<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
AMERICAN EDUCATIONAL PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-1012129
(State of Incorporation (I.R.S. Employer
or organization) Identification No.)
5350 Manhattan Circle, Suite 210
Boulder, Colorado 80393
(Address of principal (Zip Code)
executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which
to be registered each class is to be registered
None N/A
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock Purchase Warrants
(Title of Class)<PAGE>
ITEM 1.
DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Warrants
The Board of Directors has authorized the issuance of 916,298 Warrants.
Each Warrant entitles the holder thereof to purchase one share of Common Stock
("Warrant Stock") at an exercise price of $10.00 per share. The Warrants are
exercisable for a period commencing upon the effective date of the
Registration Statement registreing for sale under the Securities Act of 1933,
as amended ("Securities Act") the Warrant Stock (Exercise Date) and ending
three (3) years from the date of such effectiveness ("Expiration Date"). In
the event the Warrants are not exercised within such three-year period, all
unexercised Warrants will expire and be void and of no further force or
effect. The Warrant exercise period may be extended by the Company at the sole
discretion of the Board of the Directors upon thirty (30) days' notice to the
Warrantholders. The Warrants will expire, become void and be of no further
force or effect upon conclusion of the applicable exercise period, or any
extension thereof.
The Warrants are issued under and pursuant to a Warrant Agreement between
the Company and Corporate Stock Transfer, Inc., of Denver, Colorado, as
Warrant Agent.
Subject to compliance with applicable securities laws, Warrants
certificates may be transferred or exchanged for new certificates of different
denominations at the offices of the Warrant Agent described above. The holders
of Warrants, as such, are not entitled to vote, to receive dividends or to
exercise any of the rights of shareholders for any purpose. The Warrants may
be transferred separately from the Common Stock with which they will be
issued.
Exercise. The Warrants may be exercised during the Warrant Term only upon
surrender of the Warrant certificate at the offices of the Company with the
form of "Election to Purchase" on the reverse side of the Warrant certificate
completed and signed, accompanied by payment of the full Exercise Price for
the number of Warrants being exercised. Warrantholders will receive one share
of Common Stock for every Warrant exercised, subject to any adjustment
required by the Warrant Agreement. For a holder to exercise Warrants, there
must be a current Registration Statement in effect with the Commission and
various state securities authorities registering the shares of Common Stock
underlying the Warrants or, in the sole determination of the Company and its
counsel, there must be a valid exemption therefrom. The Company has
undertaken, and intends, to maintain a current Registration Statement which
will permit the exercise of the Warrants during the Warrant Term. Maintaining
a current effective Registration Statement could result in substantial expense
to the Company and there is no assurance that the Company will be able to
maintain a current Registration Statement covering the shares issuable upon
exercise of the Warrants. Holders of Warrants will have the right to exercise
the Warrants included therein for the purchase of shares of Common Stock only
if a Registration Statement is then in effect and only if the shares are
qualified for sale under securities laws of the state in which the exercising
warrantholder resides or if the Company, in its and its counsel's sole
discretion, is able to obtain valid exemptions from the foregoing
requirements. Although the Company believes that it will be able to register
or qualify the shares of Common Stock underlying the Warrants for sales in
those states where the Securities are offered, there can be no guarantee that
such registration or qualification, or an exemption therefrom, can be
accomplished without undue hardship or expense to the Company. The Warrants
may be deprived of any value if a Registration Statement covering the shares
issuable upon exercise thereof or an exemption therefrom cannot be filed or
obtained without undue expense or hardship or if such underlying shares are
not registered or exempted from such registration in the states in which the
holder of a Warrant resides. In the latter event, the only option available to
a holder of a Warrant may be to attempt to sell his or her Warrants into the
market, if a market then exists and only then in compliance with applicable
securities laws and restrictions on transfer.
Redemption. The Company shall have the right, at its discretion, to call
all of the Warrants for redemption on 30 days' prior written notice at a
redemption price of $.01 per Warrant if: (i) the closing bid price of the
Company's Common Stock exceeds the Warrant Exercise Price by a least 10%
during a period of at least 20 of the 30 trading days immediately preceding
the notice of redemption; (ii) the Company has in effect a current
Registration Statement covering the Common Stock issuable upon exercise of the
Warrants; and (iii) the expiration of the 30 day notice period is within the
Warrant Term. If the Company elects to exercise its redemption right, holders
of Warrants may either exercise their Warrants, sell such Warrants in the
market or tender their Warrants to the Company for redemption. Within five
business days after the end of the 30 day period, the Company will mail a
redemption check to each registered holder of a Warrant who holds unexercised
Warrants as of the end of the 30 day period, whether or not such holder has
surrendered the Warrant certificates for redemption. The Warrants may not be
exercised after the end of such 30 day period.
ITEM 2. EXHIBITS.
Exhibit No.Title
1.0Specimen Warrant Certificate
2.0Warrant Agreement
3.1 Articles of Incorporation of American Educational Products, Inc.
(1)
3.2 Articles of Amendment to Articles of Incorporation (1)
3.3 Articles of Amendment to Articles of Incorporation dated April
21, 1987 (1)
3.4 Articles of Amendment to Articles of Incorporation dated
February 19, 1990 (2)
(1) Incorporated by reference from the Registrant's Post-Effective Amendment
No. 5 to Registration Statement on Form S-18 as filed with the Securities
and Exchange Commission and declared effective on July 1, 1987.
(2) Incorporated by reference from the Registrant's Registration Statement on
Form S-8 filed with the Securities and Exchange Commission and declared
effective on August 4, 1992.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
AMERICAN EDUCATIONAL PRODUCTS, INC.
Dated: By:/s/ Clifford C. Thygesen
Clifford C. Thygesen, President
ATTEST:
/s/ Robert A. Scott
Robert A. Scott, Secretary
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
Each Warrant entitles the Warrant Holder to purchase one share of Common
Stock. The Warrants may only be exercised when either (a) a current
registration statement under the Securities Act of 1933, as amended, is
effective or (b) an exemption from such registration is available to the
Company, in either case, without undue expense or hardship. Additionally,
Warrants are only exercisable when such exercise, and the issuance of the
underlying Common Stock, can be effected in compliance with applicable state
Blue Sky laws. The Warrants are subject to redemption and may not be
exercised after the redemption date.
W-__________ __________ Warrants
CUSIP ____________
WARRANT CERTIFICATE
American Educational Products, Inc.
