THE COMPANY HAS LIMITED OPERATING HISTORY AND FUTURE REVENUES ARE UNPREDICTABLE
It is not certain that the Company has the technical capability to support the
potential that the motion display boards and LED boards could attract. The
Company has just begun to actively sell its advertising product and it has very
limited 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. Such risks
and uncertainties include:
o the Company's ability to attract and retain advertising customers at a
steady rate for our brand display board to stimulate the sale of
advertisements to be displayed on the display boards;
o the Company's ability to locate, develop and lease suitable site
locations, indoor and outside, for placement of the display boards and
the generation of innovative spots within the site locations that are
best suited for effective marketing and other promotional activities;
o maintaining customer satisfaction by providing customers, both
advertisers and location owners, with a quality trouble-free product
of various sizes, models and quality courteous service, i. e.,
minimizing technical difficulties and downtime;
o the continuing development and enhancement of our existing display
boards and development of innovative display boards and service to
stay ahead of competitors in this market;
o increasing the level of response and consumer awareness and
recognition for our advertisers for the purchase of consumer products
and services;
o economic conditions both general and specific to the advertising
industry;
o infrastructure management of an expanding business in a rapidly
changing market and the ability to attract and retain suitable
talented personnel who are able to recognize potential customers,
advertisers, locations and improvements of the display boards;
o the amount and timing of operating costs and capital expenditures
relating to expansion of the Company's business, operations and
infrastructure;
o attaining acceptable profit margins notwithstanding competition;
o development of strategic relationships and alliances;
o many cities and states have regulations that prohibit LED signs on the
basis that the signs may be a distraction to passing drivers and may
lead to an increase in the number of traffic accidents;
o risks associated with unanticipated events or liabilities;
11
o the Company has incurred losses and expects to incur substantial net
losses for the foreseeable future;
o going concern uncertainty;
o purchasers of the common stock in this transaction will experience
substantial dilution;
o our common stock is subject to penny stock regulation;
o trading in our common stock on the OTC Bulletin Board may be limited.
ABILITY TO ATTRACT AND RETAIN CUSTOMERS
The revenues derived through the display boards and LED screens are advertising
fees paid by the advertisers to NMMI for placing and displaying the
advertisements on the NMMI display boards and LED screens. In most instances
additional revenue is produced by the Company designing and/or printing the
advertisements that are to be displayed. This is the case in both the backlit
scrolling and the front-lit rotating display boards as well as the LED screens.
The display boards and the LED screens are designed to display up to
approximately twenty alternating advertisements. The success of the Company is
totally dependent on the Company's ability to attract and retain advertising
customers at a steady rate and to stimulate the sale of advertisements to be
displayed on the display boards and LED screen.
ABILITY TO LOCATE, DEVELOP AND LEASE LOCATIONS
The Company's success is dependent on selecting the proper display boards in the
most suitable locations with the most dynamic advertising material for the
particular needs of the advertisers in order to offer its customers the quality
results that are necessary for a continuing lasting business relationship.
Certainly, some specific locations are better suited than others for a
particular market. For example, advertising popcorn would logically be more
suited in a movie theater rather than in an automobile dealership. Of equal
importance are the demographics and volume of traffic that will be exposed to
the advertising media. This entails not only the host site location, but also
the specific location within the specific site. No matter how much foot traffic
passes by the front of a store, unless the advertising media can be seen by the
traffic, it is of little use and consequence to the advertiser. 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 distributors,
advertisers and site locations. Unless the Company can locate, develop and
procure suitable advertising locations, there will be little hope to attract
advertising customers to generate sufficient revenues.
There can be no assurance that advertisers will chose to deal through an agency
or distributor with whom the Company has a relationship or the advertisers may
deal directly with the owner of the site location for the placement of static
visual poster type advertisements or through a competitor of the Company rather
than through the Company's products. Accordingly, this could significantly
decrease the amount of our business, operating results and financial condition.
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 agency or media of
12
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.
CUSTOMER SATISFACTION
In all instances the host venue location owner has a vested interest in the
success of the display boards and the LED screens because the space that our
media occupies is some of the retailers' stock in trade. Unless the space can be
put to productive use, the location of the media is of no economic value to the
location owners as well as the advertisers. In addition to the most suitable
location, it is imperative that the media equipment be of a size suitable for
the particular location. Over-kill as well as under-kill can produce an adverse
effect with the ultimate consequence of lost revenue.
Because the Company's products are electronic and electromechanical, the LED and
the rotating display boards, have a potential for breakdown. The Company limits
the exposure to this problem by having a periodic maintenance procedure;
however, there will eventually be downtime. The impact of such downtime will be
problematic to the Company because the advertiser pays the Company a monthly fee
to have its advertisements seen by the public; a portion of the fee is paid to
the host venue and a portion to the sales distributor. When downtime occurs,
unless such downtime is immediately minimized, the advertisers' monthly
advertising fees will need to be adjusted accordingly. A sincere apology for
nonproductive downtime is never going to cure the problem. When advertisers are
paying for a specific number of advertising exposures per minute, a
non-functioning media machine will not fill the expectations of the advertising
customers. Ultimately, a succession of breakdowns will result in loss of the
advertising customers and loss of the site locations as well. Any vandalism or
intentional destruction or theft of the display boards will be another cause for
concern because such acts will most assuredly be an additional cause for
downtime with the same ultimate economic consequence to the Company. NMMI has
attempted to distribute a high quality product; however, because NMMI does not
manufacture the display board and LED screen equipment, the quality cannot be
assured. Ultimately, all of these matters have an affect on the cash flow and
will have an affect on the Company's plan for growth, as well.
CONTINUING DEVELOPMENT AND ENHANCEMENT OF DISPLAY BOARDS
Management feels that as a part of the service provided by NMMI to its customers
it is necessary to service and maintain the existing boards as well as
continuing to improve and innovate its products. NMMI trains each of its
distributor representatives regarding upkeep and maintenance of the advertising
machines. There is no assurance as to how much the routine servicing of the
machines will lengthen the longevity of the machines. As part of the innovation
plan, NMMI developed a kiosk housing for placement of several display boards
within a single fabricated self-contained kiosk housing. Although NMMI does not
have a research and development department, each distributor and sales
representative is in periodic contact with advertisers and site location owners
all of whom have an interest in promoting the most reasonably visible and
appealing advertising media. Ideas are exchanged, many of which are implemented
by NMMI in one manner or another. There is,
13
however, no assurance that competitors will not be more aggressive in their
innovative progression than is NMMI.
CONSUMER AWARENESS AND RECOGNITION
The advertisers expect results. Unless it can reasonably be established that the
advertisers' sales increase to the extent economically anticipated by the
advertisers, there will be no renewal of the advertisement contracts.
Advertising is a competitive business, as too is the advertisers' businesses.
The answer lies with the consumers and the consumers' willingness to accept
NMMI's advertising media by responding by purchase of the advertisers' products.
The Company believes that establishing, maintaining and enhancing its brand
(NMMI brand) are critical aspects 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 the Company's own
brand name. Each display board displays the Company's brand name, address and
phone number. If the Company is unable to provide high-quality advertisers,
displays, 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.
ECONOMIC CONDITIONS
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. In a down
economy merchants and service providers advertise more than in a more affluent
economy. Notwithstanding this philosophy of economics, the economy fluctuates
both in time and geographical location depending on the type of product and the
region where the advertising is to take place. In either event, because of the
periodic change in the economy, the advertising industry will change. It is a
matter of advertising the right product to the right consumer at the right
location at the right time in the right economy. Each of these variables has a
reaction on the potential revenues to be earned by NMMI. There is no assurance
that any or all of these variables will exist to the advantage of NMMI.
14
INFRASTRUCTURE MANAGEMENT
As the Company continues to grow there is a continuing risk of misdirection of
management's attention from operational issues to more subtle, but
time-consuming, less cash flow productive, issues such as personnel matters. The
success of NMMI will rise or fall depending on the talent of the NMMI personnel
to recognize potential customers, advertisers, locations and improvements of the
display boards. Notwithstanding contractual efforts to retain key personnel,
there is always the reality that key personnel could leave the Company.
Management is charged with the responsibility of recruiting competent personnel
able to fulfill the required talent requirement. It is not only the current
ability of the personnel, but the individuals must be able to adapt to an
ever-changing market. A change in the market is reflected in a change of
products, consumer interests, consumer demographics, economics, advertising
media, as well as many additional variables. Because a change in personnel
entails a transition and transitions require time and expense, it is
management's position to employ personnel who have a genuine interest and
ability in progressing along with the changing times and conditions. Replacing
any single key personnel could, and generally does, take several months. During
this term it is necessary for other key personnel to "fill-in" by assuming job
related responsibilities for which such "fill-in's" are not necessarily properly
skilled or efficiently qualified; in addition to taking away such "fill-in's"
attention from otherwise customary daily prescribed duties. This would cause
overall temporary operational inefficiency that certainly would have an ultimate
negative effect on the Company's proposed growth. Management cannot assure that
any particular individual will remain with the Company or that, in the future,
the personnel will continue to be the most suitable for the particular position.
TIMING OF OPERATING COSTS AND CAPITAL
Now that the Company has evolved beyond the initial start-up period and is fully
operational, the Company expects to grow in relation to its growth of sales.
There is, however, no certainty that the Company will achieve these growth
results. The amount and timing of operating costs and capital expenditures
relating to expansion of the Company's business, operations and infrastructure
are key elements to the success of NMMI. Because NMMI is undercapitalized,
timing is important. Although there is a definite distinction between operating
costs and capital expenditures, without both, failure is destined. It is
imperative that the Company has sufficient capital to operate the daily ongoing
business, but by the same token, it is just as important to the ultimate success
of the Company that there be sufficient capital for company expansion. There is
no assurance that there will ever be sufficient capital or revenue to fully fund
both of these vital elements. The Company may need to raise additional funds in
order to fund more rapid expansion, to develop new or enhanced equipment
(display boards, both indoor and outdoor and LED screens), services, site
locations and 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. Other than as already mentioned above, 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
15
required or that, if available, it will be on terms acceptable to the Company.
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 and services and respond to competitive pressures.
COMPETITION
The motion display industry is rapidly evolving and intensely competitive. We
expect competition to continue to intensify in the future. Many of our
competitors have significantly greater financial, technical, marketing and other
resources than we do. Some of our competitors also offer a wider range of
services than we offer and have greater name recognition and a larger customer
base. These competitors may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements and may be able to
undertake more extensive promotional activities, offer more attractive terms to
customers and adopt more aggressive pricing policies. We cannot assure that we
will be able to compete effectively with current or future competitors or that
the competitive pressures faced by us will not harm our business. Intense
competition from existing and new entities may adversely affect our revenues and
profitability.
Many businesses compete with NMMI in some aspects of the motion display
industry. This competition includes traditional static print advertising, LED
and video advertising as well as billboard advertising. Many of NMMI's
competitors are national companies with existing track records that offer
products and services similar to those of NMMI. A few of these major competitors
are Eller Media owned by publicly traded Clear Channel Communications (CCU),
Infinity Group owned by publicly traded Viacom, Inc. (VIA) and JC Decaux. These
companies currently have name recognition in the billboard advertising industry.
NMMI is slightly different from most of its competition in that it operates in a
capacity that includes being the supplier of product, in some instances the
seller of product, the seller of all graphics for the product and the seller of
all advertisements for the product.
The Company needs to keep abreast with its competitors regarding 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 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 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;
16
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 motion display product 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.
STRATEGIC RELATIONSHIPS
The patent holder of the "IllumiSign-Eyecatcher" indoor front-lit display
boards, a resident of Great Britain, granted to the Company an exclusive license
to manufacture, operate, distribute and market the "IllumiSign-Eyecatcher"
indoor front-lit display boards in the United States and Canada. Presently,
Ardian Sheet Metal Limited, a Great Britain based company, manufactures the
"IllumiSign-Eyecatcher" indoor front-lit display boards. AMS Controls, Inc.
holds the patent for the "EyeCatcher Powered by Insight", which is a scrolling
backlit motion display board. AMS granted the Company the exclusive (with minor
exceptions) right to operate, distribute and market the "EyeCatcher Powered by
Insight" motion display boards in the United States. The minor exceptions to
this exclusivity relate to accounts with which AMS had an existing business
relationship at the time of contracting with NMMI. Should either of these
contracts be terminated, it could cause a material adverse affect to the Company
and its operations.
It is a philosophy of Management that strategic relationships are an important
element in the success of the Company. It is felt that strategic relationships
provide an inexpensive, least amount of capital up front, manner of acquiring
some products as well as locating display boards and LED screens. The strategic
relationship that NMMI has with E-Vision LED, Inc. (See section entitled
Business Overview) provides NMMI with the opportunity to furnish expensive LED
panels at dealer cost. This provides NMMI a competitive edge over other LED
advertisers. In the majority of motion display host venue sites the venue site
owner participates in the advertising revenue paid by the advertiser. This too
is a strategic relationship that allows for the placement of the display boards
in prime location at no up-front cost to NMMI. Many of our competitors follow a
similar business plan and there is no assurance that NMMI will continue to
profit from these relationships.
