Exhibit 10.1
STOCK OPTION AGREEMENT
AGREEMENT made as of the 24th day of August, 1998 by and between
American International Petroleum Corporation, a Nevada corporation having its
principal place of business at 444 Madison Avenue, Suite 3203, New York, New
York 10022 ("Grantor"), and ___________________, having an office at
__________________________ ("Optionee").
W I T N E S S E T H:
WHEREAS, Optionee has agreed to provide certain public relation
services ("PR Services") on behalf of Grantor and is not an employee of Grantor;
and
WHEREAS, Grantor is desirous of retaining Optionee to provide PR
Services and compensating Optionee in part by delivering this Option.
NOW, THEREFORE, in consideration of the mutual covenants set
forth in this Agreement and for other good and valuable consideration, the
Grantor hereby grants the Optionee options to purchase Common Stock of the
Grantor on the following terms and conditions:
1. Option.
The Grantor hereby grants to the Optionee outside of its 1998
Stock Option Plan, a non-qualified stock option (the "Option"), not intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to purchase, subject to Section 4 hereof and terminating as of 5:00
p.m. on August 24, 1999 (the "Term"), Two Hundred Thousand (200,000) fully paid
and non-assessable shares of the Common Stock of the Grantor, par value $.08 per
share, subject to the terms and conditions of this Agreement.
2. Purchase Price.
The purchase price ("Option Price") for the Option Shares (as
defined herein) to acquire Two Hundred Thousand (200,000) shares of the Common
Stock of Grantor shall be $2.00 per share. The Grantor shall pay all original
issue or transfer taxes on the exercise of this option and all other fees and
expenses necessarily incurred by the Grantor in connection therewith.
3. Exercise of Option.
At any time after the conditions of Section 4(B) of the Service
Agreement dated August 24, 1998 between the Grantor and Optionee, attached
hereto as Exhibit A, are met, the Optionee may notify the Grantor by registered
or certified mail, return receipt requested, addressed to its principal office
as to the number of shares which he desires to purchase under the options herein
granted, which notice shall be accompanied by payment (by (i) cash, (ii)
certified check, (iii) tendering to the Grantor a number of shares of the
Grantor's Common Stock equal to the portion of the aggregate Option Price being
paid by the tendering of such stock divided by the NASDAQ closing price, or the
closing price on the exchange or market then traded, of the Grantor's Common
Stock on the date of exercise, and/or (iv) surrendering a number of the Options
granted hereunder equal to the Option Price for the portion of the aggregate
Option Price being paid by the surrendering of Option and the Option price of
the Options being surrendered divided by the excess of the NASDAQ closing price,
or the closing price on the exchange or market then traded, of the Grantor's
Common Stock on the date of exercise and the respective Option Prices of the
Options being exercised and surrendered) of the respective Option Price
therefore as specified in Paragraph 2 above. As soon as practicable thereafter,
the Grantor shall at its principal office tender to Optionee certificates issued
in the Optionee's name evidencing the shares purchased by the Optionee.
4. Option Conditioned On Continued Service.
If the Optionee terminates their PR services before one year
they will return a proportionate percent of the options granted.
5. Divisibility and Non-Assignability of the Options.
(a) The Optionee may exercise the options herein granted from
time to time during the periods of their respective effectiveness with respect
to any whole number of shares included therein, but in no event may an option be
exercised as to less than one hundred (100) shares at any one time, except for
the remaining shares covered by the option if less than one hundred (100).
(b) The Optionee may not give, grant, sell, exchange, transfer
legal title, pledge, assign or otherwise encumber or dispose of the options
herein granted or any interest therein, otherwise than by will or by the laws of
descent and distribution, and these options, or any of them, shall be
exercisable during Optionee's lifetime only by the Optionee.
6. Stock as Investment.
By accepting this option, the Optionee agrees for Optionee, and
Optionee's heirs and legatees, that except to the extent the shares to be
received upon the exercise of the options are subject to a current registration
statement filed by the Grantor with the Securities and Exchange Commission, and
all shares purchased hereunder shall be acquired for investment and not for
distribution, and upon the issuance of any or all of the shares subject to the
option granted hereunder the Optionee, and Optionee's heirs and legatees
receiving such shares, shall deliver to the Grantor a representation in writing,
that such shares are being acquired in good faith for investment and not for
distribution. Grantor may place a "stop transfer" order with respect to such
shares with its transfer agent and place an appropriate restrictive legend on
the stock certificate.
7. Restrictive Period
In no event may the Option Shares (as defined herein), whether
or not the Option Shares are registered, be sold before January 31, 1999.
8. Restriction on Issuance of Shares.
The Grantor shall not be required to issue or deliver any
certificate for shares of its Common Stock purchased upon the exercise of any
option unless (a) the issuance of such shares has been registered with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
or counsel to the Grantor shall have given an opinion that such registration is
not required; (b) approval, to the extent required, shall have been obtained
from any state regulatory body having jurisdiction thereof, and (c) permission
for the listing of such shares shall have been given by any national securities
exchange on which the Common Stock of the Grantor is at the time of issuance
listed.