This Warrant Certificate certifies that _______________ or registered
assigns (the "Warrant Holder"), is the registered owner of the above-indicated
number of Warrants ("Warrants") expiring at 5:00 p.m., Denver, Colorado, local
time, on _______________ (the "Expiration Date"). Each Warrant entitles the
Warrant Holder to purchase from American Educational Products, Inc. (the
"Company"), a Colorado corporation, at any time before the Expiration Date,
one fully paid and non-assessable share of Common Stock of the Company at a
purchase price of $__________ per share (the "Exercise Price) upon surrender
of this Warrant Certificate, with the exercise form hereon duly completed and
executed, with payment of the Exercise Price, at the principal office of the
Company, but only subject to the conditions set forth herein and in the
Warrant Agreement. In addition, the Warrant Holder has the right to convert
the Warrants evidenced by this Certificate into shares of Common Stock as
provided in Section 4.6 of the Warrant Agreement. All unexercised Warrants
may be redeemed by the Company (i) upon 30 calendar days prior written notice
to registered Warrant Holders and (ii) under certain conditions set forth in
the Agreement between the Company and Corporate Stock Transfer, Inc.] as the
Warrant Agent (the "Warrant Agreement"). No Warrant may be exercised or
converted after such 30-day period. The Exercise Price, the number of shares
purchasable upon exercise or conversion of each Warrant, the number of
Warrants outstanding and the Expiration Date are subject to adjustments upon
the occurrence of certain events set forth in the Warrant Agreement.
Reference is hereby made to the other provisions of this Warrant Certificate
and the provisions of the Warrant Agreement, all of which are hereby
incorporated by reference herein and made a part of this Warrant Certificate
and which shall for all purposes have the same effect as though fully set
forth at this place.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants, subject to any adjustments made in accordance with the Warrant
Terms, shall be issued to the transferee in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement.
The Warrant Holder of the Warrants evidenced by this Warrant Certificate
may exercise all or any whole number of such Warrants in the manner stated
hereon and in the Warrant Agreement. The Exercise Price shall be payable in
lawful money of the United States of America in cash or by certified or
cashier's check or bank draft payable to the order of the Company. Upon any
exercise of any Warrants evidenced by this Warrant Certificate in an amount
less than the number of Warrants so evidenced, there shall be issued to the
Warrant Holder a new Warrant Certificate evidencing the number of Warrants not
so exercised. No adjustment shall be made for any dividends on any shares
issued upon exercise of this Warrant.
No Warrant may be exercised after 5:00 p.m., Colorado time, on the
Expiration Date, and any Warrant not exercised by such time shall become void.
COPIES OF THE WARRANT AGREEMENT, WHICH DEFINES THE RIGHTS,
RESPONSIBILITIES AND OBLIGATIONS OF THE COMPANY AND THE WARRANT HOLDERS, ARE
ON FILE WITH THE WARRANT AGENT. ANY WARRANT HOLDER MAY OBTAIN A COPY OF THE
WARRANT AGREEMENT, FREE OF CHARGE, BY A REQUEST TO THE PRINCIPAL OFFICE OF THE
WARRANT AGENT.
This Warrant Certificate, when surrendered to the Warrant Agent, in
person or by attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement,
without payment of a charge, except for any tax or other governmental charge
imposed in connection with such exchange, for another Warrant Certificate or
Warrant Certificates of like tenor and evidencing a like number of Warrants,
subject to any adjustment made in accordance with the Warrant Agreement.
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone) for all purposes and the
Company shall not be affected by any notice to the contrary. No Warrant
Holder, as such, shall have the rights of a stockholder of the Company, either
at law or in equity, and the rights of the Warrant Holder, as such, are
limited to those rights expressly provided in the Warrant Agreement and in the
Warrant Certificates.
The Company shall not be required to issue fractions of Warrants upon any
such adjustment or to issue fractions of shares upon the exercise of any
Warrants after any such adjustment, but the Company, in lieu of issuing any
such fractional interest, shall pay an amount in cash equal to such fraction
times the current market value of one Warrant or one share, as the case may
be, determined in accordance with the Warrant Agreement.
Unless the amendment is able to be effected by the Company in accordance
with the Warrant Agreement, the Warrant Agreement is subject to amendment only
upon the approval of holders of not less than a majority of the outstanding
Warrants, except that no such amendment shall accelerate the Expiration Date
or increase the Exercise Price without the approval of all the holders of all
outstanding Warrants. A copy of the Warrant Agreement shall be available at
all reasonable times at the principal office of the Warrant Agent for
inspection for any Warrant Holder. As a condition of such inspection, the
Company may require any Warrant Holder to submit his Warrant Certificate for
inspection.
IMPORTANT: The Warrants represented by this Certificate may not be
exercised by a Warrant Holder unless at the time of exercise the underlying
shares of Common Stock are qualified for sale, by registration or otherwise,
in the state where the Warrant Holder resides or unless the issuance of the
shares of Common Stock would be exempt under the applicable state securities
laws. Although the underlying shares of Common Stock were qualified for sale
in the states in which the Warrants were originally sold, the Company may not
continue such qualifications for the life of the Warrants. Moreover, the
Company may not qualify the underlying shares of Common Stock in any other
states. Further, a registration statement under the Securities Act of 1933,
as amended, covering the exercise of the Warrants must be in effect and
current at the time of exercise unless the issuance of shares of Common Stock
upon any exercise is exempt from the registration requirements of the
Securities Act of 1933, as amended. Notwithstanding the provisions hereof,
unless such registration statement and qualification are in effect and current
at the time of exercise, or unless exemptions are available, the Company may
decline to permit the exercise of the Warrants and the holder hereof would
then only have the choice of either attempting to sell the Warrants, if a
market existed therefor, or letting the Warrants expire.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its President and by its Secretary, each by a facsimile of said
officers' signatures, and has caused a facsimile of its corporate seal to be
imprinted hereon.
Dated: ___________________ AMERICAN EDUCATIONAL PRODUCTS, INC.
a Colorado corporation
By________________________ By:
____________________________________
Secretary Clifford D. Thygesen, President
<PAGE>
ASSIGNMENT
(Form of Assignment to be Executed if the Warrant Holder
Desires to Transfer Warrants Evidenced Hereby)
FOR VALUE RECEIVED, ____________________________ hereby sells, assigns
and transfers to
__________________________________________________________________.
(Please print name and address including zip code)
Please insert social security, federal
tax ID number or other identifying
number:
____________________________________
___________________________________ Warrants represented by this Warrant
Certificate and does hereby irrevocably constitute and appoint ______________
, Attorney, to transfer said Warrants on the books of the Company with full
power of substitution.
Dated:__________________ ____________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate.)
SIGNATURE GUARANTEED:
______________________________
Note: Any transfer or assignment of this Warrant Certificate is subject to
compliance with the restrictions on transfer imposed under the Warrant
Agreement.
<PAGE>
EXERCISE
(Form of Exercise to be Executed if the Warrant Holder
Desires to Exercise Warrants Evidenced Hereby)
TO THE COMPANY:
The undersigned hereby irrevocably elects to exercise _______________
Warrants represented by this Warrant Certificate and to purchase thereunder
the full number of shares of Common Stock issuable upon exercise of said
Warrants and enclose $__________ as the purchase price therefor, and requests
that certificates for such shares shall be issued in the name of, and cash for
any fractional shares shall be paid to,
Please insert Social Security Number or
other identifying number:
________________________________________
______________________________________________________________________________
_______
(Please print name and address, including zip code)
and, if said number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant Certificate for the unexercised
number of Warrants may be assigned under the form of Assignment appearing
hereon.