LED SIGN REGULATIONS
Many cities and states have regulations that prohibit LED signs on the basis
that the signs may be a distraction to passing drivers and may lead to an
increase in the number of traffic accidents. Such regulations together with
zoning and other government permit regulations are cause for additional expenses
and time delays. Such additional expense and delays could be cause for
customer/advertiser dissatisfaction. Management's business model many times
requires that
17
at least some LED screen advertisements be pre-sold, i. e., sold prior to
erection of the LED screen. There is no assurance that the LED screen panels,
erection costs, advertising revenues will remain as quoted in the event of a
lengthy government zoning, permit or other regulatory proceeding; or that
appropriate zoning and/or permits will be granted for erection of the LED
screens.
If the Company does not successfully manage these risks, its business, operating
results and financial condition will 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.
RISKS ASSOCIATED WITH UNANTICIPATED EVENTS OR LIABILITIES
Although management has put a great deal of effort into protecting the Company
from potential harmful events that could arise, there is always the distinct
possibility that such events could occur. The Company is insured against all
such events for which insurance is logically and economically available;
however, there exists the reality of potential catastrophes for which there is
no "cash flow" protection such as loss because of hurricane, electrical
lightning, other natural hostile elements that could cause damage to the office
facility, motion displays or LED billboards. Management has determined that it
is not economically feasible for the Company to insure against loss of cash flow
resulting from such calamity. These potential disasters along with other matters
that could cause a disruption of the Company's business most certainly would
have a disastrous effect on the Company's cash flow and ultimately on the
Company's profit.
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. As a result of the Company's limited 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 that the Company will be innovative in its choice of
sites and the locations within the sites.
The Company's future profitability depends on generating and sustaining high
revenue growth while maintaining reasonable expense levels. Slower revenue
growth than the Company anticipates 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
18
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.
There can be no assurance that the Company will be successful in implementing
its plans, or if such plans are implemented, that the Company will be
successful.
PURCHASERS OF THE COMMON STOCK IN THIS TRANSACTION WILL EXPERIENCE SUBSTANTIAL
DILUTION
Based upon the terms of the Swartz 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 Swartz Investment Agreement. The Company cannot
presently ascertain the number of shares to be issued pursuant to the Swartz
Investment Agreement. Under the Swartz Investment Agreement this number may be
up to 4,000,000 (post split number of shares) shares, plus additional shares as
may be registered in the future. Consequently, purchasers of the Company's stock
may experience substantial dilution in the future up to the number of shares
registered.
OUR COMMON STOCK IS SUBJECT TO PENNY STOCK REGULATION
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 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
19
of this report, the trading price of New Millennium's common stock is not in
excess of $5.00 per share and there can be no assurance that the price of the
Company's securities will attain such a level.
TRADING IN OUR COMMON STOCK ON THE OTC BULLETIN BOARD MAY BE LIMITED
The Company's common stock trades on the OTC Bulletin Board. The OTC Bulletin
Board is not an exchange and because trading of securities on the OTC Bulletin
Board is often more sporadic than the trading of securities listed on an
exchange or NASDAQ, you may have difficulty reselling any of the shares that you
purchase from the selling shareholder.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the selling
security holders. However, we have received proceeds from the sale of shares
that are presently outstanding, we could receive up to $25 million from Swartz
upon Swartz's purchase of the shares from us and we may receive additional
proceeds from the sale to Swartz of shares issuable upon the exercise of
warrants issued or to be issued to Swartz pursuant to the Investment Agreement.
There is no assurance that this $25,000,000 maximum will ever be reached.
We intend to use the proceeds from the sale of the shares to Swartz and the
exercise of warrants by Swartz for working capital and general corporate
purposes, including acquisitions, funding anticipated operating losses, sales
and marketing expenses, purchase of additional equipment, working capital 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.
To the extent we deem appropriate, we may acquire fully developed products or
businesses that, in our opinion, facilitate our growth and/or enhance the market
penetration or reputation of our products and services. To the extent that we
identify any such opportunities, an acquisition may involve the expenditure of
significant cash and/or the issuance of our capital stock. We currently have no
commitments, understandings or arrangements with respect to any such
acquisition.
Until we use the net proceeds of the offering, we will invest the funds in
investment grade, interest-bearing securities.
PRICE RANGE OF COMMON STOCK
Our common stock is traded on the OTC BB. 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 first quarter of 1999 through the third quarter of 2001.
The quotations set forth below reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not represent actual transactions.
20
Year High Bid Low Bid
---- -------- -------
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 .650 .430
Fourth Quarter .350 .220
2001
----
First Quarter .080 .080
Second Quarter* 1.700 1.350
Third Quarter 1.170 1.110
*Note: On May 18,2001 the issuer shares split 5:1. The second quarter prices
reflect the post split prices.
DILUTION
At June 30, 2001, we had a net tangible book value of ($138,775) or
approximately ($0.019) 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 $1.38 per unit (after deducting underwriting discounts and
estimated offering expenses payable by us) the net tangible book value as of
June 30, 2001, would have been approximately $5,381,225 or $.48 per share of
common stock. This would represent an immediate increase in the net tangible
book value per share of common stock of $.499 to existing shareholders and an
immediate dilution of $1.02 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 common
stock contained in our unit $1.50
Net tangible book value per share of common stock
before the offering ($0.019)
Increase attributable to new investors $4.999
Proforma net tangible book value after the offering $0.48
Dilution to new investors $1.02
Percentage of dilution to new investors 68%
The following table summarizes the number of shares of common stock newly issued
under this Registration Statement. The table reflects 200,000 commitment
warrants at $1.50 a share and 3,800,000 shares at $1.50.
21
The table, with respect to new investors, gives effect to 4,000,000 shares as if
issued June 30, 2001.
Share Purchased Consideration Paid Average Price
Number Percentage Amount Percentage Per Share
------ ---------- ------ --------------------
Existing Shareholders 7,116,863 64.02 $3,789,820 .53
New Investors 4,000,000 35.98 $6,000,000 2.00
--------- ----------
Total 11,116,863 100.00% $9,789,820 .88
There can be no assurance that $1.50 will be the consideration amount from new
investors, but is based on current market conditions of the stock.
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 filing
the registration statement (post-split number of shares) and as adjusted to give
effect to the sale of all of the shares offered hereby. 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
After Offering
Number of Shares --------------
Beneficially Owned Number of Number
Name Before Offering* Shares Offered* of Shares* Percentage
---- ---------------- --------------- ---------- ----------
Swartz Private
Equity, LLC 200,000 4,000,000(1) -0-(2) -0-
Investment Management
of America, Inc. 1,326,416(3) 600,000 1,326,416 21%
Raymond D. Benedict 4,000 4,000 4,000
Thomas H. Breiter 4,000 4,000 4,000
Alan D. Bridges 2,000 2,000 2,000
Thomas Daley 4,000 4,000 4,000
William L. Gaskins 800 800 800
Kirtinai Jeerapaet 6,000 6,000 6,000
Michael McEnany 6,000 6,000 6,000
John T. Puls 40,000 40,000 40,000
Richard Puls 1,600 1,600 1,600
Barry Rusche 1,000 1,000 1,000
Charles Saulino 20,000 20,000 20,000
Paul Skversky 2,000 2,000 2,000
Bonnie Sonnenfield 2,000 2,000 2,000
Rosalie Stall 1,000 1,000 1,000
HNC Associates, LLC 20,000 20,000 20,000
Gerry Ghini 100,000 100,000 100,000
Russell Wahl 80,000 80,000 80,000
Eric Kennedy 20,000 20,000 20,000
William H. Simon 100,000 100,000 100,000
William Acquaviva 2,000 2,000 2,000
22
Robert Colvin 2,000 2,000 2,000
William Long 2,000 2,000 2,000
Timothy Meenan 2,000 2,000 2,000
Randall Willis 600 600 600
Jack Wynn 1,000 1,000 1,000
Peter Jensen 8,000 8,000 8,000
*Note: On May 18,2001 the issuer shares split 5:1. This schedule and the notes
associated with it reflect this split.
(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) 600,000 shares of Series A Convertible
Preferred that were converted to Common stock on a 1:1 ratio. Three of the
officers and directors of Investment Management of America, Inc. were formerly
on the board of directors of NMMI.
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. There is no assurance that this
$25,000,000 maximum will ever be reached. 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
23
stock outstanding (as calculated under Section 13(d) of the Securities Exchange
Act of 1934).
For each share of common stock purchased by Swartz, 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
24
the canceled put will be smaller than it would have been had the put not been
canceled.
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 3,000,000 shares of registered common stock to satisfy overdue
contractual obligations of two individuals. NMMI did not have sufficient shares
of restricted common stock available to satisfy this requirement, but had
available 10,000,000 shares of Preferred Stock. The NMMI Board of Directors
passed a resolution creating a Series A Convertible Preferred Stock as to
5,000,000 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 3,000,000 shares of its registered Common
Stock for 3,000,000 shares of NMMI's Series A Convertible Preferred Stock with
the contractual requirement that NMMI will authorize at least 3,000,000
additional shares of Common Stock and include the 3,000,000 shares of Common
Stock in the SB-2 registration statement, thus creating the shares of registered
Common Stock for which Investment
25
Management of America, Inc. can convert its Series A Convertible Preferred
Stock. This conversion was completed and the 3,000,000 shares of registered
common stock were exchanged for the 3,000,000 shares of Series A Convertible
Preferred Stock. These transactions were all pre-split and the amounts stated
above in this paragraph are all pre-split amounts.
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 432,000 shares (post-split number of shares)
that were sold to accredited investors.
May 7, 2001 the shareholders voted to amend the Articles of Incorporation to
decrease the number of authorized shares of common stock from 75,000,000 to
15,000,000, the 1:5 split. This amendment to the Articles of Incorporation
became effective May 18, 2001 and the Company trading symbol was changed from
NMMI to NMMG. See the Definitive Proxy Statement filed April 18, 2001 for
additional information.
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
26
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.
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.
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. January 24, 2001 the parties agreed to a
settlement by making periodic payments. There is presently owed on this
settlement account a principal balance of $42,700. This settlement is recognized
as a liability of the Company.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following are officers and directors of the Company.
NAME AGE POSITION
---- --- --------
John Thatch 39 Chief Executive Officer,
President and Director
Jennifer Freeman 28 Corporate Secretary
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.
JOHN "JT" THATCH, PRESIDENT/CEO AND DIRECTOR
Mr. Thatch, age 39 years, has served as President, Chief Executive Officer and
Director of New Millennium Media International since January 2000. During this
time he has overseen all functions of the company, including day-to-day
operations. Mr. Thatch has over 15 years of entrepreneurial business experience
that includes over 7 years as the principal in Bay Area Auto Sales, an
automotive dealership, that specialized in sales of reconditioned vehicles. He
was the founder and General Partner for Last Chance Finance, Ltd. that owned and
operated over 18 offices specializing in alternative vehicle financing. Over the
past 10 years Mr. Thatch has been President and majority
27
shareholder of Superior Management of Tampa, Inc., a privately owned company,
that owns property and commercial leases. Other than for nominal time spent on
corporate and personal real estate holdings that have no business relationship
with NMMI, Mr. Thatch dedicates his full time to his current position. He brings
leadership, marketing and strong management skills to the company.
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 filing this document 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 500,000 7% 4%
President/CEO
and Director
Investment Management 1,576,416 22% 13%
of America, Inc.(2)(3)
Troy Lowrie 450,000 6% 4%
(Resigned)(4)
Less than 5%
Officers and Directors 500,000 7% 4%
(John "JT" Thatch)
(1) Based upon June 30, 2001 shareholder list, 7,016,861 outstanding shares of
common stock.
(2) Parker, Badolato and Gomes are officers, directors and majority
shareholders in Investment Management of America, Inc. and were officers
and directors of NMMI.
(3) Does not include 3,000,000 shares of Series A Preferred stock that were
traded with NMMI for 3,000,000 pre-split shares of common stock immediately
after the SB-2 registration.
(4) Mr. Troy Lowrie was the past president and director of PMC which was merged
into New Millennium.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our articles of incorporation authorize us to issue up to 15,000,000 (post split
number of shares) shares of common stock, par value $.001 per share. Of the
15,000,000 shares of common stock authorized, as of
28
June 30, 2001 there are 7,116,863 shares (post split number of shares) issued
and outstanding.
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. Currently there are no
preferred shares issued and outstanding. 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 the SB-2 registration statement 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 were
issued to Investment Management of America, Inc. in exchange for 3,000,000
shares of registered Common Stock owned by Investment Management of America,
Inc. These 3,000,000 shares of preferred were subsequently re-exchanged for
3,000,000 shares of common stock. Currently there are no shares of preferred
stock issued and outstanding. The preferred shares were not affected by the
reverse stock split. The 3,000,000 shares transaction mentioned herein above
occurred pre-split.
