Exhibit 10.21
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
OKLAHOMA SECURITIES ACT OR THE SECURITIES LAWS OF ANY OTHER
STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND/OR THE SECURITIES LAWS OF ANY OTHER STATE OR AN
OPINION OF COUNSEL OR OTHER DOCUMENTATION SATISFACTORY TO
ADVANTAGE MARKETING SYSTEMS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR ACTS.
STOCK OPTION AGREEMENT
OPTIONS TO PURCHASE COMMON STOCK
OF
ADVANTAGE MARKETING SYSTEMS, INC.
Date: January 3, 2001
WHEREAS, this Stock Option Agreement is granted to pursuant
to that certain Purchase and Assignment Agreement (the "Purchase
Agreement"), dated this 3rd day of January, 2001 (the "Effective
Date"), amongst Advantage Marketing Systems, Inc., an Oklahoma
corporation (the "Company"), having its offices at 0000 Xxxxxxxxx
Xxxxxxxxxx, Xxxxx 0000X, Xxxxxxxx Xxxx, Xxxxxxxx 00000, Life
Science Technologies Holdings, Inc., an Oklahoma corporation and
a wholly-owned subsidiary of the Company ("Acquisition Sub"), GHI
Holding, Inc., a Nevada corporation ("GHI"), RMS Limited
Partnership, Nevada limited partnership ("RMS"), and Life Science
Technologies, Inc., a Nevada corporation ("LSTI");
WHEREAS, pursuant to Section 1(B)(ii) of the Purchase
Agreement, on or before the 15th day of each of the 60 months
following the Effective Date (the "Payment Date"), AMS agreed to
pay RMS, or its designees, the greater of (A) 5% of the gross
sales of LST Products (as defined in the Purchase Agreement)
during the calendar month preceding the Payment Date or (B)
$41,666.67 (the "Installment Payments"). At the election of RMS
exercised prior to payment of an Installment Payment, in lieu of
payment of all or any portion of any Installment Payment in cash,
RMS shall be issued and delivered one share of the Company's
common stock, $0.0001 par value per share (the "Common Stock")
for each $3.00 of the Installment Payment;
WHEREAS, the Common Stock is listed on the American Stock
Exchange ("AMEX") and under the applicable rules of AMEX, the
Company cannot issue 20 percent or more of additional shares of
Common Stock (based upon the number of shares of Common Stock
outstanding on the Effective Date) in connection the Purchase
Agreement, without first obtaining the approval of the holders of
the outstanding Common Stock;
WHEREAS, the Holder, as identified below, is entitled to
entitled to receive 100 percent of the Installment Payments;
WHEREAS, this Stock Option Agreement is executed and
delivered in accordance with the Purchase Agreement to further
definitively evidence the option rights of RMS;
NOW, THEREFORE, this is to certify that, for value received,
RMS or any subsequent holder or holders of option rights
hereunder by virtue of assignment or transfer is entitled to
purchase, subject to the provisions of this Stock Option
Agreement (this "Option Agreement"), from the Company one share
of Common Stock for each $3.00 of each Installment Payment (the
"Exercise Price"), exercisable at the election of RMS at any time
on or before payment of the applicable Installment Payment. The
shares of Common Stock issued pursuant to this Option Agreement
are referred to as the "Stock". Provided, however, in no event
shall the Company issue and deliver pursuant to this Option
Agreement more than 860,000 shares of Stock, without first
obtaining the approval of the holders of the Common Stock ( in
accordance with the applicable rules of the AMEX). With the
exception of any adjustments pursuant to Section 4 of this
Option, the shares of Common Stock issuable pursuant to this
Option Agreement shall be in all respects identical to the Common
Stock issued and outstanding of the Company as of the date
hereof. The shares of Stock or other securities deliverable upon
such exercise, as adjusted from time to time, are hereinafter
sometimes referred to as the "Option Securities." Unless the
context otherwise requires, the term "Option" or "Options" as
used herein includes this Option Agreement and any other Option
Agreement that may be issued and delivered pursuant to the
provisions of this Option Agreement, whether upon transfer,
assignment, partial exercise, divisions, combinations, exchange
or otherwise, and the term "Holder" or "Holders" includes any
registered transferee or transferees or registered assignee or
assignees of Holder, who in each case shall be subject to the
provisions of this Option Agreement, and when used with reference
to Option Securities, means the holder or holders of such Option
Securities.