Dated:__________________ Signature:
__________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of this Warrant
Certificate)
SIGNATURE GUARANTEED:
______________________________
IMPORTANT: Signature guarantee must be made by a participant of STAMP or
another signature guarantee program acceptable to the Securities and Exchange
Commission, the Securities Transfer Association and the Transfer Agent of the
Company or the Company.
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC.
AND
Corporate Stock Transfer, Inc.
Warrant Agent
WARRANT AGREEMENT
Dated as of _______________, 1997
<PAGE>
TABLE OF CONTENTS
Section
Number Title Page
1 Definitions. . . . . . . . . . . . 2
2 Warrants and Issue of Warrant Certificates . . 4
3 Form of Warrant Certificates . . . . . 4
4 Term of Warrants; Exercise of Warrants . . 5
5 Redemption . . . . . . . . . . . . 6
6 Reservation of Warrant Shares. . . . . 7
7 Payment of Taxes . . . . . . . . . 7
8 Warrant Shares to be Fully Paid. . . . 7
9 Limitation on Transfer . . . . . . . . 7
10 Adjustment of Exercise Price and Number of Shares . . 8
11 Merger or Consolidation of Company . .11
12 Modification of Agreement. . . . . . .11
13 Notices to Warrant Holders . . . . . .12
14 No Rights as Shareholder . . . . . 12
15 Warrant Agent. . . . . . . . . . . 13
16 Merger, Consolidation or Change of Name of
Warrant Agent. . . . . . . . . . 14
17 Change of Warrant Agent. . . . . . 14
18 Notices. . . . . . . . . . . . . . 15
19 Arbitration. . . . . . . . . . . . 15
20 Miscellaneous Provisions . . . . . 16
<PAGE>
THIS WARRANT AGREEMENT dated as of _______________, 1997, is between
AMERICAN EDUCATIONAL PRODUCTS, INC. (the "Company"), a Colorado corporation,
and CORPORATE STOCK TRANSFER, INC. (called, as well as any successor acting as
warrant agent under this Agreement, the "Warrant Agent").
RECITALS
The Company has declared a dividend to all stockholders pursuant to which
it will issue Warrants (evidenced by a "Warrant Certificate") on the effective
date of a registration statement (the "Registration Statement') registering
the shares of common stock with which the warrants are exercisable; and
2. Each Warrant will entitle the Warrant Holder to purchase one Warrant
Share; and
3 The Company desires to enter into this agreement to establish the
terms and conditions of the Warrants, to set forth the rights of the
registered holders of the Warrants, and to provide for the issuance, transfer
and exercise of the Warrants and other matters; and
4. The Company desires the Warrant Agent to act on behalf of the
Company and the Warrant Agent is willing so to act under the terms of this
Agreement;
NOW THEREFORE, in consideration of the mutual agreements stated in this
Agreement, the Company and the Warrant Agent agree as follows:
TERMS OF WARRANTS
Section 1 Definitions
The following terms used in this agreement shall have the following
meanings (unless otherwise expressly provided herein):
The "Act." The Securities Act of 1933, as amended.
The "Commission." The Securities and Exchange Commission.
The "Company." American Educational Products, Inc., a Colorado
corporation.
"Common Stock." The Common Stock, $0.05 par value per share, of the
Company, whether now or hereafter authorized, holders of which have the right
to participate in the distribution of earnings and assets of the Company
without limit as to the amount or percentage.
"Current Market Price." The Current Market Price shall be determined as
follows:
(a) if the security at issue is listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange or
quoted on either the NASDAQ National Market or on the NASDAQ Small Cap Market,
the Current Market Price shall be the last reported sale price of that
security on such exchange or system on the day for which the Current Market
Price is to be calculated; or, if no such sale is made on such day, the
average of the highest closing bid and lowest asked price for such day on such
exchange or system; or
(b) if the security at issue is not so listed or quoted or admitted
to unlisted trading privileges, the Current Market Price shall be the last
reported sale price of that security on the OTC Bulletin Board on the day for
which the Current Market Price is to be calculated; or if no such sale is made
on such day, the average of the last reported highest bid and lowest asked
prices quoted on the OTC Bulletin Board on such day; or
(c) if the security at issue is not so listed or quoted or admitted
to unlisted trading privileges and bid and asked prices are not reported, the
Current Market Price shall be determined in such reasonable manner as may be
prescribed from time to time by the Board of Directors of the Company, subject
to the objection and arbitration procedure as described in Sections 10.9 and
19 below.
"Effective Date." __________ .
"Exercise Date." The date of surrender for exercise of any Warrant
Certificate, provided the exercise form on the back of the Warrant Certificate
or a form substantially similar thereto has been completed in full by the
Warrant Holder or a duly appointed attorney and the Warrant Certificate is
accompanied by payment in full of the Exercise Price.
"Exercise Period." The period commencing on the date the Warrants are
issued and extending to and through the Expiration Date.
"Exercise Price." $10.00 per Share, as modified in accordance with
Section 10, below.
"Expiration Date." 5:00 p.m. Denver, Colorado, local time on , 2000,
subject to the terms provided in Section 5 hereof for redemption; provided,
however, if such date shall be a holiday or a day on which banks are
authorized to close in the State of Colorado, the Expiration Date shall mean
5:00 p.m. Denver, Colorado, local time on the next following day which in the
State of Colorado is not a holiday or a day on which banks are authorized to
close. If the Company redeems the Warrants as provided in Section 5 of this
Agreement, the Expiration Date shall be the date fixed for redemption.
"Holder" or "Warrant Holder." The person to whom a Warrant Certificate
is issued, and any valid transferee thereof pursuant to Section 9 below.
"NASDAQ." The electronic inter-dealer quotation system operated by The
Nasdaq Stock Market, Inc.
"OTC Bulletin Board." An electronic quotation medium operated by The
Nasdaq Stock Market, Inc.
"Warrants." The Warrants issued in accordance with the terms of this
Agreement and any Warrants issued in substitution for or replacement of such
Warrants, or any Warrants into which such Warrants may be divided or
exchanged.
"Warrant Shares." The Common Stock receivable upon exercise or
conversion of a Warrant, and the Common Stock underlying the unexercised
portion of a Warrant.
"Termination of Business." Any sale, lease or exchange of all, or
substantially all, of the Company's assets or business or any dissolution,
liquidation or winding up of the Company.
<PAGE>
Section 2 Warrants and Issuance of Warrant Certificates
2.1 Description of Warrants. Each Warrant shall initially entitle the
Warrant Holder to purchase one share of Common Stock on exercise thereof,
subject to modification and adjustment as hereinafter provided in Section 10.
Warrant Certificates representing up to 916,200 Warrants and evidencing the
right to purchase an aggregate of up to 916,200 shares of Common Stock of the
Company shall be executed by the proper officers of the Company. The Company
shall deliver Warrant Certificates in required whole number denominations to
the person entitled thereto in connection with the original issuance of
Warrant Certificates or any transfer or exchange permitted under this
Agreement.