WARRANTS
There are outstanding warrants to purchase 242,274 (post split number of shares)
shares of our common stock at a price of $1.50 per share and may be reset every
6 months thereafter. These warrants were issued to Swartz on March 21, 2000
(200,000 shares), April 17, 2001 (16,796 shares) and July 17, 2001 (25,478
shares) in consideration of Swartz's commitment to enter into the Investment
Agreement. The warrants expire on May 25, 2004, April 17, 2006 and July 17,
2006, respectively. By contract, 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. The shares of common
stock to support these warrants are included in the SB-2 registration statement.
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 Condensed Balance Sheet, Condensed Statement of Operations and Condensed
Statement of Cash Flows as of June 30, 2001, for the period ended June 30, 2001
in this prospectus and the Balance Sheets, Statement of Operations, Statement of
Stockholders' (deficit) Equity and Statement of Cash Flows for the period ending
December 31, 2000
29
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.
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 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.
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.
ORGANIZATION WITHIN LAST FIVE YEARS
None.
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 200 9th Avenue
North, Suite 210, Safety Harbor, Florida 34695. NMMI is the successor by merger
to Progressive Mailer Corp.
30
(hereafter "PMC"), 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. On November 3, l997, PMC received
clearance from the NASD to have its common stock listed on the OTC Bulletin
Board.
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 was 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 6.4
million 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 front-lit display
machine. NMMI markets and sells 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 common shares.
August 31, 1999 NMMI entered into an Amended and Restated Agreement and Plan of
Merger among NMMI, New Millennium Media, Inc., a wholly owned 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. Subsequent to the
acquisition, Unergi, Inc. was liquidated.
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 in order to
obtain consulting services of its Corporate officer and was not significant to
the financial statements of NMMI. By virtue of the merger, NMMI acquired 100% of
the issued and outstanding common stock of Scovel. After the acquisition, Scovel
was liquidated.
NMMI is a fully reporting company which common stock is traded on the OTC
Bulletin Board operated by NASDAQ under the symbol NMMG.
BUSINESS OVERVIEW
For years the billboard industry has seen several consolidations with large
corporate owners acquiring smaller (fewer than 50 billboards) 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), to LED (light emitting diode) signs. Presently the plasma signs are used
indoors and generally do not have a screen size larger than 48 inches.
Advertisers soon learned that rotating signs attract the attention of
31
viewers more effectively than static signs. 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 moving slowly 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 is approximately
$1,000.000 to $2,000.000 depending on the size of the LED sign. In many
instances, because of the additional weight of the LED sign, it is necessary to
erect an entire new foundation along with accompanying supports. 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 of different sizes and
place them in theaters, malls, airports and other similar venue locations.
NMMI provides several types of visual advertising: The Illumisign-Eyecatcher
front-lit movable display boards, the "EyeCatcher Powered by Insight" back-lit
scrolling movable display boards, plasma screens and LED display boards. We
retain ownership of all types of the machines and sell the advertising space on
a monthly basis.
NMMI has the exclusive United States distribution and manufacturing rights from
the patent owner of the IllumiSign-Eyecatcher front-lit movable display boards,
a resident of Great Britain. This board is steel encased, 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 ranging from 3 seconds to
one hour.
Additionally, NMMI has the exclusive U.S. rights to an indoor backlit
advertising board designed and manufactured by AMS Controls, Inc. called the
"EyeCatcher Powered by Insight". There are a few minor exceptions to this
exclusivity that relate to accounts with which the manufacturer had an existing
business relationship at the time of contracting with NMMI. We are marketing
this new product as "EyeCatcher Powered by Insight". This is a patented product,
which ranges in size from 18" X 24" to 40" X 60" poster size. These signs can
display from 10 to 20 scrolling advertising images. Each rotation can be set to
run from three seconds to one hour. Because the poster material in both of these
machines 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 motion displays
are then placed in various sites in stores, shopping malls, movie theaters and
anywhere else where indoor poster type advertising is feasible. NMMI is the
owner of the registration of the trademark, "IllumiSign-Eyecatcher" for
32
electric sign products in 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 stationary or full 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.
NMMI has a strategic relationship with E-Vision LED, Inc., a U.S. based company
whose affiliates manufacture these high quality LED units (See above heading
Risk Factors, subheading Strategic Relationships). E-Vision will sell the LED
boards to NMMI for a less than retail price 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. Because these LED boards can run any
commercial format on any sized board, we feel that NMMI has a strong competitive
advantage over other similar 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 strategic
partner, E-Vision and its affiliates will supply NMMI, free of charge, software
upgrades as they become available.
In relation to these various 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 United States.
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 were to be marketed throughout the 50 United States. Effective May 10,
2001 NMMI and EyeCatcher Marketing Company reached an agreement whereby their
contractual relationship was terminated and NMMI received nearly all of the
assets of EyeCatcher Marketing Company. The major advantage to NMMI of this
settlement was the cancellation of the marketing agreement that now allows NMMI
to do all marketing in-house. All marketing is now under the direct supervision
and control of the Company which is now equipped to oversee the marketing
function.
33
EMPLOYEES
NMMI has twelve full time 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 distributors. 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS
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 no longer a development stage company as defined in Statement of
Financial Accounting Standards No. 7, "Accounting and Reporting by Development
Stage Enterprises." We have generated our cash needs through equity financings
and loans from officers and stockholders. As an operational 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 several types of visual advertising: The
Illumisign-Eyecatcher front-lit movable display board, "EyeCatcher Powered by
Insight" back-lit movable display boards, plasma screens and LED display boards.
We retain ownership of all types of the machines and sell the advertising space
on a monthly basis. The Company is continuing to devote substantially all of its
present efforts to implementing its operational and marketing plans designed to
establish new business accounts for its mobile LED boards and the motion display
boards. Through much of the first quarter the Company has been negotiating with
Carson Jensen Anderson Enterprises, Inc. d/b/a EyeCatcherPlus, the Company's
marketing affiliate, to take over in-house all future marketing activity. This
effort came to fruition very recently. As a result, the Company will presently
conduct all marketing in-house, but will continue to use the EyeCatcherPlus
logo, marketing material and website. We feel that this decision will have the
net effect of "cutting out the middle man" and increasing Company revenues.
34
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have funded our operations and investments in equipment
through cash from operations, equity financings and borrowing from related
parties.
Our cash and cash equivalents were $129,544 at the six months ending June 30,
2000 compared to $18,288 for the same period in 2001, a decrease of $111,256.
Generally, the Company has been funded by proceeds from common stock
transactions that are not necessarily isolated transactions; however, there is
no assurance that there will be proceeds from common stock transfers in the
future.
On May 19, 2000 the Company entered into an investment agreement with Swartz
Private Equity, LLC to raise up to $25 million through a series of sales of
common stock. The dollar amount of each sale is limited by the trading volume
and a minimum period of time must occur between sales. In order to sell shares
to Swartz, there must be an effective registration statement on file with the
SEC covering the resale of the shares by Swartz and we must meet certain other
conditions. The agreement is for a three-year period ending May 2003. See the
section above entitled "Swartz Investment Agreement".
Our net loss has not changed dramatically from the first six months of 2000
($401,611) to the same period of 2001 ($440,963), an increase of 9.8%. These
same two comparative terms show a 3.36% decrease in Net Cash Used in Operating
Activities, from $342,436 to $330,945. Management feels that this is the result
of an increase in net operating loss with an increase in accounts receivable of
$114,939 net of an increase in payables of $78,040 in 2001. It is further felt
that these two contributing factors are a direct consequence of a steady
increase in business activity, i. e., as the business increases so do the
receivables and payables. The increased business activity are the result of a
steady increase in the number of events for which the mobile LED display unit is
being booked as well as the increase in the number of display boards being
placed which, in turn, increases the amount of artwork being produced by the
Company graphic arts department. These three units of the Company, display
boards, LED screens and graphic arts, are the revenue producing elements.
Although this is an apparent positive trend, there is uncertainty as to the
longevity of this trend. Maintaining this trend is necessary for the Company's
short-term as well as long-term internal liquidity. Management feels that the
receivables are collectable, it is anticipated that the receivables will
"roll-over" monthly or bi-monthly. Some leniency has been afforded new
advertising accounts to boost the initial advertising sales. By the same token,
management feels that the increase in accounts payable are too the direct result
of additional business and that the payables will continue to "roll-over"
monthly or bi-monthly.
We have incurred recurring operating losses and negative cash flows from
operating activities and have little working capital. Presently, there is no
outstanding material commitment for capital expenditures. We believe that our
available equity financing arrangement with Swartz will be sufficient to meet
our working capital and capital expenditure liquidity requirements for at least
the next two years. However, there can be no assurance that we will receive
financing from Swartz, that we will not require additional financing within this
time frame or that such additional financing, if needed, will be available on
terms
35
acceptable to us, if at all. See section entitled "Swartz Investment Agreement",
above, for further detail on this equity transaction.
RESULTS OF OPERATIONS
Income - The comparative revenue for the first six months of 2001 compared to
the same period for 2000 shows an increase of $217,697. This increase is due
primarily to receipt of additional revenues from the mobile LED truck unit that
has been booked throughout these first six months nearly every weekend. Also, as
the Company installs additional EyeCatcher display boards, additional
advertisements are sold. Generally, this is cumulative, i. e., as the display
boards are placed, the advertisements are sold for a term of several months or a
yearly. Even though the advertisement contracts expire, many are renewed with a
minimal amount of sales effort and the display board continues to produce
revenue with no additional effort necessary to place the display board because
it remains in place at the host venue so long as it continues to produce revenue
for the host venue.
GENERAL AND ADMINISTRATIVE COSTS AND EXPENSES
There was an increase in the General and Administrative Costs and Expenses of
$52,379 for the second quarter comparison of 2000 and 2001 and an increase of
$204,140 for the first six months of these two years. This increase is due
primarily to the Company being operational.
INTEREST EXPENSE
Interest Expense decreased by $5,257 for the first six months of 2001 compared
to the same period of 2000. This interest expense decreased primarily as a
result of the Company negotiating equity financing for debt transactions.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased by $58,166 primarily as a result of
advertising boards being available for lease. Previously, these boards were to
be sold and not leased and included in inventory.
TOTAL COSTS AND EXPENSES
The Total Costs and Expenses have increased by $80,986, an increase of 29.2% in
the second quarter of 2001 when compared to the second quarter of 2000 and for
the first six months of the two years compared, the increase was $257,049, a
63.8% increase. This is the effect of the Company depreciation and amortization
increasing $29,048 and $58,166 primarily as a result of the boards and general
and administrative expenses increasing $52,379 and $204,140 primarily because of
being operational in comparative quarters and the six months ended,
respectively.
LOSS FROM OPERATIONS AND NET LOSS
The $39,352 increase in Loss from Operations for the first six months term of
2001 compared to 2000 is the effect of an increase in the total costs and
expenses and the income. The total costs and expenses increased as did the
income, only to a lesser extent (63.8%).
BASIC AND FULLY DILUTED LOSS PER COMMON SHARE
The Basic Loss Per Common Share for the same comparative two quarters has
decreased from $(0.060) to $(0.043), a comparative Basic Loss Per Common Share
decrease of 28.3%. This loss per common share is a
36
function of the Costs and Expenses versus Income. As stated above, a major
portion of the Costs and Expenses are non-reoccurring start-up costs. Compared
to a year ago, we are now fully staffed and beginning to produce income. We are
continuing to concentrate on establishing new business and increasing sales
relating to the IllumiSign Eyecatcher, the "EyeCatcher Powered by Insight"
backlit display board and the LED display sign truck.
TRENDS AND EVENTS
In May of 2001 we changed our operations model primarily in that we have
regained the marketing role in-house. Management feels that this is a positive
change in that the Company now has total control of all marketing activities.
The Company continues to allocate geographical areas to distributors who, in
turn, focus on their respective areas.
The Company out grew its leased office and warehouse space and moved to new
quarters that has sufficient space for growth. The new expanded warehouse area
now has sufficient space to handily store the various type and size display
boards as well as a work area for refurbishing and repairing. When the mobile
LED screen truck is not in use, it is placed in a specially built truck bay
within the new warehouse area.
In the opinion of management, the cumulative effect of these events is a
positive trend. Although there is no real assurance that this positive trend
will continue; this trend is further reinforced by the 21% decrease in the Basic
and Fully Diluted Loss Per Common Share.
DESCRIPTION OF PROPERTY
NMMI owns no real estate. On March 29, 2001 the Company signed a lease with
Safety Harbor Centre for five years with an option for five additional years.