I. SECTION Exercise of Option. Subject to the
provisions of this Agreement, Holder shall be eligible to
exercise this Option at any time or from time to time by
written notification of the Company ("Election Notice").
Such exercise shall be effective with respect to each
Installment Payment to be paid following the date of receipt
of the Election Notice by the Company at its principal
office. Each Election Notice may be modified at any time
and from time to time pursuant to written notification of
the Company by Holder, such modification shall be effective
with respect to each Installment Payment to be paid
following the date of receipt of the modified Election
Notice by the Company at its principal office. Upon such
exercise, Company shall issue to the Holder one or more
certificates for the shares of Stock (or Option Securities),
as appropriate.
II.
III. SECTION Reservation of Shares. Company shall at
all times after the date hereof and until expiration or full
exercise of this Option reserve for issuance and delivery
upon exercise of this Option the number of Option Securities
as shall be reasonably required for issuance and delivery
upon exercise of this Option.
IV.
V. SECTION Transfer, Exchange, Assignment or Loss
of Option.
VI.
SECTION 3.1 Transferability. This Option Agreement
may be assigned or transferred, in whole or in part, as
provided herein so long as such assignment or transfer is in
accordance with and subject to the provisions of the
Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (said Act and such rules
and Regulations being hereinafter collectively referred to
as the "Securities Act"). Any purported transfer or
assignment made other than in accordance with this Section 3
shall be null and void and of no force and effect.
SECTION 3.2 Transfer Procedure. This Option Agreement
shall attach to the rights of Holder to receive the
Installment Payments and shall not otherwise be separately
transferable. Any assignment shall be made by surrender of
this Option Agreement to the Company at its principal office
with the Assignment Form annexed hereto duly executed. In
such event the Company shall, without charge, execute and
deliver a new stock option agreement in the name of the
assignee named in such instrument of assignment and
designate the assignee as the registered holder on the
Company's records and this Option Agreement shall promptly
be canceled. In the event of a partial transfer of Holder's
right to receive the Installment Payments, the Company shall
issue and deliver a new stock option agreement that carries
the same rights, specifying the percentage or amount of
Installment Payments that the Holder will be entitled to
receive.
I. SECTION Adjustment in the Number, Kind and Price
of Option Securities. The number and kind of Option
Securities purchasable upon exercise of this Option shall be
subject to adjustment from time to time upon the occurrence,
after the date hereof, of the following events:
II.
A. SECTION Stock Dividends and Splits. In the
event the Company shall (i) pay a dividend in, or make a
distribution of, shares of Stock or of capital stock
convertible into Stock on its outstanding Stock, (ii)
subdivide (forward split) its outstanding shares of Stock
into a greater number of such shares, or (iii) combine
(reverse split) its outstanding shares of Stock into a
smaller number of such shares, the total number of shares of
Stock purchasable upon the exercise of this Option
immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive at the same Exercise
Price the number of shares of Stock and the number of shares
of capital stock convertible into Stock which such Holder
would have owned or have been entitled to receive
immediately following the happening of such event, assuming
and giving effect to the exercise of this Option by such
Holder. Any adjustment made pursuant to this Subsection
shall, in the case of a stock dividend or distribution or a
stock issuance, become effective as of the record date
therefor and, in the case of a subdivision or combination,
be made as of the effective date thereof.
B. SECTION Adjustment of Option Securities. In the
event of any adjustment of the total number of shares of
Stock purchasable upon the exercise of this Option pursuant
to Subsection 4.1, the Exercise Price shall remain
unchanged, but the number of shares of capital stock or
Option Securities obtainable on exercise of this Option
shall be adjusted as provided in Subsection 4.1.
C.