2.2 Warrant Shares. Except as provided in Section 3.4 hereof,
certificates representing the Warrant Shares shall be issued only on or after
the Exercise Date upon exercise of the Warrants or upon transfer or exchange
of the Warrant Shares following exercise of the Warrants.
Section 3 Form of Warrant Certificate
3.1 Form of Certificates. The Warrant Certificates shall be
substantially in the form attached hereto as Exhibit A and may have such
letters, numbers or other marks of identification and such legends, summaries
or endorsements printed, lithographed or engraved thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement. The Warrant Certificates shall be dated as of the date of
issuance, whether on initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates.
3.2 Execution of Certificates. The Warrant Certificates shall be
executed on behalf of the Company by its President and Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have
imprinted thereon a facsimile of the Company's seal. If any person whose
facsimile signature has been placed upon any Warrant Certificate as the
signature of an officer of the Company shall have ceased to be such officer
before such Warrant Certificate is countersigned, issued and delivered, such
Warrant Certificate may be countersigned, issued and delivered with the same
effect as if such person had not ceased to be such officer. Any Warrant
Certificate may be signed by, or may bear the facsimile signature of, any
person who at the actual date of the preparation of such Warrant Certificate
shall be a proper officer of the Company to sign such Warrant Certificate even
though such person was not such an officer upon the date of this Agreement.
3.3 Countersignatures. Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose
unless so countersigned. The Warrant Agent is hereby authorized to
countersign and deliver to, or in accordance with the instructions of, any
Warrant Holder any Warrant Certificate which is properly issued under the
terms of this Agreement.
3.4 Mutilated, Lost, Stolen, or Destroyed Certificate. In case the
certificate or certificates evidencing the Warrants shall be mutilated, lost,
stolen or destroyed, the Company shall, at the request of the Warrant Holder,
issue and deliver in exchange and substitution for and upon cancellation of
the mutilated certificate or certificates, or in lieu of and substitution for
the certificate or certificates lost, stolen or destroyed, a new Warrant
Certificate or Certificates of like tenor and representing an equivalent right
or interest, but only upon receipt of evidence satisfactory to the Company of
such loss, theft or destruction of such Warrant and a bond of indemnity, if
requested, also satisfactory in form and amount, at the applicant's cost.
Applicants for such substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
3.5 Exchange of Certificate. Any Warrant Certificate may be exchanged
for another certificate or certificates entitling the Warrant Holder to
purchase a like aggregate number of Shares as the certificate or certificates
surrendered then entitled such Warrant Holder to purchase. Any Warrant Holder
desiring to exchange a Warrant Certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, with
signatures guaranteed, the certificate evidencing the Warrant to be so
exchanged. Thereupon, the Company shall execute and deliver to the person
entitled thereto a new Warrant Certificate as so requested.
Section 4 Term of Warrants; Exercise of Warrants
4.1 Exercise of Warrant. Subject to the terms of this Agreement, the
Warrant Holder shall have the right, at any time during the Exercise Period,
to purchase from the Company up to the number of fully paid and nonassessable
Shares to which the Warrant Holder may at the time be entitled to purchase
pursuant to this Agreement, upon surrender to the Company, at its principal
office, of the certificate evidencing the Warrants to be exercised, together
with the purchase form on the reverse thereof, duly filled in and signed, and
upon payment to the Company of the Exercise Price for the number of Shares in
respect of which such Warrants are then exercised, but in no event for less
than 100 Shares (unless fewer than an aggregate of 100 shares are then
purchasable under all outstanding Warrants held by a Warrant Holder).
4.2 Payment of Exercise Price. Payment of the aggregate Exercise Price
shall be made in cash or by check, or any combination thereof.
4.3 Delivery of Share Certificate. Subject to the provisions of Section
9, upon receipt of a Warrant Certificate with the exercise form thereon duly
executed, together with payment in full of the Exercise Price for the Warrant
Shares being purchased by such exercise, the Warrant Agent shall requisition
from the Company's transfer agent (which transfer agent may be the Warrant
Agent pursuant to its appointment therefor separately from this Agreement),
certificates for Warrant Shares and upon receipt shall make delivery of
certificates evidencing the total number of whole Warrant Shares for which
Warrants are then being exercised, together with cash as provided in Section
4.7 hereof in respect of any fractional Warrant Shares otherwise issuable upon
such surrender. The certificates shall be in such names and denominations as
are required for delivery to, or in accordance with the instructions of the
Warrant Holder; provided that if fewer than all Warrant Shares issuable on
exercise of a Warrant Certificate are purchased, the Warrant Agent (if so
requested) shall issue such balance Warrant Certificate for the balance of the
Warrant Shares. Such certificates for the Warrant Shares shall be deemed to
be issued, and the person to whom such Warrant Shares are issued of record
shall be deemed to have become a holder of record of such Warrant Shares, as
of the date of the surrender of such Warrant Certificate and payment of the
Exercise Price, whichever shall last occur; provided further that if the books
of the Company with respect to the Warrant Shares shall be closed as of such
date, the certificates for such Warrant Shares shall be deemed to be issued,
and the person to whom such Warrant Shares are issued of record shall be
deemed to have become a record holder of such Warrant Shares, as of the date
on which such books shall next be open (whether before, on or after the
applicable Expiration Date) but at the Exercise Price and upon the other
conditions in effect upon the date of surrender of the Warrant Certificate and
payment of the Exercise Price, whichever shall have last occurred, to the
Warrant Agent.
4.4 Cancellation of Certificates. All Warrant Certificates surrendered
upon exercise of Warrants shall be canceled.
4.5 Delivery of Proceeds of Exercise. Within two days after the receipt
thereof in cleared funds, the Warrant Agent shall deliver to the Company all
proceeds received from Warrant Holders on exercise of the Warrants.
4.6 Registration Statement. If any Warrant Shares issuable upon the
exercise of Warrants require the maintenance of a current registration
statement under the Securities Act of 1933, as amended (the "Act"), with
respect to such Warrant Shares before such Warrant Shares may be validly and
lawfully issued, the Company will in good faith endeavor to maintain such
current registration statement under the Act, provided that in no event shall
such Warrant Shares be issued, and the Company shall have the authority to
suspend the exercise of any or all Warrants while such registration statement
is not current. Similarly, a Warrant Holder residing in a state where a
required registration or governmental approval of issuance of the Warrant
Shares is not in effect as of or has not been obtained within a reasonable
time after the surrender date of the Warrant Certificate for exercise shall
not be entitled to exercise Warrants unless in the opinion of counsel such
registration or approval in such state shall not be required, or the Company
authorizes issuance. In such event, the Warrant Holder shall be entitled to
transfer the Warrants to others, but only prior to the Expiration Date for the
Warrants being transferred.