The lease became effective August 27, 2001, the date that the Company began
occupancy of the new facility. This leased facility is slightly larger than the
prior leased premises and will support a more efficient use of the floor space
as well as additional space for expansion. Many of the machines will continue to
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 whenever possible. Those machines that are not repairable on-site will
be repaired in-house at the Safety Harbor, Florida facility.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company 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") The Unergi acquisition was to
obtain certain goodwill at which time Unergi was liquidated. The valuation was
determined by, in part, NMMI stock and certain debt. This was a forward
acquisition with the surviving company being NMMI. Unergy shareholders received
70% of NMMI shares. As a part of this merger, two founders and major
shareholders of Unergi, Mark Western and Cole Leary, were to receive a total of
3,000,000 shares of NMMI registered common stock. In anticipation a buy-back of
these shares from the two individuals, NMMI
37
conveyed the shares intended for these two individuals to another individual.
NMMI failed to consummate the buy-back of these shares from the two individuals
and consequently found it necessary to acquire 3,000,000 shares of restricted
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 Series A Preferred stock for 3,000,000 shares
of common stock owned by IMA with the understanding that the 3,000,000 shares of
Series A Preferred stock will be granted voting rights and be convertible on a
1:1 ratio for shares of registered common stock which common stock are included
in this registration. The re-exchange of these shares has occurred and NMMI
replaced the 3,000,000 IMA Series A Preferred shares with 3,000,000 shares of
restricted common stock that are included in this registration. These
transactions occurred pre-split and the 3,000,000 shares of common stock are
pre-split. The post-split amount is 600,000 shares of common stock that are
included in this registration.
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.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
NMMI is a fully reporting company which common stock is traded on the OTC
Bulletin Board operated by NASDAQ under the symbol NMMG. The table above, PRICE
RANGE OF COMMON STOCK, sets forth the high and low bid prices of our common
stock for each quarter for the four quarters of 1999, four quarters of 2000 and
the first three quarters of 2001. As of June 30, 2001 there are in excess of 500
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.
EXECUTIVE COMPENSATION
The following table lists the cash remuneration paid or accrued during 1999,
2000 and 2001 to John Thatch, president and CEO. Except for John Thatch, none of
our executive officers and directors received compensation of $100,000 or more
in 1999, 2000 and 2001.
38
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
------------------------------ ------------------------ -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
-----------------------------------------------------------------------------------------------------
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principle Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
-----------------------------------------------------------------------------------------------------
John 2001 120,000 10,000 10% of all Stock option Per month:
Thatch, expenses issued to be 500 medical
Pres./CEO common determined 500 car
stock by Board 250 celphone
-----------------------------------------------------------------------------------------------------
DIRECTOR COMPENSATION
The NMMI directors receive no compensation.
EMPLOYMENT AGREEMENTS
NMMI has one written employment agreement, John Thatch, President and CEO, see
section entitled Certain Relationships and Related Transactions, above.
FINANCIAL STATEMENTS
Index to Financial Statements
Reviewed Financial Statements
Condensed Balance Sheet for June 30, 2001 and
December 31, 2000 F-41
Condensed Statements of Operations for quarter and six
months ended June 30, 2001 and for quarter and
six months ended June 30, 2000 F-42
Condensed Statements of Cash Flows for quarter and
six months ended June 30,2001 and for quarter
and six months ended June 30, 2000 F-43
Notes to the Condensed Financial Statements,
for quarter ended June 30, 2001 F-44
Audited Financial Statements
Report of Richard J. Fuller, C.P.A., P.A. F-45
Balance Sheet for December 31, 1999 and December
31,2000 F-46
Statements of Operations for year ended December
31, 1999 and year ended December 31, 2000 F-47
Statement of Stockholders' Deficit for period from
January 1, 1999 through December 31, 2000 F-48
Statements of Cash Flows for year ended December
31, 1999, year ended December 31, 2000 F-49
Notes to Financial Statements, December 31, 1999
and 2000 F-50
39
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
CONDENSED BALANCE SHEET
June 30, December 31,
2001 2000
(Unaudited) (Audited)
(Restated) (Restated)
------------ ------------
ASSETS
Current Assets
Cash $ 18,288 $ --
Accounts Receivable 131,575 16,636
Inventories 3,255 3,255
Prepaid Assets 10,972 9,096
------------ ------------
Total Current Assets 164,090 28,987
------------ ------------
Furniture and Equipment-Net 887,279 924,148
------------ ------------
Other Assets
Other Assets -- --
Goodwill, net of accumulated amortization
of $90,389 and $67,793, respectively, 2001 and 2000 587,705 610,301
------------ ------------
Total Other Assets 587,705 610,301
------------ ------------
$ 1,639,074 $ 1,563,436
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 186,148 $ 155,118
Notes payable 250,000 --
Related payables 753,996 658,110
------------ ------------
Total Current Liabilities 1,190,144 813,228
------------ ------------
Long-term Liabilities -- --
Stockholders' Equity
Common stock, par value $.001; 15,000,000 (restated - see note 3)
shares authorized; 7,116,863 and 5,688,123 (restated - see note 3)
shares issued and outstanding, respectively, 2001 and 2000 7,117 5,690
Common stock warrants (200,000 issued and outstanding; exercisable
at $1.50 expiring March 21, 2005) (restated - see note 3) 57,200 57,200
Preferred stock, par value $.001; shares authorized, 10,000,000
no shares issued and outstanding -- --
Additional paid in capital 3,782,703 2,769,445
Accumulated Deficit (2,523,090) (2,082,127)
------------ ------------
1,323,930 750,208
Less common stock subscribed (875,000) --
------------ ------------
Total Stockholders' Equity 448,930 750,208
------------ ------------
$ 1,639,074 $ 1,563,436
============ ============
40
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
For the For the For the For the
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
6/30/01 6/30/00 6/30/01 6/30/00
(Restated) (Restated) (Restated) (Restated)
------------ ------------ ------------ ------------
Income $ 74,991 $ 1,044 $ 218,741 $ 1,044
Costs and Expenses:
General and administrative $ 309,091 $ 256,712 $ 562,729 $ 358,589
Interest expense 15,559 16,000 26,743 32,000
Depreciation and amortization 35,116 6,068 70,232 12,066
------------ ------------ ------------ ------------
Total costs and expenses 359,766 278,780 659,704 402,655
------------ ------------ ------------ ------------
Loss from Operations (284,775) (277,736) (440,963) (401,611)
------------ ------------ ------------ ------------
Net Loss $ (284,775) $ (277,736) $ (440,963) $ (401,611)
============ ============ ============ ============
Basic and Fully Diluted Loss Per Common Share $ (0.043) $ (0.060) $ (0.069) $ (0.085)
============ ============ ============ ============
Weighted Average Number of Shares Outstanding 6,556,863 4,615,892 6,403,493 4,717,934
============ ============ ============ ============
41
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
For the For the For the For the
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
6/30/01 6/30/00 6/30/01 6/30/00
(Restated) (Restated) (Restated) (Restated)
---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (284,775) $ (277,736) $ (440,963) $ (401,611)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 35,116 6,068 70,232 12,066
Fair value of shares issued for services 25,000 -- 76,685 2,500
Fair value of warrants issued to investment bankers -- 57,200 -- 57,200
(Increase) decrease in accounts receivable (38,706) -- (114,939) --
(Increase) decrease in inventories -- -- -- (18,750)
(Increase) decrease in prepaid expenses (1,876) (1,215) (1,876) (6,215)
Increase (decrease) in accounts payable
and accrued expenses 36,464 42,772 79,916 12,374
Increase (decrease) in related party payables
---------- ---------- ---------- ----------
Net cash provided by (used in) operating activities (228,777) (172,911) (330,945) (342,436)
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (6,062) (1,626) (10,767) (5,083)
---------- ---------- ---------- ----------
Net provided by (used in) investing activities (6,062) (1,626) (10,767) (5,083)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - Related 250,000 -- 310,000 15,000
Proceeds from common stock transactions -- 19,000 50,000 460,000
---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities 250,000 19,000 360,000 475,000
---------- ---------- ---------- ----------
Increase (Decrease) in cash and cash equivalents $ 15,161 $ (155,537) $ 18,288 $ 127,481
Cash and cash equivalents at beginning of period 3,127 285,081 -- 2,063
---------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 18,288 $ 129,544 $ 18,288 $ 129,544
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest -- -- -- --
Cash paid during the year for income taxes -- -- -- --
Supplemental schedule of noncash investing
and financing activities:
Fair value of shares issued (500,000 shares)
for goodwill of Scovel Management, Inc. $ -- $ -- $ -- $ 500
Fair value of shares issued (20,000 shares)
for amounts previously owed to secretary/treasurer 13,000 -- 13,000 --
42
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Basis of Presentation
--------------------------------------
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, including Rule 301(b) of Regulation
SB and instructions to Form 10-Q. 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 year
ended December 31, 2000. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the six
months ended June 30, 2001 are not necessarily indicative of the operating
results for the full fiscal year or any future period.
2. Going Concern Uncertainty
-------------------------
The financial statements are presented assuming the Company will continue
as a going concern. 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 successful in
implementing its plans, or if such plans are implemented, that the Company
will achieve its goals.
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.
3. Equity Transactions
-------------------
As approved at a Special Meeting of Stockholders on May 7, 2001, the
Company reverse split its common stock on a basis of 1 for 5 with a
resulting decrease in the number of common stock authorized to 15,000,000
shares. The Company has restated its financial statements to reflect this
common stock reverse split.
On June 4, 2001, the Company issued and held stock for consulting services
to be rendered to the Company (500,000 shares at $1.00 and 500,000 shares
at $.75).
43
4. Restatement information
-----------------------
Fair value of shares issued as indicated in accordance with FASB No. 123 as
restated consists of:
AMOUNT - RESTATED
--------------------------------------------
QUARTER ENDED SIX MONTHS ENDED
NO. OF -------------------- --------------------
DESCRIPTION SHARES 6/30/01 6/30/00 6/30/01 6/30/00
-------------------------------------------- -------- -------- -------- -------- --------
Shares issued to John D. Thatch for $.005
per share in consideration of accepting
officer/stockholder employment - net
of rescission 500,000 $ -- $ -- $ -- $ 2,500
Shares issued to San Rafael Consulting Group
for $.25 per share for consulting services 600 -- -- 150 --
Shares issued to E-Vision LED Inc. for $.25
per share for consulting services 6,140 -- -- 1,535 --
Shares issued to Tim Daley for $.25
per share for consulting services 200,000 -- -- 50,000 --
Shares issued to Ray Oliver for $.25
per share for consulting services 100,000 25,000 -- 25,000 --
-------- -------- -------- -------- --------
806,740 $ 25,000 $ -- $ 76,685 $ 2,500
======== ======== ======== ======== ========
44
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
New Millennium Media International, Inc.
Safety Harbor, Florida
We have audited the balance sheets of New Millennium Media International, Inc.
as of December 31, 1999 and 2000, and the related statements of operations,
stockholders' (deficit) equity 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.