D. SECTION Reorganization, Recapitalization, etc.
In the event of a capital reorganization or a
reclassification of the Stock (except as provided in
Subsection 4.1 or Subsection 4.4), the holder of this
Option, upon exercise thereof, shall be entitled to receive,
in lieu of the Stock to which he would have become entitled
upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or
other Option Securities or property of the Company (or cash)
that the Holder would have been entitled to receive at the
same Exercise Price upon such reorganization or
reclassification if this Option had been exercised
immediately prior thereto; and in any such case, appropriate
provision shall be made for the application of this
Section 4 with respect to the rights and interests
thereafter of the Holder of this Option (including, but not
limited to, the allocation of the Exercise Price between or
among the Option Securities), to the end that this Section 4
(including the adjustments of the number of shares of Stock
or other Option Securities purchasable) shall thereafter be
reflected, as nearly as reasonably practicable, in all
subsequent exercises of this Option for any shares or other
Option Securities or other property (or cash) thereafter
deliverable upon the exercise of this Option.
E.
F. SECTION Consolidation, Merger, etc. In case of
any consolidation of the Company with, or merger of the
Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does
not result in any reclassification or change of the
outstanding Stock), or in case of any sale or conveyance to
another corporation of the property of the Company as an
entirety or substantially as an entirety, the corporation
formed by such consolidation or merger or the corporation
which shall have acquired such assets, as the case may be,
shall execute and deliver to the Holder a supplement to this
Option Agreement or a new stock option agreement providing
that the Holder shall have the right thereafter to receive,
upon exercise of this Option or any new option, at the same
Exercise Price, solely the kind and amount of shares of
Option Securities and property (or cash) receivable upon
such consolidation, merger, sale or transfer by the Holder
of this Option for the number and kind of Option Securities
for which this Option might have been exercised immediately
prior to such consolidation, merger, sale or transfer. Such
supplemental option or new option shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this Section.
The above provision of this Subsection 4.4 shall similarly
apply to successive consolidations, mergers, sales or
transfers.
G.
H. SECTION Notification of Adjustment. Whenever
the Option Securities purchasable upon exercise of this
Option are modified as provided in Section 4.1 or 4.4, the
Company will promptly deliver to the Holder a certificate
signed by the Chairman of the Board, Chief Executive Officer
or the President, or a Vice President of the Company and by
the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary of the Company setting forth the
number and kind of Option Securities purchasable and the
other property (including cash) receivable by the Holder
upon exercise of this Option or any supplemental or new
option. Such certificate will state that such adjustments
in the kind of purchasable Option Securities and other
property (including cash) receivable by the Holder upon
exercise of this Option conform to the requirements of this
Section 4, and setting forth a brief statement of the facts
accounting for such adjustments. In the event, the Holder
of this Option does not agree with such determination of the
Board of Directors of the Company as set forth in the
certificate, the Company shall retain a firm of independent
public accountants acceptable to the Holder to make any
computation required under this Section 4, and a certificate
signed by such firm shall be conclusive evidence of the
correctness of any computation made under this Section 4.
I.
III. SECTION Redemption and Dividend Consent
Requirements. Omitted.
IV.
V. SECTION Notice of Certain Corporation Action.
In case the Company after the date hereof shall propose to
effect any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the
Company is required, or any sale, transfer or other
disposition of its property and assets substantially as an
entirety, or the liquidation, voluntary or involuntary
dissolution or winding-up of the Company, then, in each such
case, the Company shall mail (by first-class, postage
prepaid mail) to the Holder of this Option notice of such
proposed action, which notice shall specify the date on
which such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation,
voluntary or involuntary dissolution or winding-up shall
take place or commence, as the case may be, and which shall
also specify any record date for determination of holders of
the capital stock of the Company entitled to vote thereon or
participate therein and shall set forth such facts with
respect thereto as shall be reasonably necessary to indicate
any adjustments in the number or kind of Option Securities
purchasable upon exercise of this Option which will be
required as a result of such action, and the Holder may
thereafter exercise this Option. Such notice shall be filed
and mailed in the case of any action covered by this Section
6, at least 10 days prior to the earlier of (i) the date on
which such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation,
voluntary or involuntary dissolution or winding-up is
expected to become effective, or (ii) the date on which it
is expected that holders of shares of the capital stock of
record on such date shall be entitled to exchange their
shares for securities or other property deliverable upon
such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation,
voluntary or involuntary dissolution or winding-up. Failure
of the Holder to exercise this Option in whole or in part
prior to any corporate action as described in this Section 6
shall not affect or alter the rights of the Holder as set
forth in this Option.
VI.
VII. SECTION Acquisition for Investment Purposes.
PARENS W/INDENT1Omitted.