4.7 Fractional Shares. On exercise of the Warrants by the Warrant
Holders, the Company shall not be required to deliver fractions of shares of
Common Stock; provided, however, that the Company shall purchase such fraction
for an amount in cash equal to the Current Market Price of such fraction,
computed on the trading day immediately preceding the day upon which such
Warrant Certificate was surrendered for exercise. By accepting a Warrant
Certificate, the holder thereof expressly waives any right to receive a
Warrant Certificate evidencing any fraction of a Warrant or to receive any
fractional share of securities upon exercise of a Warrant, except as expressly
provided in this Section 4.7.
4.8 Status as Shareholder. Upon receipt of the Warrant Certificate by
the Company as described in this Section, the Holder shall be deemed to be the
holder of record of the Warrant Shares issuable upon such exercise,
notwithstanding that the transfer books of the Company may then be closed or
that certificates representing such Warrant Shares may not have been prepared
or actually delivered to the holder.
Section 5 Redemption
5.1 Right to Redeem. The Company may, at its option, redeem the
Warrants in whole or in part on a pro rata basis for a redemption price of
$.01 per Warrant (the "Redemption Price") on 30 days prior written notice to
the Warrant Holders. The right to redeem the Warrants may be exercised by the
Company only in the event (i) the closing sale price, as the case may be, for
the Common Stock has exceeded the Exercise Price by at least 10% during a
period of 20 consecutive trading days preceding the date of mailing of the
notice of redemption, (ii) the Company has in effect a current registration
statement (or a post-effective amendment to an existing registration
statement) with the Commission registering the Warrant Shares, and (iii) the
expiration of the 30 days notice period is within the Exercise Period. In the
event the Company exercises its right to redeem the Warrants, the Expiration
Date will be deemed to be, and the Warrants will be exercisable until the
close of business on, the date fixed for redemption in such notice (the
"Redemption Date"). If any Warrant called for redemption is not exercised by
such time, it will cease to be exercisable and the Warrant Holder thereof will
be entitled only to the Redemption Price.
5.2 Termination of Rights. From and after the Redemption Date, all
rights of the holders of record of redeemed Warrants (except the right to
receive the Redemption Price) shall terminate, but only if (i) no later than
one day prior to the Redemption Date the Company shall have irrevocably
deposited with the Warrant Agent, as paying agent, a sufficient amount to pay
on the Redemption Date the Redemption Price for all Warrants called for
redemption, and (ii) the notice of redemption shall have stated the name and
address of the Warrant Agent and the intention of the company to deposit such
amount with the Warrant Agent no later than one day prior to the Redemption
Date.
5.3 Payment of Redemption Price. The Warrant Agent shall pay to the
holders of record of redeemed Warrants all amounts received by the Warrant
Agent for the redemption of warrants to which the holders of record of such
redeemed Warrants who shall have surrendered their Warrants are entitled. Any
amounts deposited by the Company with the Warrant Agent to pay the Redemption
Price for all Warrants called for redemption that are not required for
redemption of Warrants may be withdrawn by the Company. Any amounts deposited
by the Company with the Warrant Agent to pay the Redemption Price for all
Warrants called for redemption that shall be unclaimed six months after the
Redemption Date may be withdrawn by the Company, and thereafter the holders of
the Warrants called for redemption for which such funds were deposited shall
look solely to the Company for payment. The Company shall be entitled to the
interest, if any, on funds deposited with the Warrant Agent, and the Warrant
Holders of redeemed Warrants shall have no right to any such interest.
5.4 Failure to Make Deposit. If the Company fails to make a sufficient
deposit with the Warrant Agent as provided above, the Warrant Holder of any
Warrants called for redemption may at the option of the holder (i) by notice
to the Company declare the notice of redemption a nullity as to such holder,
or (ii) maintain an action against the Company for the Redemption Price. If
the Warrant Holder brings such an action, the Company will pay the reasonable
attorney's fees of the Warrant Holder. If the Warrant Holder fails to bring
an action against the Company for the Redemption Price within 60 days after
the Redemption Date, the Warrant Holder shall be deemed to have elected to
declare the notice of redemption to be a nullity as to such holder and such
notice shall be without any force or effect as to such holder.
Section 6. Reservation of Warrant Shares
There has been reserved, and the Company shall at all times keep reserved
so long as the Warrants remain outstanding, out of its authorized and unissued
Common Stock, such number of shares of Common Stock as shall be subject to
purchase under the Warrants. The Company covenants that all Warrant Shares
that may be issued and delivered to a Warrant Holder upon the exercise of a
Warrant and payment of the Exercise Price shall be validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issuance thereof. Every transfer agent for the Common Stock and other
securities of the Company issuable upon the exercise of the Warrants will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares and other securities as shall be requisite for such purpose.
The Company will keep a copy of this Agreement on file with every transfer
agent for the Common Stock and other securities of the Company issuable upon
the exercise of the Warrants. The Company will supply every such transfer
agent with duly executed stock and other certificates, as appropriate, for
such purpose and will provide or otherwise make available any cash which may
be payable as provided in Sections 4.7 and 7 hereof.
Section 7 Payment of Taxes
The Company will pay all documentary stamp taxes, if any, attributable
to the initial issuance of the Warrants or the Warrant Shares and any tax
(except federal or state income tax) which may be payable in respect of any
transfer of the Warrants or the Warrant Shares.
Section 8 Warrant Shares to be Fully Paid
The Company covenants that all Warrant Shares that may be issued and
delivered to a Holder of this Warrant upon the exercise of this Warrant and
payment of the Exercise Price, and all Converted Shares that may be issued and
delivered to a holder upon a conversion of a Warrant will be, upon such
delivery, validly and duly issued, fully paid and nonassessable.
Section 9 Registration of Transfer
9.1. Exchange of Certificate. A Warrant Certificate may be exchanged for
another certificate or certificates entitling the Warrant Holder to purchase a
like aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitled such Warrant Holder to purchase. Any Warrant Holder
desiring to exchange a Warrant Certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, with
signatures guaranteed, the certificate evidencing the Warrant to be so
exchanged. Thereupon, the Company shall execute and deliver to the person
entitled thereto a new Warrant Certificate as so requested.
9.2 Transfer. The Warrants may be transferred in whole or in part.
Warrant Certificates representing the Warrants to be transferred shall be
surrendered to the Warrant Agent, properly endorsed, with signatures
guaranteed. Thereupon, the Company shall execute and deliver to the persons
entitled thereto the Warrant Certificate or Certificates to which the holder
making the transfer and the person to whom the transfer is made are entitled
and the Warrant Agent shall promptly cancel the surrendered Warrant
Certificate.
9.3 Ownership Records. The Warrant Agent shall keep books for
registration of ownership and transfer of Warrant Certificates. Such books
shall show the names and addresses of the respective holders of the Warrant
Certificates and the number of Warrants evidenced by each such Warrant
Certificate. All Warrant Certificates presented for registration of transfer
shall be duly endorsed or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and the Warrant
Agent. On due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall caused to be executed, issued
and delivered to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Warrants.