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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Millennium Media
International, Inc. at December 31, 1999 and 2000 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, 1999 and 2000. This condition raises substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Richard J. Fuller, CPA, PA
Clearwater, Florida
March 20, 2001
45
NEW MILLENNIUM MEDIA INTERNATIONAL, INC
BALANCE SHEETS
December 31, 1999 and December 31, 2000
2000
1999 (RESTATED)
------------ ------------
ASSETS
Current Assets
Cash $ 2,063 $ --
Accounts receivable -- 16,636
Inventories 548,862 3,255
Prepaid expenses -- 9,096
------------ ------------
Total Current Assets 550,925 28,987
------------ ------------
Furniture and Equipment
Furniture, fixtures and equipment,net 3,964 924,148
------------ ------------
Other Asssets
Goodwill, net 655,007 610,301
Other intangibles 417 --
------------ ------------
Total Other Assets 655,424 610,301
------------ ------------
$ 1,210,313 $ 1,563,436
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 85,235 $ 81,556
Accrued expenses payable 129,289 73,562
Related payables 1,596,012 658,110
------------ ------------
Total Current Liabilities 1,810,536 813,228
------------ ------------
Long-term Liabilities -- --
Stockholders' (Deficit) Equity
Common stock, par value $.001; 25,000,000
and 75,000,000 shares authorized,
24,099,881 and 28,440,614 shares issued
and outstanding, respectively,
1999 and 2000 24,100 28,451
Common stock warrants (1,000,000 issued and
outstanding; exercisable at $.30 expiring
March 21, 2005) -- 57,200
Preferred stock, par value $.001; shares
authorized, 10,000,000 no shares issued
and outstanding -- --
Additional paid in capital 448,991 2,746,684
Deficit (1,073,314) (2,082,127)
------------ ------------
Total Stockholders' (Deficit) Equity (600,223) 750,208
------------ ------------
$ 1,210,313 $ 1,563,436
============ ============
46
NEW MILLENNIUM MEDIA INTERNATIONAL, INC
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 2000
2000
1999 (Restated)
------------ ------------
Income $ 49,176 $ 149,400
Costs and Expenses:
General and administrative $ 141,847 $ 798,732
General and administrative -related 234,860 155,000
Interest expense - related 95,382 63,587
Depreciation and amortization 23,072 140,894
------------ ------------
Total costs and expenses 495,161 1,158,213
------------ ------------
Loss from Operations (445,985) (1,008,813)
------------ ------------
Net Loss $ (445,985) $ (1,008,813)
============ ============
Basic and Diluted Loss Per Common Share $ (0.03) $ (0.04)
============ ============
Weighted average common shares outstanding 15,559,940 26,275,250
============ ============
47
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH DECEMBER 31, 2000
COMMON STOCK COMMON ADDITIONAL TOTAL
------------------------ STOCK PAID - IN STOCKHOLDERS'
SHARES AMOUNT WARRANTS CAPITAL DEFICIT EQUITY
---------- ---------- ---------- ---------- ------------ ----------
Balance, January 1, 1999 7,020,000 $ 7,020 $ 0 $ 403,115 $ (627,329) $ (217,194)
---------- ---------- ---------- ---------- ------------ ----------
Fair value of shares issued to Unergi 16,566,667 16,567 -- -- 16,567
Shares issued for cash 513,214 513 45,876 -- 46,389
Net loss for the period ended
December 31, 1999 -- -- -- -- (445,985) (445,985)
---------- ---------- ---------- ---------- ------------ ----------
Balance, December 31, 1999 24,099,881 $ 24,100 $ 0 $ 448,991 $ (1,073,314) $ (600,223)
Fair value of shares issued for services
to officers - net of rescission (1,020,419) (1020) 3,520 -- 2,500
Fair value of 1,000,000 warrants
issued to investment bankers -- -- 57,200 -- -- 57,200
Shares issued:
Fair value of stock issued in settlement
of debt to stockholders/officers
in accordance with FASB 123 3,641,152 3,641 1,487,403 -- 1,491,044
Fair value of equipment (LED truck
$450,000) net of debt ($107,000) 200,000 200 342,800 -- 343,000
Fair value of stock issued for goodwill
of Scovel Management, Inc. 500,000 500 -- 500
Proceeds of stock issued for cash 1,030,000 1,030 463,970 -- 465,000
Net loss for the period ended
December 31, 2000 -- -- -- -- (1,008,813) (1,008,813)
---------- ---------- ---------- ---------- ------------ ----------
Balance, December 31, 2000 - (Restated) 28,450,614 $ 28,451 $ 57,200 $2,746,684 $ (2,082,127) $ 750,208
========== ========== ========== ========== ============ ==========
48
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 2000
2000
1999 (RESTATED)
------------ ------------
Cash Flows from Operating Activities:
Net income (loss) $ (445,985) $ (1,008,813)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 23,072 140,894
Fair value of shares issued for services of officers - net of recission -- 2,500
Fair value of warrants issued to investment bankers -- 57,200
Loss on disposition of fixed assets 5,891 --
(Increase) decrease in accounts receivable -- (16,636)
(Increase) decrease in inventories (66,946) (124)
(Increase) decrease in prepaid expenses -- (9,096)
Increase (decrease) in accounts payable and accrued expenses 139,337 (41,934)
Increase (decrease) in related parties payable 296,033 428,918
------------ ------------
Net cash provided by (used in) operating activities (48,598) (447,091)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (2,539) (19,972)
------------ ------------
Net provided by (used in) investing activities (2,539) (19,972)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock transactions 46,389 465,000
------------ ------------
Net cash provided by (used in) financing activities 46,389 465,000
------------ ------------
Increase (Decrease) in cash and cash equivalents $ (4,748) $ (2,063)
Cash and cash equivalents at beginning of period 6,811 2,063
------------ ------------
Cash and cash equivalents at end of period $ 2,063 $ --
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest -- --
Cash paid during the year for income taxes -- --
Supplemental schedule of noncash investing and financing activities:
Fair value of common stock (500,000 shares) issued for
goodwill of Scovel Management, Inc. $ -- $ 500
Fair value of common stock (16,566,667 shares) issued for goodwill
of Unergi, Inc. ($677,594 net of debt assumed of $661,027) 16,567 --
Fair value of equipment (LED truck, $450,000 net of debt
assumed of $107,000; 200,000 common stock shares issued) -- 343,000
Fair value of common stock (3,641,152 shares )issued in settlement
of related party debt based upon debt of $1,491,044 -- 1,491,044
49
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
1. Organization and summary of significant accounting policies
-----------------------------------------------------------
A summary of the Company's significant accounting policies consistently applied
in the preparation of the accompanying financial statements follows.
Nature of Business
------------------
The Company is in the business of developing and marketing advertising space in
special movable advertising display machines and LED display boards. The Company
provides two types of visual advertising including movable display boards and
LED display boards. NMMI sells advertising space while retaining ownership of
the boards.
The Company is no longer considered to be in the development stage for 2000. In
prior years, the Company had been in the development stage.
Basis of presentation
---------------------
The financial statements have been prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
Revenues are earned when services have been performed and advertising equipment
has been leased to customers during a period of time in which services have been
rendered, the price for services is fixed and determinable and collectibility is
reasonably assured.
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.
There can be no assurance that the Company will be successful in implementing
its plans, or if such plans are implemented, that the Company will achieve its
goals.
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.
50
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
Organization and summary of significant accounting policies - Cont'd.
---------------------------------------------------------------------
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 items 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 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 Company classifies the excess of the purchase price, including
estimated fees and expenses related to the merger, over the net assets acquired
as goodwill. 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.
51
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
Organization and summary of significant accounting policies - Cont'd.
---------------------------------------------------------------------
Inventories
-----------
Inventories consist primarily of supplies related to advertising machines and
are carried at the lower of cost (first-in, first-out) or market. Once the
advertising machines are available for rental and placed in service,
depreciation is recognized. During the year, the advertising machines of
$545,483 included in inventory for 1999 were removed from inventory and made
available for lease. When placed in boards available for lease, they are no
longer included in inventories. Starting in 2000, the Company's policy is to
lease all boards and they are included in furniture, fixtures and equipment.
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.
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 basis 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.
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 not presented since the result is antidilutive.
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.
Cash Equivalents
----------------
The Company considers all highly liquid debt instruments purchased with maturity
of three months or less to be cash equivalents.
52
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
Organization and summary of significant accounting policies - Cont'd.
---------------------------------------------------------------------
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.
During the year, the Company negotiated the ability to manufacture the
advertising machines previously supplied principally by one foreign vendor.
2. Furniture, fixtures and equipment
---------------------------------
Furniture, fixtures and equipment is summarized as follows:
1999 2000
------------ ------------
Boards available for lease $ -- $ 545,483
Equipment -- 468,730
Furniture & fixtures 4,249 5,490
------------ ------------
4,249 1,019,703
Less accumulated depreciation (285) (95,555)
------------ ------------
Net $ 3,964 $ 924,148
============ ============
During the year 2000, the advertising boards became available for lease. In
1999, the boards available for lease had been included in inventory.
3. Goodwill
---------
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 and the assumption of debt in the amount of $661,027. Because the assets
acquired consisted of certain intangible contracts, management assigned an
amount to the intangibles as goodwill based upon the debt assumed and the fair
value of common stock at $16,567 based upon par value. The purchase price
exceeded the fair value of the net assets acquired by $677,594 that has been
recorded as goodwill in accordance with FASB No. 123.
53
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
Organization and summary of significant accounting policies - Cont'd.
---------------------------------------------------------------------
On March 9, 2000, the Company acquired 100% of the issued and outstanding common
stock of Scovel Management, Inc. in exchange for 500,000 shares of the Company
in order to obtain services of an officer valued at $500 in accordance with FASB
No. 123 being the fair value of services received equivalent to par value of
stock.
Goodwill consists of the following:
1999 2000
---------- ----------
Goodwill in connection with acquisition of
Fair value of stock in exchange for Unergi,
Inc. accounted for as a purchase with
16,566,667 common shares issued at $.001
par value given limited trading and
marketability of approximately 70% of stock
($16,667) and the assumption of debt of
$660,927 $ 677,594 $ 677,594
Fair value of stock in exchange for Scovel
Management, Inc. accounted for as a
purchase with 500,000 common shares
issued at $.001 par value given limited
trading value of stock and agreed upon
value of shell company (Scovel) whose
Intangible value included listing on OTC BB -- 500
---------- ----------
677,594 678,094
Less accumulated amortization (22,587) (67,793)
---------- ----------
Net $ 655,007 $ 610,301
========== ==========
All assets were intangible with goodwill providing value in accordance with APB
No. 16 amortized over 15 years.
54
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
4. Related party transactions
--------------------------
Related party payables consists of the following:
1999 2000
---------- ----------
Note due stockholder/former officer at 10% $ 641,152 $ --
Accounts payable to stockholders,
non-interest bearing 954,860 249,860
$100,000 convertible note payable, with
interest accrued @10%, (convertible $1.00
of debt into common stock) -- 102,500
$125,000 convertible note payable, with
interest accrued @ 15%, secured by
equipment (convertible $1.00 of debt into
common stock) -- 143,750
$162,000 convertible note payable, with
interest accrued @ 8%, to officer/stockholder
(convertible $.10 of debt into preferred
stock) -- 162,000
---------- ----------
$1,596,012 $ 658,110
========== ==========
During the year, the Company issued common stock at fair value in settlement of
certain debt to stockholders and former officer. Fair value of stock issued was
valued at book value of the debt relieved plus accrued interest. The settlement
of certain debt to stockholder/officer was 641,152 shares in the amount of
$795,356 including accrued interest of $92,573 and fair value of 670,000 shares
to stockholders in the amount of $695,688 including settlement charges
subsequent to 1999 of $25,688 for a total of $1,491,044. Currently, the Company
disputes a payable to a prior officer but has recognized the debt for financial
statement purposes in the amount of $249,860. Also, during the year, the Company
was successful in a lawsuit against prior officers of the Company to rescind
3,520,419 shares. No gain or loss was recognized on this rescission and the
Company issued 2,500,000 shares to its present officer/director. Fair value of
the common stock issued has been reported net of rescission under FASB 123.
55
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
5. Income Taxes
------------
The Company has available net operating loss carryforwards of $1,950,000 that
expire through 2020.
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:
1999 2000
---------- ----------
Deferred tax assets:
Net operating loss carryforwards $ 870,000 $1,950,000
Valuation allowance for deferred tax asset (870,000) (1,950,000)
---------- ----------
$ -- $ --
========== ==========
6. Equity Transactions
-------------------
On August 31, 1999, pursuant to an Agreement and Plan of merger, the Company
acquired all the issued and outstanding stock of Unergi, Inc. (a Nevada company)
in exchange for fair value of 16,566,667 shares of the Company's $.001 par value
common stock. Unergi was liquidated and the goodwill of $677,594 was capitalized
and amortized over 15 years.
On March 9, 2000, the Company acquired 100% of the issued and outstanding common
stock of Scovel Management, Inc. (a Delaware company) office in the amount of
$500 in exchange for fair value of 500,000 shares of the Company.
On May 19, 2000, the Company entered into an agreement with Swartz Private
Equity (Swartz) to provide an equity line of up to $25,000,000 during the
three-year period following the effective date of September 28, 2000 of the
registration statement covering the Swartz Agreement. The Company may sell stock
to Swartz under a "put right". The Company is required to issue and deliver to
Swartz "additional warrants" to purchase a number of shares of common stock
equal to 10% of the common shares issued to Swartz in each applicable put. Each
"additional 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. The warrants are immediately exercisable and have a term expiring 5
years thereafter. Certain provisions of the Agreement provide that Swartz shall
receive the "additional" warrants so that the sum of "commitment warrants" and
"additional warrants" may equal up to 4.0% of the fully diluted shares of the
Company's common stock. As part of this agreement, the Company has issued
1,000,000 initial "commitment warrants", expiring March 21, 2005 to purchase
1,000,000 shares of the Company's common stock. The initial exercise price of
these "commitment warrants" is $.30. Utilizing the Black Scholes formula,
assuming a 5-year life, no expected dividends, volatility of 35% and interest
rate of 6%, the Company determined that the fair value
56
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1999 and 2000
Equity Transactions - Cont'd
----------------------------
of commitment warrants issued to be $57,200 that is charged to expense in 2000.
7. Stock options and warrants
--------------------------
On June 26, 2000, the Company's Board of Directors adopted the New Millennium
Media International, Inc. 2000 Stock Option Plan (the "Plan"). The Plan provides
for the issuance of incentive stock options (ISO's) to any individual who has
been employed by the Company for a continuous period of at least six months. The
Plan also provides for the issuance of Non Statutory Options (NSO's) to any
employee who has been employed by the Company for a continuous period of at
least six months, any director or consultant to the Company. The total number of
shares of common stock authorized and reserved for issuance under the Plan is
3,000,000 shares. The Board shall determine the exercise price per share in the
case of an ISO at the time an option is granted and shall be not less than the
fair market value or 110% of fair market value in the case of a ten percent or
greater stockholder. In the case of an NSO, the exercise price shall not be less
than the fair market value of one share of stock on the date the option is
granted. Unless otherwise determined by the Board, ISO's and NSO's granted under
the Plan have a maximum duration of 10 years. As of December 31, 2000, no
options have been granted under the Plan.