SECTION 8. Registration under Securities Act. On the
Effective Date, the Company will undertake and use its best
efforts to effect registration on Form S-3 or another
appropriate Form (filed under Rule 415) under the Securities
Act of a reasonable number of shares of Common Stock or
other Option Securities that may be issued pursuant to
exercise of this Option to permit the disposition by Holder
in accordance with the intended method or methods of the
shares of Common Stock or other Option Securities covered by
the registration statement. The Company will pay all
registration expenses in connection with each registration
of Option Securities requested pursuant to Section 8 hereof.
The Company shall use its best efforts to list all Option
Securities covered by such registration statement on any
securities exchange on which any of the Common Stock is then
listed or quoted on a recognized quotation service, which
also provides quotations of the Common Stock. The Company
may require each Holder of Option Securities covered by the
registration statement to furnish the Company such
information regarding such Holder and the distribution of
such Option Securities as the Company may from time to time
reasonably request in writing. The Company shall maintain
effectiveness of such registration until (i) all shares
issued pursuant to this Option have been sold or (ii) if no
shares are issued under this Option, the end of the 60 month
period following the Effective Date.
SECTION 8.2 Registration Procedures. Whenever the
Company is required to used its best efforts to effect the
registration of any Option Securities under the Securities
Act as provided in Section 8 hereof, the Company, as
expeditiously as possible, will undertake and perform the
following:
(i) with respect to the registration of Option
Securities under the Securities Act prepare and (as
soon thereafter as possible) file with the United
States Securities and Exchange Commission (the
"Commission") the requisite registration statement or
amendment to effect such registration and, thereafter,
use its best efforts to cause such registration or
amendment to become effective; provided however, that
the Company may discontinue any registration of its
securities which are not Option Securities at any time
prior to the effective date of the registration
statement or amendment under the Securities Act or
under any state securities or blue sky laws relating
thereto;
(ii) prepare and file with the Commission which
amendments and supplements to the requisite
registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the
disposition of all securities covered by such
registration statement until such time that all of such
securities have been disposed of in accordance with the
intended methods of disposition by the seller or
sellers thereof as set forth in such registration
statement;
(iii) furnish to each seller of Option Securities
covered by such registration statement (A) such number
of conformed copies of such registration statement and
such number of each amendment and supplement thereto
(in each case including all exhibits), (B) such number
of copies of the prospectus contained in such
registration statement (including preliminary
prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the
Securities Act, and (C) such other documents, as such
seller may reasonably request;
(iv) use its best efforts to register or qualify
all Option Securities and other securities covered by
such registration statement under such other securities
or blue sky laws of each state that each Holder of
Option Securities shall reasonably request, to keep
such registration or qualification in effect for so
long as such registration statement remains in effect
(subject to Section 8.2(ii)), and take any other action
which may be reasonably necessary or advisable to
enable such seller to consummate the disposition in
such states of the securities owned by such seller,
except that the Company shall not for any such purpose
be required to either qualify generally to do business
as a foreign corporation, or subject itself to taxation
in any jurisdiction wherein it would not, but for the
requirements of this subsection (iv), be obligated to
be so qualified or subject to taxation or to any
material restrictions on the conduct of the Company's
business, or any restrictions on payments to any of the
Company's shareholders, or require the escrow, "lockup"
or placing of any restrictions on the sale and
disposition of securities of the Company (other than as
may have been previously imposed or existed immediately
before the effective date of the registration statement
under the Securities Act) held of record by any of the
Company's officers, directors or controlling persons
that is not a Holder of Option Securities;
(v) use its best efforts to cause all Option
Securities covered by such registration statement to be
registered with or approved by such other federal or
state governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to
consummate the disposition of such Option Securities;
(vi) notify Holder of Option Securities covered
by such registration statement, at any time when a
prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon
the happening of any event as a result of which, the
prospectus included in such registration statement, as
then in effect, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made, and at the
request of any such seller or holder promptly prepare
and furnish to such seller or holder a reasonable
number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statement therein not misleading
in the light of the circumstances under which they were
made;
(vii) otherwise use its best efforts to comply
with all applicable rules and regulations of the
Commission, and make available to its security holders,
as soon as reasonably practicable, a historical
earnings statement covering the period of at least 12
months, but not more than 18 months, beginning with the
first month of the first full fiscal quarter after the
effective date of such registration statement, which
earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act, and will furnish
to each such Holder at least five business days prior
to the filing hereof a copy of any amendment or
supplement to such registration statement or prospectus
and shall not file any amendment or supplement to the
registration statement to which any such Holder shall
have reasonably objected on the grounds that such
amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or
the rules or regulations thereunder;
(viii) provide and cause to be maintained a
transfer agent and registrar for all Option Securities
covered by such registration statement from and after a
date not later than the effective date of such
registration statement; and
(ix) uses its best efforts to list all Option
Securities covered by such registration statement on
any securities exchange on which any of the Common
Stock is then listed or quoted on a recognized
quotation service, which also provides quotations of
the Common Stock.