9.4 Ownership Prior to Presentment. Prior to due presentment for
registration of transfer thereof, the Company may treat the Warrant Holder as
the absolute owner thereof (notwithstanding any notations of ownership or
writing thereon made by anyone other than the Company) and the parties hereto
shall not be affected by any notice to the contrary.
Section 10 Adjustment of Exercise Price and Number of Shares
The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
10.1 Adjustments. The number of Warrant Shares purchasable upon the
exercise of the Warrants shall be subject to adjustments as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock or
securities convertible into Common Stock or make a distribution to its
stockholders in Common Stock or securities convertible into Common Stock; (ii)
subdivide its outstanding Common Stock; (iii) combine its outstanding Common
Stock into a smaller number of shares of Common Stock; or (iv) issue by
reclassification of its Common Stock other securities of the Company; then the
number of Warrant Shares purchasable upon exercise of the Warrants immediately
prior thereto shall be adjusted so that the Warrant Holder shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which it would have owned or would have been entitled to receive
immediately after the happening of any of the events described above, had such
Warrants been exercised immediately prior to the happening of such event or
any record date with respect thereto. Any adjustment made pursuant to this
subsection 10.1(a) shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event.
(b) If, prior to the expiration of the Warrants by exercise, by
their terms, or by redemption, the Company shall be recapitalized by
reclassifying its outstanding shares of Common Stock into shares with a
different par value, or by changing its outstanding shares of Common Stock
into shares without par value or in the event of any other material change of
the capital structure of the Company or of any successor corporation by reason
of any reclassification, recapitalization or conveyance, prompt,
proportionate, equitable, lawful and adequate provision shall be made whereby
any Warrant Holder shall thereafter have the right to purchase, on the basis
and the terms and conditions specified in this Agreement, in lieu of the
Warrant Shares theretofore purchasable on the exercise of any Warrant, such
securities or assets as may be issued or payable with respect to or in
exchange for the number of Warrant Shares theretofore purchasable on exercise
of the Warrants had such reclassification, recapitalization or conveyance not
taken place; and in any such event, the rights of any Warrant Holder to any
adjustment in the number of Warrant Shares purchasable on exercise of such
Warrant, as set forth above, shall continue to be preserved in respect of any
stock, securities or assets which the Warrant Holder becomes entitled to
purchase.
(c) In case the Company shall issue rights, options, warrants, or
convertible securities to all or substantially all holders of its Common
Stock, without any charge to such holders, entitling them to subscribe for or
purchase Common Stock at a price per share which is lower at the record date
mentioned below than the then Current Market Price, the number of Shares
thereafter purchasable upon the exercise of each Option shall be determined by
multiplying the number of Shares theretofore purchasable upon exercise of the
Options by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such rights,
options, warrants or convertible securities plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants, or
convertible securities plus the number of shares which the aggregate offering
price of the total number of shares offered would purchase at such Current
Market Price. Such adjustment shall be made whenever such rights, options,
warrants, or convertible securities are issued, and shall become effective
immediately and retroactively to the record date for the determination of
shareholders entitled to receive such rights, options, warrants, or
convertible securities.
(d) In case the Company shall distribute to all or substantially
all holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions out of earnings) or rights,
options, warrants, or convertible securities containing the right to subscribe
for or purchase Common Stock (excluding those referred to in subsection
10.1(b) above), then in each case the number of Warrant Shares thereafter
purchasable upon the exercise of the Warrants shall be determined by
multiplying the number of Warrant Shares theretofor purchasable upon exercise
of the Warrants by a fraction, of which the numerator shall be the then
Current Market Price on the date of such distribution, and of which the
denominator shall be such Current Market Price on such date minus the then
fair value (determined as provided in subsection 10.1(g)(y) below) of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights, options, warrants, or convertible securities applicable
to one share. Such adjustment shall be made whenever any such distribution is
made and shall become effective on the date of distribution retroactive to the
record date for the determination of stockholders entitled to receive such
distribution.
(e) No adjustment in the number of Warrant Shares purchasable
pursuant to the Warrants shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of
Warrant Shares then purchasable upon the exercise of the Warrants or, if the
Warrants are not then exercisable, the number of Warrant Shares purchasable
upon the exercise of the Warrants on the first date thereafter that the
Warrants become exercisable; provided, however, that any adjustments which by
reason of this subsection 10.1(e) are not required to be made immediately
shall be carried forward and taken into account in any subsequent adjustment.
(f) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Exercise Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which
the numerator shall be the number of Warrant Shares purchasable upon the
exercise of the Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Warrant Shares so purchasable immediately
thereafter.
(g) For the purpose of this subsection 10.1, the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value,
or from no par value to par value. In the event that at any time, as a result
of an adjustment made pursuant to this Section 10, the Warrant Holder shall
become entitled to purchase any securities of the Company other than Common
Stock, (y) if the Warrant Holder's right to purchase is on any other basis
than that available to all holders of the Company's Common Stock, the Company
shall obtain an opinion of an independent investment banking firm valuing such
other securities; and (z) thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Warrant Shares contained in this Section
10.
(h) Upon the expiration of any rights, options, warrants, or
conversion privileges, if such shall have not been exercised, the number of
Shares purchasable upon exercise of the Warrants, to the extent the Warrants
have not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may
be) on the basis of (i) the fact that the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants, or conversion privileges, and
(ii) the fact that such shares of Common Stock, if any, were issued or sold
for the consideration actually received by the Company upon such exercise plus
the consideration, if any, actually received by the Company for the issuance,
sale or grant of all such rights, options, warrants, or conversion privileges
whether or not exercised; provided, however, that no such readjustment shall
have the effect of decreasing the number of Shares purchasable upon exercise
of the Warrants by an amount in excess of the amount of the adjustment
initially made in respect of the issuance, sale, or grant of such rights,
options, warrants, or conversion rights.
10.2 No Adjustment for Dividends. Except as provided in subsection 10.1,
no adjustment in respect of any dividends or distributions out of earnings
shall be made during the term of the Warrants or upon the exercise of the
Warrants.
10.3 No Adjustment in Certain Cases. No adjustments shall be made
pursuant to this Section 10 in connection with the issuance of Warrant Shares
upon exercise of the Warrants. No adjustments shall be made pursuant to this
Section 10 in connection with the grant or exercise of presently authorized or
outstanding options to purchase, or the issuance of shares, of Common Stock
under the Company's director or employee benefit plans disclosed in the
Registration Statement.
10.4 Preservation of Purchase Rights upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or
merger of the Company into another corporation, or in case of any sale or
conveyance to another corporation of the property, assets, or business of the
Company as an entirety or substantially as an entirety, the Company or such
successor or purchasing corporation, as the case may be, shall execute an
agreement that the Warrant Holder shall have the right thereafter upon payment
of the Exercise Price in effect immediately prior to such action to purchase,
upon exercise of the Warrants, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale, or conveyance
had the Warrants been exercised immediately prior to such action. In the
event of a merger described in Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, in which the Company is the surviving corporation, the right to
purchase Warrant Shares under the Warrants shall terminate on the date of such
merger and thereupon the Warrants shall become null and void, but only if the
controlling corporation shall agree to substitute for the Warrants, its
Warrants which entitle the holder thereof to purchase upon their exercise the
kind and amount of shares and other securities and property which it would
have owned or been entitled to receive had the Warrants been exercised
immediately prior to such merger. Any such agreements referred to in this
subsection 10.4 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 10. The provisions of this subsection 10.4 shall similarly apply to
successive consolidations, mergers, sales, or conveyances.