Also, in February 2000, the Company issued options to purchase 500,000 shares at
$1.00 expiring in two years and in March 2000, the Company issued options to
purchase 100,000 shares at $2.25 expiring in two years. Utilizing the Black
Scholes formula, the Company has determined that the fair value of these options
granted has no effect on loss or loss per share.
8. Restatement Information
-----------------------
Information concerning restatement of net loss:
2000
----------
Fair value of common stock warrants
(1,000,000 issued and outstanding;
exercisable at $.30 expiring
March 21, 2005 $ 57,200
Common stock, 10,000 shares subscribed
at $.50 per share not previously reported 5,000
----------
Net Increase in loss previously reported $ 62,200
==========
57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
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.
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 Post Effective Amendment to the
SB-2 Registration Statement The expenses relating to the filing of the SB-2
Registration Statement are stated in the appropriate schedule in the SB-2
Registration Statement that was filed.
SEC filing fee........................................ $ paid
Legal fees............................................ 3,000.00
Accounting fees and expenses.......................... 5,000.00
Miscellaneous......................................... 3,066.00
-----------
Total........................................ $ 11,066.00
===========
58
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. There is no assurance that this
$25,000,000 maximum will ever be reached.
In March, April and May 2000 the Company sold an aggregate of 520,000 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.
59
EXHIBITS INDEX
Note: Please note that the asterisk designates that the document has been
previously filed.
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.*
60
10.6 Exclusive Distribution Contract with Multiadd.*
10.7 Agreement with E-Vision Technologies, LLC.
10.9 Marketing Agreement dated May 10, 2000 wherein NMMI grants to
Carson-Jensen-Anderson Enterprises, Inc. marketing rights for the
Illumisign-Eyecatcher display boards.*
10.9(a) Compromise and Settlement Agreement between Carson-Jensen-Anderson,
Inc. terminating the marketing rights agreement for the Illumisign-
Eyecatcher display boards.
10.10 Office Lease Agreement between St. James Properties, Inc. and NMMI.*
10.11 Office Lease Agreement between Abdi Boozar-Jomehri d/b/a Safety Harbor
Centre and NMMI.
21.1 List of Subsidiaries.*
23.1 Consent of Legal Counsel (included in Exhibit 5.1).*
23.2 Consent of Independent Auditors.*
27.1 Financial Data Schedule.*
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.*
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
61
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.
(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.
62
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 Post Effective
Registration Statement to be signed on its behalf by the undersigned in the City
of Safety Harbor, Florida on October 24, 2001.
New Millennium Media International, Inc.
By: /s/ John Thatch
---------------
John Thatch, President/CEO
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 October 24, 2001
------------------ Executive Officer
John Thatch (Principal Executive Officer)
63
EX-3.1
3
ex31-1001.txt
ARTICLES OF INCORPORATION
EXHIBIT 3.1
Articles of Incorporation of NMMI as amended.
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
4
ex31a-1001.txt
DESIGNATION OF PREFERRED STOCK
EXHIBIT 3.1(a)
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
5
ex32-1001.txt
BYLAWS
EXHIBIT 3.2
Bylaws of NMMI.
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
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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
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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.
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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
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(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.
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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,
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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:
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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
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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
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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,
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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.
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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
6
ex41-1001.txt
INVESTMENT AGREEMENT
EXHIBIT 4.1
Investment Agreement dated May 19, 2000 by and between the Registrant and Swartz
Private Equity, LLC.
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]
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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
7
ex42-1001.txt
COMMITMENT WARRANT
EXHIBIT 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.
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
8
ex43-1001.txt
PURCHASE WARRANT
EXHIBIT 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.
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
9
ex44-1001.txt
WARRANT SIDE-AGREEMENT
EXHIBIT 4.4
Warrant Side-Agreement by and between the Registrant and Swartz Private Equity,
LLC.
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
10
ex45-1001.txt
REGISTRATION RIGHTS AGREEMENT
EXHIBIT 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.
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
11
ex46-1001.txt
PRIVATE PLACEMENT LETTER AGREEMENT
EXHIBIT 4.6
Letter Agreement between NMMI and Swartz Institutional Finance relating to the
private placement of up to two million dollars of common stock.
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
12
ex47-1001.txt
EMPLOYEE STOCK OPTION PLAN
EXHIBIT 4.7
Employees Stock Option Plan adopted by Board of Directors resolution date June
26, 2000.
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-5.1
13
ex51-1001.txt
LEGAL OPINION
EXHIBIT 5.1
Legal Opinion of Atlas Pearlman, P.A., Suite 1700, 350 East Las Olas Boulevard,
Ft. Lauderdale, Florida 33301
Exhibit 5.1
ATLAS PEARLMAN, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
October 24, 2001
New Millennium Media International, Inc.
101 Phillippe Parkway, Suite 350
Safety Harbor, Florida 34695
RE: REGISTRATION STATEMENT ON FORM SB-2; NEW MILLENNIUM
MEDIA INTERNATIONAL, INC. (THE "COMPANY")
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration by the
Company of 1,032,000 shares of Common Stock, $.001 par value ("Common Stock") up
to 3,436,364 shares of Common Stock issuable under an equity line of credit
("Equity Line Shares"), and 563,636 additional shares of Common Stock,
underlying warrants, and options (collectively "Underlying Securities").
In connection therewith, we have examined and relied upon original,
certified, conformed, photostat or other copies of (i) the Articles of
Incorporation and Bylaws of the Company; (ii) resolutions of the Board of
Directors of the Company authorizing the offering and the issuance of the Common
Stock, Equity Line Shares and Underlying Securities and related matters; (iii)
the Registration Statement and the exhibits thereto; and (iv) such other matters
of law as we have deemed necessary for the expression of the opinion herein
contained. In all such examinations, we have assumed the genuineness of all
signatures on original documents, and the conformity to originals or certified
documents of all copies submitted to us as conformed, photostat or other copies.
As to the various questions of fact material to this opinion, we have relied, to
the extent we deemed reasonably appropriate, upon representations or
certificates of officers or directors of the Company and upon documents, records
and instruments furnished to us by the Company, without independently checking
or verifying the accuracy of such documents, records and instruments.
We are members of the Bar of the State of Florida and express no opinion on
any law other than the laws of the State of Florida applicable Federal
Securities laws.
New Millennium Media International, Inc.
October 24, 2001
Page 2
Based upon the foregoing, we are of the opinion that the Common Stock,
Equity Line Shares and Underlying Securities have been duly and validly
authorized and when issued and paid for in accordance with their terms will be
fully paid and non-assessable. We hereby consent to the filing of this opinion
as an exhibit to the Registration Statement and to use our name under the
caption "Legal Matters" in the prospectus comprising part of the Registration
Statement. In giving such consent, we do not thereby admit that we are included
in with the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations promulgated thereunder.
Sincerely,
ATLAS PEARLMAN, P.A.
EX-10.1
14
ex101-1001.txt
INVESTMENT MANAGEMENT OF AMERICA, INC. CONTRACT
EXHIBIT 10.1
Investment Management of America, Inc. contract with NMMI regarding the
3,000,000 shares of Preferred stock.
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
15
ex102-1001.txt
AGREEMENT OF MERGER - PROGRESSIVE MAILER CORP
EXHIBIT 10.2
Agreement of Merger effective April 30, 1998 between Progressive Mailer
Corporation and NMMI in which NMMI was the survivor corporation.
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
16
ex103-1001.txt
ASSET PURCHASE AGREEMENT - LUFAM TECH., INC.
EXHIBIT 10.3
Asset Purchase Agreement dated April 8, 1998 whereby PMC acquired the assets of
LuFam Technologies, Inc.
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
17
ex104-1001.txt
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
EXHIBIT 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.
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
18
ex105-1001.txt
AGREEMENT AND PLAN OF MERGER - SCOVEL CORPORATION
EXHIBIT 10.5
Agreement and Plan of Merger dated March 9, 2000 between NMMI and Scovel
Corporation wherein NMMI acquired all of the above shares of stock of 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
19
ex106-1001.txt
EXCLUSIVE DISTRIBUTION CONTRACT WITH MULTIADD
EXHIBIT 10.6
Exclusive Distribution Contract 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-10.7
20
ex107-1001.txt
AGREEMENT WITH E-VISION TECHNOLOGIES, LLC
EXHIBIT 10.7
Agreement with E-Vision Technologies, LLC.
e
VISION
E-Vision Technologies, LLC
November 2, 1999
Mr. John Thatch, President/CEO
New Millennium Media, Inc.
101 Philippe Parkway Suite 300
Safety Harbor, FL 34695
Dear John:
This letter is to confirm our recent discussions regarding LED display boards.
E-Vision is please to enter into a strategic partnership with New Millennium
Media, Inc. to provide LED display board systems at our production cost.
E-Vision maintains exclusive marketing rights to the leading edge technology in
electronic display boards from Asian manufacturers.
We believe that this unique marketing arrangement with New Millennium Media,
Inc. will provide your company an incredible advantage over the other companies
entering the realm of full digital display LED advertising.
We look forward to a long and mutually satisfying relationship.
Sincerely,
E-VISION TECHNOLOGIES, LLC
/s/ W.H. Simon, Jr.
W. H. Simon, Jr.
Chief Executive Officer
WHS:bjs
EX-10.9
21
ex109-1001.txt
MARKETING AGREEMENT
EXHIBIT 10.9
Marketing Agreement dated May 10, 2000 wherein NMMI grants to Carson-Jensen-
Anderson Enterprises, Inc. marketing rights for the IllumiSign-Eyecatcher
display boards.
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-10.9.A
22
ex109a-1001.txt
COMPROMISE AND SETTLEMENT AGREEMENT
EXHIBIT 10.9(a)
Compromise and Settlement Agreement between Carson-Jensen-Anderson, Inc.
terminating the marketing rights agreement for the IllumiSign-Eyecatcher display
boards.
COMPROMISE AND SETTLEMENT AGREEMENT
THIS AGREEMENT, is made and entered into on the 2nd day of May 2001 between New
Millennium Media International, Inc., a Florida corporation, (hereinafter
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. d/b/a EyeCatcherPlus, a Florida corporation, (hereinafter
referred to as "CJE"), with its principal place of business at 235 Four Knot
Lane, Osprey, FL 34229.
WHEREAS, NMMI and CJE entered into a marketing agreement dated October 1, 2000
(hereinafter referred to as "Marketing Agreement");
WHEREAS, NMMI asserts a claim against CJE based upon the facts alleged in a
demand letter to CJE dated March 3, 2001 (said letter is attached hereto and
incorporated herein by reference);
WHEREAS, CJE disputes the alleged facts and the amount of the liability in
connection with the aforementioned asserted claim of NMMI (hereinafter referred
to as "Dispute");
WHEREAS, CJE has tendered to NMMI an offer to compromise and settle the Dispute;
WHEREAS, NMMI has unconditionally accepted the terms of compromise and
settlement offered by CJE;
WHEREAS, both parties wish to reach a full and final settlement of all matters
and all causes of action arising out of the alleged facts and claim as set forth
above;
WHEREAS, both parties hereby intend to terminate the Marketing Agreement and to
mutually release the other party from all rights, duties, and obligations that
exist under the Marketing Agreement;
NOW, THEREFORE, in consideration of the promises, covenants and conditions
contained herein, including, but not limited to, the parties' mutual agreement
to compromise a bona fide dispute and to settle a controverted matter of claim,
ten dollars and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. TERMINATION OF MARKETING AGREEMENT. The October 1, 2000 Marketing
Agreement by and between NMMI and CJE is hereby cancelled and
terminated in total and said Marketing Agreement is of no further
force and effect. Excepting the rights and obligations created under
this Compromise and Settlement Agreement, all claims, rights, duties,
obligations, and liabilities existing between the parties prior to or
at the time of execution of this Compromise and Settlement Agreement
are hereby fully and completely satisfied, discharged, and terminated.