9. Adjustment on Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are
changed after the date hereof by reason of recapitalization, reclassification,
stock split-up, combination or exchange of shares of Common Stock or the like,
or by the issuance of dividends payable in shares of Common Stock, an
appropriate adjustment shall be made by the Board of Directors, as determined by
the Board of Directors and/or the Committee, in the aggregate number of shares
of Common Stock issuable upon exercise of the outstanding Options, and the
Option Price per share. In the event of any consolidation or merger of the
Grantor with or into another company where the Grantor is not the survivor, or
the conveyance of all or substantially all of the assets of the Grantor to
another company, each then outstanding Option shall upon exercise thereafter
entitle the holder thereof to such number of shares of Common Stock or other
securities or property to which a holder of shares of Common Stock of the
Grantor would have been entitled to upon such consolidation, merger or
conveyance; and in any such case appropriate adjustment, as determined by the
Board of Directors of the Grantor (or successor entity) shall be made as set
forth above with respect to any future changes in the capitalization of the
Grantor or its successor entity. In the event of the proposed dissolution or
liquidation of the Grantor, all outstanding Options will automatically
terminate, unless otherwise provided by the Board of Directors of the Grantor or
any authorized committee thereof.
(b) Notwithstanding the above, this option may, at the
discretion of the Board of Directors of the Grantor and said other corporation,
be exchanged for options to purchase shares of capital stock of another
corporation which the Grantor, and/or a subsidiary thereof is merged into,
consolidated with, or all or a substantial portion of the property or stock of
which is acquired by said other corporation or separated or reorganized into.
The terms, provisions and benefits to the Optionee of such substitute option(s)
shall in all respects be identical to the terms, provisions and benefits of
Optionee under his Option(s) prior to said substitution.
(c) Any adjustment in the number of shares of Common Stock shall
apply proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock, so long as such increase does not result in the holder
of the option being deemed to own more than 5% of the total combined voting
power or value of all classes of stock of the Grantor or its subsidiaries.
(d) Notwithstanding the above, no adjustment shall be made with
respect to stock dividends or splits which do not exceed 10% in any fiscal year,
cash dividends or the issuance to stockholders of the Grantor of rights to
subscribe for additional shares of Common Stock or other securities.
10. No Rights in Option Stock.
Optionee shall have no rights as a shareholder in respect of
shares as to which the option granted hereunder shall not have been exercised
and payment made as herein provided.
11. Effect Upon Services.
This Agreement does not give the Optionee any right to provide
continued services to the Grantor.
12. Binding Effect.
Except as herein otherwise expressly provided, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
successors, legal representatives and assigns.
13. Notice of Certain Events. In case at any time any of the
following occur:
(a) The Grantor shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Grantor; or
(b) The Grantor shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Grantor or securities
convertible into or exchangeable for shares of capital stock of the Grantor, or
any option, right or warrant to subscribe therefor; or
(c) The Grantor shall take any action to effect any
reclassification or change of outstanding shares of Common Stock or any
consolidation, merger, sale, lease or conveyance of property, described in
Section 8; or
(d) The Grantor shall take any action to effect any liquidation,
dissolution or winding-up of the Grantor or a sale of all or substantially all
of its property, assets and business;
then, and in any one or more of such cases, the Grantor shall give written
notice thereof, by registered mail, postage prepaid, to the Optionee at the
Optionee?s address as it appears above, or if different, as such place as
Optionee shall direct in writing given to Grantor, mailed at least ten (10) days
prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants or other securities are to be determined, (ii) the date on which any
such offer to holders of Common Stock is made, or (iii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up is expected to become effective and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up.
14. Registration Rights.
(a) Commencing on the date hereof, the Grantor shall
advise the Optionee, but not any transferee or assignees thereof, by written
notice at least 45 days prior to the filing of any registration statement or
post-effective amendment thereto ("Registration Statement") under the Act,
covering a public offering of equity securities of the Grantor solely for cash
(other than a registration relating solely to the sale of securities to
participants in a stock plan of the Grantor, or a registration on any form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the shares underlying
the options (?Option Shares) and shall, except as otherwise provided herein,
register in any such Registration Statement the number of Option Shares that the
Optionee shall notify the Grantor within twenty (20) days after mailing of such
notice by the Grantor that he desires to register and shall include in any such
Registration Statement such information as may be required to permit a public
offering of such Option Shares, provided, however, that the Optionee notify the
Grantor that it desires to register all of his Option Shares then vested. The
Grantor shall supply prospectuses and other documents as the Optionee may
reasonably request in order to facilitate the public sale or other disposition
of the Option Shares. The Grantor shall bear the entire cost and expense of a
registration of securities initiated by it under this subsection (a). The
Optionee shall, however, bear any transfer taxes and underwriting discounts or
commissions applicable to the Option Shares sold by him and any legal fees
incurred by him. The Grantor may include other securities in any such
Registration Statement. The Grantor shall do any and all other acts and things
which may be necessary or desirable to enable the Optionee to consummate the
public sale or other disposition of the Option Shares, and furnish
indemnification in the manner as set forth in subsection (c) of this Section 14,
but shall not be required to qualify as a foreign corporation to qualify the
Option Shares for sale under the securities laws of any state. The Optionee
shall furnish information and indemnification as set forth in subsection (c)(1)
of this Section 14. All decisions as to whether and when to proceed with any
Registration Statement shall be made solely by the Grantor.