10.5 Par Value of Shares of Common Stock. Before taking any action which
would cause an adjustment effectively reducing the portion of the Exercise
Price allocable to each Warrant Share below the par value per share of the
Common Stock issuable upon exercise of the Warrants, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Common Stock upon exercise of the Warrants.
10.6 Independent Public Accountants. The Company may retain a firm of
independent public accountants of recognized national standing (which may be
any such firm regularly employed by the Company) to make any computation
required under this Section 10, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section 10.
10.7 Statement on Warrant Certificates. Irrespective of any adjustments
in the number of securities issuable upon exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant Certificates
initially issuable pursuant to this Agreement. However, the Company may, at
any time in its sole discretion (which shall be conclusive), make any change
in the form of Warrant Certificate that it may deem appropriate and that does
not affect the substance thereof; and any Warrant Certificate thereafter
issued, whether upon registration of transfer of, or in exchange or
substitution for, an outstanding Warrant Certificate, may be in the form so
changed.
10.8 Officers' Certificate. Whenever the Exercise Price or that
aggregate number of Warrant Securities purchasable pursuant to this Warrant
shall be adjusted as required by the provisions of this Section 10, the
Company shall promptly file with the Warrant Agent an officers' certificate
executed by the Company's President and Secretary or Assistant Secretary,
describing the adjustment and setting forth, in reasonable detail, the facts
requiring such adjustment and the basis for and calculation of such adjustment
in accordance with the provisions of this Warrant Agreement. Each such
officers' certificate shall be made available to the Holders for inspection at
all reasonable times, and the Company, after each such adjustment, shall
promptly deliver a copy of the officers' certificate relating to that
adjustment to the Holders. If the officers' certificate is not accompanied by
the Certificate described in Section 10.6, the officers' certificate described
in this Section 10.8 shall be deemed to be conclusive as to the correctness of
the adjustment reflected therein if, and only if, no Holder delivers written
notice to the Company of an objection to the adjustment within 30 days after
the officers' certificate is delivered to the Holders. The Company will make
its books and records available for inspection and copying during normal
business hours by the Holder so as to permit a determination as to the
correctness of the adjustment. If written notice of an objection is delivered
by a Holder to the Company and the parties cannot reconcile the dispute, the
Holder and the Company shall submit the dispute to arbitration pursuant to the
provisions of Section 19 below. Failure to prepare or provide the officers'
certificates shall not modify the parties' rights hereunder.
Section 11 Merger or Consolidation of the Company
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 10.4 are complied with.
Section 12 Modification of Agreement
The Company may by supplemental agreement make any changes or corrections
in this Agreement it shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or mistake or error herein
contained. Additionally, the Company may make any changes or corrections
deemed necessary which shall not adversely affect the interests of the Warrant
Holders, including lowering the exercise price or extending the Exercise
Period of the Warrants; provided, however, this Agreement shall not otherwise
be modified, supplemented or altered in any respect except with the consent in
writing of the Warrant Holders who hold not less than a majority of the
Warrants then outstanding and provided further that no such amendment shall
accelerate the Warrant Expiration Date or increase the Exercise Price without
the approval of all the holders of all outstanding Warrants.
Section 13 Notices to Warrant Holders
If, prior to the expiration of this Warrant either by its terms or by its
exercise in full, any of the following shall occur:
(i) the Company shall declare a dividend on its Common Stock or
authorize any other distribution on its Common Stock; or
(ii) the Company shall authorize the granting to the stockholders of
its Common Stock of rights to subscribe for or purchase any securities or any
other similar rights; or
(iii) any reclassification, reorganization or similar change of
the Common Stock, or any consolidation or merger to which the Company is a
party, or the sale, lease, or exchange of any significant portion of the
assets of the Company; or
(iv) the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(v) any purchase, retirement or redemption by the Company of its
Common Stock;
then, and in any such case, the Company shall deliver to the Holder or
Holders written notice thereof at least 30 days prior to the earliest
applicable date specified below with respect to which notice is to be given,
which notice shall state the following:
(a) the purpose for which a record of stockholders is to be taken;
(b) the number, amount, price, and nature of the shares of Common
Stock or other stock, securities, or assets which will be deliverable on
Warrant Shares following exercise of the Warrants if such exercise occurs
prior to the record date for such action;
(c) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights, or, if a record is not to be taken, the
date as of which the stockholders of Common Stock of record to be entitled to
such dividend, distribution or rights are to be determined;
(d) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation, winding up or
purchase, retirement or redemption is expected to become effective, and the
date, if any, as of which the Company's stockholders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption; and
(e) if any matters referred to in the foregoing clauses (x) and (y)
are to be voted upon by stockholders of Common Stock, the date as of which
those stockholders to be entitled to vote are to be determined.
Section 14 No Rights as Shareholder
Nothing contained in this Agreement or in the Warrants shall be construed
as conferring upon the Warrant Holder or its transferees any rights as a
shareholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a shareholder in respect to any meeting of
shareholders for the election of directors of the Company or any other matter.
The Company covenants, however, that for so long as this Warrant is at least
partially unexercised, it will furnish any Holder of this Warrant with copies
of all reports and communications furnished to the shareholders of the
Company.
Section 15 Warrant Agent
15.1. Appointment. The Company hereby appoints the Warrant Agent to
act as the agent of the Company in accordance with this Agreement and Warrant
Agent hereby accepts such appointment.
15.2 Duties. The Warrant Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions by all of
which the Company and every Warrant Holder by acceptance of any Warrant
Certificates, shall be bound:
(i) The statements contained in this Agreement and in the Warrant
Certificates shall be taken as statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such
as described by the Warrant Agent or action taken or to be taken by it.
(ii) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the Company's covenants contained in this
Agreement or in the Warrant Certificates.
(iii) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any Warrant
Holder in respect to any action taken, suffered or omitted by it hereunder in
good faith and in accordance with the opinion or the advice of such counsel,
provided the Warrant Agent shall have exercised reasonable care in the
selection and continued employment of such counsel.
(iv) The Warrant Agent shall incur no liability or responsibility to
the Company or to any Warrant Holder for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the property party or parties.