2. TERMS OF SETTLEMENT. CJE hereby conveys and/or assigns to NMMI, all
right, title and interest that CJE has in the following property:
a. The EyeCatcherPlus website - to include all marketing leads that
have been generated by the website, excepting specifically the
Regal Cinemas and the Hoyt Theatres corporate accounts.
b. The CJE marketing materials - to include, but not limited to, all
paper literature, video VHS tapes, CD Rom presentations,
camera-ready artwork, and supplies, excepting specifically the
Regal Cinemas and the Hoyt Theatres corporate accounts.
c. The CJE Uniform Franchise Offering Circular (UFOC) and all
related paperwork, excepting specifically the Regal Cinemas and
the Hoyt Theatres corporate accounts.
d. All existing CJE franchise rights, including, but not limited to,
Creative Advertising, Inc. (Brad Taylor) operating in Oregon,
Washington, and Northern California, excepting specifically the
Regal Cinemas and the Hoyt Theatres corporate accounts.
e. All existing CJE dealership rights, including, but not limited
to, Greg Patterson (Canada); Bud Keyes (Green Bay, WI); and Lou
Colon (Hollister, CA), excepting specifically Vinod Kulhari
(Florida); the Regal Cinemas corporate account, and the Hoyt
Theatres corporate account. CJE hereby grants permission to NMMI
to contact Vinod Kulhari for the purpose of contracting with
Vinod Kulhari as a dealer for NMMI, and, provided that Vinod
Kulhari desires to contract with NMMI as a dealer for NMMI, CJE
agrees to waive all existing dealership rights with respect to
Vinod Kulhari, excepting specifically any monies then due and
owing to CJE from Vinod Kulhari.
f. All existing CJE "Corporate Accounts," including, but not limited
to GKC Theatres and C & K Markets, excepting specifically the
Regal Cinemas and Hoyt Theatres corporate accounts. It is
understood and agreed that the parties shall in no unmistakable
terms take such steps and measures as are reasonably necessary to
assure that the said "Corporate Accounts" are not only
contractually conveyed to NMMI, but that said "Corporate
Accounts" are properly introduced to NMMI in a friendly fashion
and, with unwavering sincerity, recommended to NMMI.
g. The CJE agency rights with respect to Continental High-Tech
Marketing & Sales, Inc. and Airpass Wireless, Inc., excepting
specifically the Regal Cinemas and Hoyt Theatres corporate
accounts.
h. The CJE Microsoft Access Database, excepting specifically the
Regal Cinemas and Hoyt Theatres corporate accounts.
CJE agrees to promptly execute any and all documents required and/or
necessary to complete the above identified conveyances and/or
assignments.
CJE agrees to convey to NMMI all right, title, and interest in the CJE
EyeCatcherPlus name. CJE further agrees to promptly execute any and
all documents required and/or necessary to complete this conveyance
and the intention of this conveyance. Notwithstanding said conveyance
to NMMI of all right, title, and interest in the CJE EyeCatcherPlus
name, CJE expressly reserves any and all existing EyeCatcherPlus
contractual rights, not otherwise conveyed and/or assigned to NMMI
herein, which exist at the time of execution of this Compromise and
Settlement Agreement, to include specifically, the Regal Cinemas
Corporate Account; the Hoyt Theatres Corporate Account; any
EyeCatcherPlus Advertising Accounts, and the National Sales League
(NSL) Referral Agency.
CJE agrees to promote the Nashville, TN EyeCatcherPlus franchise on
behalf of NMMI. CJE agrees to assist NMMI in obtaining a franchise fee
from the prospective Nashville, TN franchisee, David Pipken, in the
amount of fifty thousand dollars ($50,000.00). The said payment of
fifty thousand dollars ($50,000.00) to NMMI within forty-five (45)
working business days from the execution and delivery of this
Compromise and Settlement Agreement shall be a condition subsequent to
this Compromise and Settlement Agreement.
Excepting display boards that have been placed with either a dealer or
franchisee as identified in subparagraphs 2d, 2e, or 2f herein above,
CJE shall, within twenty (20) working business days from the execution
and delivery of this Compromise and Settlement Agreement, return to
NMMI all display boards which are titled and owned by NMMI. The
returned display boards shall be in the same working condition as they
were when delivered to CJE, less reasonable wear and tear resulting
from normal and customary usage and shipment.
NMMI shall return to CJE all original artwork provided to NMMI by CJE
advertising account entities for purpose of creating poster
advertisements for display in NMMI's display board. Specifically, NMMI
shall return all original artwork for 1) Sommersby Mortgage; 2) Burson
Weathers Real Estate; and 3) First Street Caloosahatchee Development
at the time of delivery of this Compromise and Settlement Agreement.
CJE and NMMI expressly agree that all original artwork provided to
NMMI by CJE advertising account entities is and shall remain the
property of said advertising account entities.
3. MUTUAL RELEASE. Each of the above-mentioned parties, on behalf of
itself, its agents, stockholders, employees, representatives, assigns,
and successors, hereby fully releases and discharges the other party
and its agents, stockholders, employees, representatives, assigns, and
successors from all rights, claims, and actions which each party and
its above mentioned successors now have or may have against the other
party and/or the other party's above-mentioned successors arising out
of the October 1, 2000 Marketing Agreement between CJE and NMMI and
all other obligations associated with said Marketing Agreement.
4. SCOPE OF RELEASE. This Compromise and Settlement Agreement is intended
to be a full settlement of the above-mentioned Dispute. This
Compromise and Settlement Agreement shall act as a release of any and
all existing claims that may arise from the October 1, 2000 Marketing
Agreement between CJE
and NMMI and all other obligations associated with said Marketing
Agreement, whether such claims are currently known, unknown, patent or
latent. The parties understand and acknowledge the significance and
consequence of such specific intention to release all claims and
hereby assume full responsibility for any injuries, damages, losses,
or liability that they may hereafter incur from the October 1, 2000
Marketing Agreement.
5. VOLUNTARY EXECUTION OF RELEASE; NO REPRESENTATIONS OR INDUCEMENTS. The
above-mentioned mutual release is freely and voluntarily executed by
each party after having been apprised of all relevant information and
data and after having had the opportunity to be advised by its
respective attorney. Excepting the mutual promises expressly set forth
herein, neither party, in executing the above-mentioned mutual
release, has relied on any inducements, promises, or representations
made by either the other party or its agents, stockholders, employees,
representatives, assigns, and successors.
6. NO ADMISSION OF LIABILITY. This Compromise and Settlement Agreement is
the compromise of the above-mentioned Dispute and shall never be
treated as an admission of liability by either party for any purpose.
7. DISPARAGING REMARKS. Each of the parties hereto shall refrain from in
any manner, directly or indirectly, taking any action or saying any
words of a disparaging nature about any of the parties to this
Compromise and Settlement Agreement. In case of violation of this
Paragraph 7, the aggrieved party shall be entitled to any and all
available legal and equitable remedy.
8. NONINTERFERENCE WITH BUSINESS RELATIONSHIPS. Excepting the terms of
settlement identified in Paragraph 2 herein above, each of the parties
hereto shall refrain from in any manner, directly or indirectly,
interfering with the business relationships that exist at the time of
the execution of this Compromise and Settlement Agreement between the
other party and any of its employees, agents, representatives,
customers, affiliates, advertisers, or venue hosts. Specifically, NMMI
expressly agrees to refrain from contacting either Regal Cinemas or
Hoyt Theatres for any purpose whatsoever for so long as CJE maintains
a business relationship with either Regal Cinemas or Hoyt Theatres.
Moreover, NMMI expressly agrees that it shall not contact any
advertising account to whom CJE has sold advertising on display boards
that are situated on sites controlled by either Regal Cinemas or Hoyt
Theatres for purposes of collection.
CJE agrees to refrain from contacting any EyeCatcherPlus corporate
account, franchisee, or dealer identified in Paragraph 2 of the terms
of settlement herein above, provided that CJE shall be entitled to
make those communications necessary to effect the assignments and
conveyances contemplated by this Settlement and Compromise Agreement.
In case of violation of this Paragraph 8, the aggrieved party shall be
entitled to any and all available legal and equitable remedy.
9. GENERAL PROVISIONS.
(a) The laws of the State of Florida shall govern this Compromise and
Settlement Agreement. In the event of any litigation arising out
of any terms of this Compromise and Settlement Agreement, the
parties hereto agree that Pinellas County, Florida shall be the
venue for such litigation.
(b) This Compromise and Settlement Agreement represents the entire
agreement between the parties with respect to this Compromise and
Settlement Agreement and may be modified or amended only in
writing signed by all parties.
(c) Any notice, demand or request required or permitted to be given
by the parties hereto pursuant to the terms of this Compromise
and Settlement Agreement shall be in writing and shall be deemed
given when delivered personally or deposited in the U.S. mail,
First Class with postage prepaid and addressed to the parties at
the addresses of the parties set forth herein or such other
address as a party may notify the others in writing.
(d) Any party's failure to enforce any provision or provisions of
this Compromise and Settlement Agreement shall not in any way be
construed as a waiver of any such provision or provisions, nor
prevent that party thereafter from enforcing each and every other
provision of this Compromise and Settlement Agreement. The rights
granted both parties herein are cumulative and shall not
constitute a waiver of any party's right to assert all other
legal remedies available to such party under the circumstances.
(e) Each of the parties to this Compromise and Settlement Agreement
agrees upon request to execute any further documents or
instruments necessary or desirable to carry out the purpose or
intent of this Compromise and Settlement Agreement.
(f) This Compromise and Settlement Agreement may be executed in
separate counterparts, each of which is deemed to be an original
and all of which taken together constitute one and the same
Compromise and Settlement Agreement.
(g) Except as otherwise provided herein, this Compromise and
Settlement Agreement shall bind and inure to the benefit of and
be enforceable by the parties and their respective successors and
assigns.
(h) Each of the parties hereto represents that he has full and proper
legal authority to bind the entity for which he signed this
Compromise and Settlement Agreement and that the said entity is
fully bound by the terms of this Compromise and Settlement
Agreement.
(i) If any provision or clause of this Compromise and Settlement
Agreement or the application thereof to either CJE or NMMI is
held to be invalid by a court of competent jurisdiction, then
such provision shall be severed from this Compromise and
Settlement Agreement, and such invalidity shall not affect any
other provision of this Compromise and Settlement Agreement, the
balance of which shall remain in and have its intended full force
and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Compromise and
Settlement Agreement on the date as stated below.
Carson Jensen Anderson Enterprises, Inc., dba EyeCatcherPlus
By s/___________________________ Dated this 10th day of May 2001
Brooks Carson, as President
New Millennium Media International, Inc.
By s/___________________________ Dated this 10th day of May 2001
John "JT" Thatch, as President/CEO
EX-10.10
23
ex1010-1001.txt
OFFICE LEASE AGREEMENT
EXHIBIT 10.10
Office Lease Agreement between St. James Properties, Inc. and NMMI.
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-10.11
24
ex1011-1001.txt
OFFICE LEASE AGREEMENT
EXHIBIT 10.11
Office Lease Agreement between Abdi Boozar-Jomehri d/b/a Safety Harbor Centre
and NMMI
LEASE AGREEMENT
THIS AGREEMENT, entered into this 29th day of March 2001, by and between
ABDI R. BOOZAR-JOMEHRI doing business under the name of Safety Harbor Centre
hereinafter referred to as "LANDLORD" and New Millennium Media International
hereinafter referred to as "TENANT".
WHEREAS, the Landlord is the Owner of the property known as Safety Harbor
Centre located at 200 9th Avenue North, Safety Harbor, Florida and
WHEREAS, the purpose of this Agreement is to set forth the terms and
conditions whereby Landlords leases to Tenant and Tenant leases from Landlord a
portion of the area in the aforementioned property.
NOW, THEREFORE, for the sum of Ten Dollars ($10.00) and other goods and valuable
consideration the parties hereto agree as follows:
1. LEASED AREA
-----------
Landlord does lease to Tenant and Tenant leases from Landlord space
designated as Suite 210 thru 240 and the warehouse area as follows:
Office Space - 6,143 +/- Square Feet = $7,679.00 /monthly
------------------------------------
Warehouse - 4,500 Square Feet = $2,625.00/monthly
-----------------------------
2. RENTAL AMOUNT
-------------
The rental, which the Tenant shall pay to the Landlord hereunder,
shall be $ 123,648.00 plus applicable Sales Tax. Common Area
Maintenance (CAM). Rental shall be paid in monthly installments due on
the 1st of each month and every month for the term of this lease.
Monthly installments for the three-year term are broken down as
follows:
BASE RENT $ 10,304.00
SALES TAX 668.24
-----------
MONTHLY RENT DUE $ 10,972.24
a. SECURITY DEPOSIT SHALL BE:
1ST MONTHS RENT $ 10,972.24
LAST MONTHS RENT 10,972.24
SECURITY DEPOSIT 10,304.00
-----------
TOTAL $ 32,248.48
b. Prorated 50% CAM of the entire property plus tax will be paid by
tenant on monthly bases.
3. TERM OF LEASE
-------------
This lease shall be for a period of 5 years and shall commence on the
1st day of May 2001 and expire on the 30th day of April 2006.
4. COMMON AREA MAINTENANCE
-----------------------
Tenant shall pay per month for the five-year term for maintenance of
common areas.
5. OPTION TO RENEW
---------------
Tenant shall have the option to renew this lease for a period of 5
years each upon giving sixty (60) days written notice to Landlord.
6. USE OF PREMISES
---------------
Tenant agrees that the subject premises shall be used solely for
the business of Media Corporate Office Suites and for no other purpose
without written consent of the Landlord.
7. SIGNS
-----
Written consent of the Landlord being first obtained. Landlord
may stipulate type and configuration of signage used. Sign must be
constructed per the specifications of the Landlord.
8. IMPROVEMENTS
------------
The Landlord shall complete at its cost of $11.00 per square foot
the improvements of 6,143 Square Feet as specifications summarized in
the attached Floor Plan.
Per attached Exhibit "A"
All other improvements to the subject premises shall be the
responsibility of the Tenant.