In connection with any offering involving an underwriting of
shares of the Grantor's securities, the Grantor shall not be required to include
any of the Option Shares in such underwriting unless the Optionee accept the
terms of the underwriting as agreed upon between the Grantor and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering by the
Grantor. If the total amount of securities requested by selling stockholders to
be included in such offering exceeds the amount of securities to be sold, other
than by the Grantor, that the underwriters determine in their sole discretion
that such amount will jeopardize the success of the offering, then the Grantor
shall be required to include in the offering only that number of such Option
Shares which the underwriters determine in their sole discretion will not
jeopardize the success of the offering. Except as otherwise limited under any
other registration right granted by the Grantor before, on or after the date
hereof, the securities so included are to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder (or in such other proportions
as shall mutually be agreed to by such selling stockholders).
(b) Notwithstanding the foregoing subsection (a), in the event
that there is an underwritten offering of the Grantor's securities offered
pursuant to said Registration Statement, the underwriters shall have the right
to refuse to permit any Option Shares, or to limit the amount of Option Shares,
to be sold by the Optionee to such underwriters as such underwriter(s) may
determine in its discretion and the Optionee shall refrain from selling such
remainder of his Option Shares covered by such Registration Statement for the
period of days following the effective date and shall also refrain at any time
when notified by the Grantor that an amendment or supplement to the prospectus
is required. The Grantor shall not be obligated to keep any Registration
Statement effective for a continuous period of the lesser of 120 days or until
such time as all Option Shares included in the Registration Statement have been
sold.
(c)(1) Whenever pursuant to this Section 14 (a) Registration
Statement relating to the Option Shares is filed under the Act or amended or
supplemented thereto, the Grantor will indemnify and hold harmless the Optionee
if covered by such Registration Statement, amendment or supplement (such
Optionee being hereinafter called the "Distributing Holder"), against any
losses, claims, damages or liabilities, joint or several, to which the
Distributing Holder may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such Registration Statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading and will reimburse the Distributing
Holder for any legal or other expenses reasonably incurred by the Distributing
Holder for any legal or other expenses reasonably incurred by the Distributing
Holder or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action, provided, however, that the Grantor
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement, in reliance upon and in conformity with written information
furnished by the Distributing Holder or underwriter for use in the preparation
thereof.
(c)(2) To the extent permitted by law, the Distributing Holder
will indemnify and hold harmless the Grantor, each of its directors, each of its
officers who have signed said Registration Statement and such amendments and
supplements thereto, each person, if any, who controls the Grantor (within the
meaning of the Act) and the Grantor's underwriters) and each person, if any, who
controls such underwriters (within the meaning of the Act) against any losses,
claims, damages or liabilities to which the Grantor or any such director,
officer, underwriter or controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, or liabilities arise out of
or are based upon any untrue or alleged untrue statement of any material fact
contained in said Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in said
Registration Statement, preliminary prospectus, final prospectus or amendment or
supplement, in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof and
will reimburse the Grantor or underwriter or any such director, officer or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(c)(3) Promptly after receipt by an indemnified party under this
subsection (c) of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party, otherwise than under this
subsection (c).
(c)(4) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and to the
extent that it may wish, jointly with any other indemnifying party similarly
notified to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
subsection (c) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(c)(5) The Grantor's agreements with respect to Option Shares in
this Section 14 shall continue in effect, regardless of the exercise or
surrender of the Option, for a period not to exceed one year from the date of
Grant or the date Optionee would be entitled to dispose of any Option shares
received upon exercise of the Option under an exemption from the registration
thereof (i.e, Rule 144).
(c)(6) The Optionee shall not have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 14.
14. Withholding.
Optionee agrees to cooperate with the Grantor to take all steps
necessary or appropriate for any required withholding of taxes by the Grantor
under law or regulation in connection therewith.
15. Miscellaneous.
This Agreement shall be construed under the laws of the State of
New York. Headings have been included herein for convenience of reference only,
and shall not be deemed a part of the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
By:
-----------------------------------------
ACCEPTED AND AGREED TO:
-----------------------------------------