The Company may require each Holder of Option Securities
covered by the registration statement to furnish the Company
such information regarding such Holder and the distribution
of such Option Securities as the Company may from time to
time reasonably request in writing.
Each holder of Option Securities agrees, as a condition
of this Agreement, that, upon receipt of any notice from the
Company of the happening of any event of the kind described
in Section 8.2(vi) hereof, (i) holder will forthwith
discontinue the Holder's disposition of Option Securities
pursuant to the registration statement covering such Option
Securities until Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section
8.2(vi), (ii) such Holder will promptly deliver copies of
such supplemented or amended prospectus to each purchaser or
potential purchaser to whom such Holder had delivered the
prospectus prior to such supplementation or amendment, and
(iii) if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of
the prospectus relating to such Option Securities current at
the time of receipt of such notice.
SECTION 8.3 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each
registration statement under the Securities Act covering
Option Securities, the Company will give the Holder or
holders of Option Securities registered under such
registration statement, their underwriters, if any, and
their respective counsel and accountants, the opportunity to
participate in the preparation of such registration
statement, each prospectus included therein or filed with
the Commission, and each amendment or supplement thereto,
and will give each of them such access to the Company's
books and records and such opportunities to discuss the
business of the Company with its offices and independent
public accounts who have certified its financial statements
as shall be necessary, in the opinion of counsel of the
Holder or holder of Option Securities, to conduct a
reasonable investigation within the meaning of the
Securities Act.
SECTION 9 Governing Law. This Option shall be
construed in accordance with the laws of the State of
Oklahoma applicable to contracts executed and to be
performed wholly within such state.
SECTION 10 Notice. Notices and other communications
to be given to Holder of this Option shall be delivered by
hand or by first-class mail, postage prepaid, to
RMS Limited Partnership
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxx
(until another address is filed in writing by the Holder
with the Company). Notices or other communications to
Company shall be deemed to have been sufficiently given if
delivered by hand or by first-class mail, postage prepaid to
Company at
Advantage Marketing Systems, Inc.
0000 Xxxxxxxxx Xxxxxxxxxx, Xxxxx 0000X
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx
or such other address as the Company shall have designated
by written notice to such registered owner is herein
provided. Notice by mail shall be deemed given when
deposited in the United States mail, postage prepaid, as
herein provided.
SECTION 11. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company shall bind and inure to the benefit of its
successors and assigns hereunder, and all covenants and
provisions of this Agreement by or for the benefit of the
Holder of this Agreement shall bind and inure to the benefit
of the Holder of this Agreement.
SECTION 12. Termination. This Agreement shall
terminate one year following payment of the last Installment
Payment or such earlier date as RMS or its designees shall
have disposed of all of the shares of Common Stock issued
pursuant to this Stock Option Agreement and any additional
shares issued in respect of such Common Stock.
SECTION 13. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, and its respective
successors and assigns hereunder and the registered Holder
of this Agreement and this Option any legal or equitable
right, remedy or claim under this Agreement, but this
Agreement shall be for the sole and exclusive benefit of the
Company and its respective successors and assigns hereunder
and the registered Holder of this Agreement and the Option
hereunder.
IN WITNESS WHEREOF, Company has executed this Agreement
on January 3, 2001.
ADVANTAGE MARKETING SYSTEMS, INC.
By: XXXX X. XXXX
Xxxx X. Xxxx, Chief Executive Officer
_______________________________
(1) The Holder shall not have the right to demand and require
and the Company shall not have any obligation to register
the Options Securities under the Securities Act or any
applicable state securities act.