9. COMMON AREAS
------------
Landlord will maintain all thoroughfares for vehicular and
pedestrian traffic within the property and all common areas and
parking areas. This maintenance shall include adequate repairs to
lighting, painting, pavement, sidewalks, etc. Tenant and all those
having business with it in common with the other tenants and their
associates have the right to use such facilities for their intended
purposes. EXCEPT that no advertising or solicitation of any sort will
be permitted without written consent of the Landlord being first
obtained.
Tenant may upon inspection and determination of cause, be charged
an additional fee for repairs or clean up directly caused by his
business (such as chemicals or paints poured in common area washrooms:
Damage to pavement due to wash down of chemical substances, etc.)
10. RENTAL ESCALATION
-----------------
Rental amount and CAM charges shall escalate at the beginning of
the 2nd year, at CPI or 3% per annum, which ever is higher.
11. INSPECTION
----------
Landlord may inspect the leased space at reasonable times during
the business hours without notice to Tenant.
12. CONTROL OF NON-LEASED AREA
--------------------------
Landlord will retain exclusive management control of all exterior
surfaces and areas of the exterior perimeter surrounding the Tenant's
space as well as all other such exteriors of leased spaces and control
of common areas and parking areas of the property.
13. MAINTENANCE OF LEASED SPACE
---------------------------
Tenant will maintain the leased space at his own expense keeping
it at all times in good condition and good working order.
14. UTILITIES
---------
Tenant agrees to pay all charges for electricity, telephone air
conditioning and heating and all other utilities and charges for
services used by or furnished to Tenant on the premises. Utility
charges that are billed to Landlord on a common billing are included
in the CAM fee unless otherwise provided in this lease Agreement.
15. AIR CONDITIONING UNIT
---------------------
Tenant shall maintain the air conditioning units serving his
space from time to time and shall install air conditioning filters on
a timely basis. In the event Landlord feel Tenant is not performing
adequate maintenance on the air conditioners, Landlord may maintain
them at his expense and charge same to Tenant. Tenant shall be
responsible for all repairs to equipment with the exception of
replacement of major mechanical components: EXCEPT in cases where lack
of maintenance directly caused the failure of major components, in
which case, Tenant will be responsible for replacement costs.
16. ELECTRIC AND PLUMBING REPAIRS
-----------------------------
Electrical and plumbing repairs within the leased space shall be
the responsibility of the Tenant. Repairs outside the lease space
shall be the responsibility of the Landlord; EXCEPT when determined to
have been caused by the Tenant, in which case Tenant will be
responsible for cost.
17. TENANT'S COMPLIANCE WITH LAWS
-----------------------------
Tenant will comply with all governmental requirements and laws
respecting the conduct of business or use of the leased space in
timely and appropriate manner and at his sole cost and will pay and be
solely responsible for all tax levies, assessments, licenses or fines
as may be required from time to time directed to the conduct of his
business.
18. SURRENDER ON TERMINATION
------------------------
Tenant shall surrender the space at the end of the term arranged
for under this lease, including all improvements, wear and tear
excepted. All keys or other forms of access to the space or any
materials left within the space will be surrendered to Landlord by the
end of the term. Any and all improvements made by the Tenant to the
subject premises, including carpets and partition, shall remain in the
subject premises upon the termination of this lease; except that the
tenant shall be permitted to remove furniture, built-in cabinets and
similar items which can be removed without damaging the premises. The
Tenant at his expense shall repair any damages caused by said removal.
19. HOLDOVER TENANCY
----------------
Should Tenant holdover occupancy of the space after termination
of the lease with the consent or acquiescence of Landlord, the tenancy
will then be construed to be a "month to month" lease, but the terms
of this Agreement otherwise will be fully applicable insofar as
consistent with such tenancy.
20. INDEMNIFICATION
---------------
Tenant shall indemnify and hold Landlord and its agents, servants
and employees harmless from and against all causes of action, claims,
damages, losses and expenses, including reasonable attorneys' fees,
resulting from or arising out of bodily injury, sickness, disease or
death, or injury to or destruction of tangible property resulting
solely from affirmative act of negligence by Tenant. Landlord shall
not be liable to Tenant for any damage or injury to the Leased
Premises, to Tenant's property, to Tenant, its agents, contractors,
employees, invitee, or licensees, arising from any condition of the
Leased Premises, the Building, or any sidewalk or entranceway serving
the Building, or the act of neglect of co-tenants, or the malfunction
of any equipment or apparatus serving the Building, unless due to
negligence of Landlord. However, Tenant shall not be required to
indemnify Landlord hereunder with respect to any damages or injuries
caused by individual acts or omissions or Landlord while on the
premises. Without limiting the generality of the foregoing. Tenant
agrees that this will procure at its expense, and continue in force
throughout the period of this lease for the benefit of Landlord and
Tenant as their respective interest shall appear a policy or policies
or public liability insurance written by a company authorized to
engage in the business of general liability insurance in the State of
Florida. Said insurance shall be written to protect the Landlord and
Tenant against any and all
claims for injury to persons or property occurring in, upon or about
the premises, and each and every part thereof, and the sidewalks in
front of the leased premises. The coverage shall include all damages
from signs, glass, awnings, fixtures or other appurtenances now or
thereafter placed upon the leased premises during the term of this
lease.
Said public liability policy or policies shall be in an amount of
not less then $300,000.00 in respect to injuries to or death of
persons in any one accident and in an amount of not less then
$1,000,000.00 in respect to injuries to or death of any one person and
in an amount not less than $100,000.00 for damage to property.
Tenant shall promptly pay any and all insurance premiums in
connection with any policy or policies or insurance and shall deliver
evidence of such insurance to the Landlord. Should the Tenant fail to
furnish evidences of such insurance as provided for in this lease,
Landlord may obtain such insurance and the premiums on such insurance
shall be deemed to be additional rental to be paid by Tenant to
Landlord on demand.
21. CONDEMNATION CLAUSE
-------------------
If any authority under eminent domain takes business center, in
either of the forms described below, the lease will be terminated at
that time or all adjustments in rent will be made pro-rata to that
time and payable then. "Taken" under such proceedings refers to the
time when either under the provisions of a private agreement by
Landlord with the condemning authority, or order of a court of
competent, jurisdiction, the right to immediate physical possession is
given to such authority. The following kinds of "Takings" are embraced
under the terms of this Agreement:
1. The entirety of the leased space.
2. Ten (10%) percent or more of the leased space, and in such
fashion as to substantially prevent the conduct of Tenant's
business in the normal manner.
3. Space of fifty (50%) percent or more of the Tenants in the
business center, causing the removal of such tenants under the
terms of their own leases.
4. Fifty (50%) percent or more of the common areas of the business
center.
22. DEFAULT
-------
In the event the Tenant fails to pay the rent within five (5)
business days after the same is due, time being of the essence the
Landlord may declare this lease to be in default and may exercise any
of the remedies available to it under the laws of the State of Florida
as a Landlord. A late fee in an amount equal to five (5%) percent of
the monthly base rent will be charged to any rents not paid by the 6th
business day of the month, whether the Owner exercise his right to
declare the lease in default or not.
In the event a default other than the payment or rent occurs and
said default continues after fifteen (15) days written notice, the
Landlord may forthwith terminate this lease and may at that time have
available to it all remedies of a Landlord under the laws of the State
of Florida.
23. LANDLORD'S LIEN
---------------
It is understood and agreed that in addition to the statutory
lien for rent, which the Landlord has, Landlord shall also have an
express lien upon all of the furniture, fixtures, equipment, goods and
chattels of the Tenant which may be brought or put on said premises as
security for the payment of rent and additional rents herein reserved.
Tenant agrees that the Landlord's lien for the payment of said rents
may be enforced by distress, foreclosure or otherwise at the option of
the Landlord.
24. QUIET ENJOYMENT
---------------
So long as the Tenant performs all of its covenants required
hereunder, the Landlord guarantees to the Tenant quiet enjoyment of
the subject premises.
25. SUBORDINATION
-------------
The Tenant agrees that its lease interest in the subject premises
shall at all times be subordinated to any real property mortgage
financing which may be obtained by the Landlord at the time this lease
is executed, or at the time new or additional financing my be obtained
after the date this lease is executed. In the event a prospective
lender of the Landlord requires additional documentation to evidence
this right, the Tenant agrees to execute such subordination agreements
as may be required from time to time.
26. INVALIDITY OR UNENFORCABLITY
----------------------------
If any term, condition, covenant, or provision of this lease is
held to be invalid or unenforceable either in itself or as to any
particular party, then the remainder of the lease, or the
applicability of such provision to other parties, will continue in
validity and force; except, if thereafter, as to any other individual
provision or its applicability to any particular party it would be
inequitable and inconsistent with the purposes of the lease to so
continue, then only as to such first and secondary provisions or
parties will the lease be invalid and unenforceable.
27. ATTORNEY'S FEES
---------------
To any extent it becomes necessary for either Landlord or Tenant
to take legal action against the other to enforce any provisions of
this lease, the prevailing party will be entitled to awardable
attorney's fees.
28. ENTIRE AGREEMENT
----------------
This lease constitutes the entire Agreement between the parties
along with its exhibits as noted in Paragraph 35 (if any): and no
alteration or modification of such Agreement may be made except in
writing to the other party and signed by the party to be charged.
29. RECORDING OF LEASE
------------------
This lease will not be recorded in the public records.
30. WRITTEN COMMUNICATIONS
----------------------
Either party will send all rents or payments, notices, or
approvals in writing provided for under this lease to the other party
as follows:
To Landlord: Abdi R. Boozar-Jomehri
200 9th Avenue North
Safety Harbor, Florida 34695
To Tenant: At Leased Space
Rents are made payable to ABDI R. BOOZAR-JOMEHRI and delivered
(by mail or in person) to ABDI R. BOOZAR-JOMEHRI at the address noted
above. Such rents, if reported, shall use tax ID number
________________.
31. WAIVERS
-------
No waivers of any term, condition, or covenant of this lease may
be presumed, but must be made in writing by the party so waiving to
the other party. No acceptance by Landlord from Tenant of any amount
paid for any reason under this lease in a sum less than what is
actually owing will constitute a compromise, settlement, accord and
satisfaction, release or other final disposition of the amount owing
in the absence of a writing from the Landlord to the contrary.
In the event Tenant owes monies to Landlord for other than rent,
Landlord has the option of applying any monies received against that
debt or against rent at his discretion.
32. ASSIGNMENT AND SUBLETTING
-------------------------
This lease may not be assigned not the premises sublet by Tenant
without the express written consent of the Landlord being obtained,
which approval shall not be unreasonably withheld.
REAL ESTATE TAXES AND INSURANCE
-------------------------------
Real Estate Taxes and Property Insurance shall be the
responsibility of the Landlord. Insurance in this regard is the
property insurance to cover the building(s), parking lots, etc., but
does not include coverage of any property of the Tenant, his employees
or persons visiting the premises.
33. OTHER COVENANTS
---------------
The following are additional covenants between the parties of
this Agreement:
Landlord shall provide the following:
Landlord herein approves all signs as they now appear and are
placed. Sign remains personal property of the Tenant.
THIS AGREEMENT entered into as of the day and year first above
written.
WITNESSES: LANDLORD:
(As to Landlord)
_________________________ BY: s/_________________________
_________________________ ABDI R. BOOZAR-JOMEHRI
----------------------
WITNESSES: TENANT:
(As to tenant)
_________________________ BY: s/_________________________
_________________________ Print:_________________________
EX-21.1
25
ex211-1001.txt
LIST OF SUBSIDIARIES
EXHIBIT 21.1
List of Subsidiaries.
LIST OF SUBSIDIARIES
None
EX-23.1
26
ex231-1001.txt
CONSENT OF LEGAL COUNSEL
EXHIBIT 23.1
Consent of Legal Counsel (included in Exhibit 5.1)
EX-23.2
27
ex232-1001.txt
AUDITOR'S CONSENT
EXHIBIT 23.2
Consent of Independent Auditors.
23.2 CONSENT OF INDEPENDENT AUDITORS
Board of Directors
New Millennium Media International, Inc.
Safety Harbor, FL
We hereby consent to the use in this Amended Registration Statement of New
Millennium Media International, Inc. on Form S-2/A of our report dated March 20,
2001 on the financial statements of New Millennium Media International, Inc. as
of December 31, 1999 and 2000 and for the years ended December 31, 1999 and
2000, which are part of this Registration Statement, and to all references to
our firm included in this Registration Statement. Our report contains an
explanatory paragraph regarding the Company's ability to continue as a going
concern.
Richard J. Fuller, CPA, PA
Clearwater, Florida
October 3, 2001
EX-99.1
28
ex991-1001.txt
TRADEMARK DOCUMENTATION
EXHIBIT 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.
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
29
ex992-1001.txt
EMPLOYMENT AGREEMENT
EXHIBIT 99.2
Employment Agreement between Registration and John Thatch, President/CEO.
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.