(v) The Company agrees to pay to the Warrant Agent the Warrant
Agent's standard published rates in effect on the date of this Agreement, as
the same may be changed from time to time upon thirty (30) days prior written
notice from the Warrant Agent to the Company, for all services rendered by the
Warrant Agent in the execution of this Agreement; to reimburse the Warrant
Agent for all expenses, taxes and governmental charges and other charges of
any kind and nature incurred by the Warrant Agent in the execution of this
Agreement; and to indemnify the Warrant Agent and save it harmless against any
and all liabilities, including judgments, costs and counsel fees, for anything
done or omitted by the Warrant Agent in the execution of this Agreement except
as a result of the Warrant Agent's negligence or bad faith.
(vi) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Warrant Holders shall furnish the
Warrant Agent with reasonable security and indemnity for any costs and
expenses which may be incurred, but this provision shall not affect the power
of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be enforced by
the Warrant Agent without the possession of any of the Warrant Certificates or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceedings instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery or judgment shall be
for the ratable benefit of the Warrant Holders as their respective rights or
interests may appear.
(vii) The Warrant Agent and any stockholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the Warrants
or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
(viii) The Warrant Agent shall act hereunder solely as agent for
the Company, and its duties shall be determined solely by the provisions
hereof and those provisions of the Act, the Securities Exchange Act of 1934,
as amended, and those Rules and Regulations of the Commission applicable to
the duties of the Warrant Agent hereunder.
Section 16 Merger, Consolidation or Change of Name of Warrant Agent
16.1. Successor. Any corporation into which the Warrant Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Warrant
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on
the part of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Warrant Agent under the provisions of
Section 17 of this Agreement. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, and in
case at that time any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent; and in case at the
time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates
either in the name of the predecessor Warrant Agent or in the name of the
successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.
16.2. Change of Name. In case at any time the name of the Warrant
Agent shall be changed and at such time any of the Warrant Certificates shall
have been countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name; and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
Section 17 Change of Warrant Agent
The Warrant Agent may resign and be discharged from its duties under this
Agreement by giving to the Company notice in writing, and by giving notice in
writing to each Warrant Holder at his address appearing in the Warrant
register, specifying a date when such resignation shall take effect, which
notice shall be sent at least 90 days prior to the date so specified. If the
Warrant Agent shall resign or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 90 days after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Warrant Holder, then any Warrant Holder
may apply to any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Pending appointment of a successor to the
Warrant Agent, either by the Company or by such court, the duties of the
Warrant Agent shall be carried out by the Company. Any successor Warrant
Agent, whether appointed by the Company or by such court, shall be a transfer
agent, bank or trust company, in good standing, organized under the laws of
one of the states of the United States of America or under the laws of the
United States of America. After appointment, the successor Warrant Agent
shall be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Warrant Agent without further act or deed
and the former Warrant Agent shall deliver and transfer to the successor
Warrant Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Failure to give any notice provided for in this Section, however, or
any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the
successor Warrant Agent, as the case may be.
Section 18 Notices
18.1 The Company. All notices, demands, claims, elections, opinions,
requests or other communications hereunder (however characterized or
described) shall be in writing and shall be deemed duly given or made if (and
then two business days after) sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to, in the case of the
Company as follows:
American Educational Products, Inc.
5350 Manhattan Circle, Suite 210
Boulder, CO 80303
Attention: Clifford D. Thygesen
18.2 The Warrant Agent. All notices, demands, claims, elections,
opinions, requests or other communications hereunder (however characterized or
described) shall be in writing and shall be deemed duly given or made if (and
then two business days after) sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to, in the case of the
Warrant Agent as follows:
[Corporate Stock Transfer, Inc.
370 17th Street
Suite 2350
Denver, Colorado 80202-4614]
18.3 The Warrant Holders. Any distribution, notice or demand required or
authorized by this Agreement to be given or made by the Company or the Warrant
Agent to or on the Warrant Holders shall be sufficiently given or made if sent
by mail, first class, certified or registered, postage prepaid, addressed to
the Warrant Holders at their last known addresses as they shall appear on the
registration books for the Warrant Certificates maintained by the Warrant
Agent.
18.4 Effectiveness of Notice. The Company may send any notice, demand,
claim, election, opinion, request or communication hereunder to the intended
recipient at the address set forth above using any other means (including
personal delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail or electronic mail), but no such notice, demand, claim,
election, opinion, request or other communication shall be deemed to have been
duly given or made unless and until it actually is received by the intended
recipient. The Company may change the address to which notices, demands,
claims, elections, opinions, requests and other communications hereunder are
to be delivered by giving the Warrant Holders notice in the manner herein set
forth.
Section 19 Arbitration
The Company and the Holder, and by receipt of a Warrant Certificate or
any Warrant Shares, all subsequent Holders or holders of Warrant Shares, agree
to submit all controversies, claims, disputes and matters of difference with
respect to this Agreement and the Warrant Certificates, including, without
limitation, the application of this Section 19, to arbitration in San Diego,
California, according to the rules and practices of the American Arbitration
Association from time to time in force; provided, however, that if such rules
and practices conflict with the applicable procedures of California courts of
general jurisdiction or any other provisions of California law then in force,
those California rules and provisions shall govern. This agreement to
arbitrate shall be specifically enforceable. Arbitration may proceed in the
absence of any party if notice of the proceeding has been given to that
party. The parties agree to abide by all awards rendered in any such
proceeding. These awards shall be final and binding on all parties to the
extent and in the manner provided by the rules of civil procedure enacted in
California. All awards may be filed, as a basis of judgment and of the
issuance of execution for its collection, with the clerk of one or more
courts, state or federal, having jurisdiction over either the party against
whom that award is rendered or its property. No party shall be considered in
default hereunder during the pendency of arbitration proceedings relating to
that default.
Section 20 Miscellaneous Provisions
20.1 Persons Benefiting. This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent and their respective
successors and assigns and the Warrant Holders. By his acceptance of a
Warrant Certificate, the Holder accepts and agrees to comply with all of the
terms and provisions hereof. Nothing in this Agreement is intended or shall
be construed to confer on any other person any right, remedy or claim or to
impose on any other person any duty, liability or obligation.
20.2 Severability. If any term contained herein shall be held, declared
or pronounced void, voidable, invalid, unenforceable or inoperative for any
reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect
adversely any other term, which shall otherwise remain in full force and
effect, and the effect of such holding, declaration or pronouncement shall be
limited to the territory or jurisdiction in which made.
20.3 Termination. This Agreement shall terminate as of the close of
business on the Expiration Date, or such earlier date upon which all Warrants
shall have been exercised or redeemed; except that the exercise of a Warrant
in full or the Expiration Date shall not terminate the provisions of this
Agreement as it relates to holders of Warrant Securities.
20.4 Governing Law. These terms and each Warrant Certificate issued
hereunder shall be deemed to be a contract under the laws of the State of
Colorado and for all purposes shall be construed in accordance with the laws
of said state without giving effect to conflicts of laws provisions of such
state.
20.5 Agreement Available to Warrant Holders. A copy of these terms shall
be available at all reasonable times at the office of the Warrant Agent for
inspection by any Warrant Holder. As a condition of such inspection, the
Company may require any Warrant Holder to submit a Warrant Certificate held of
record for inspection.
20.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original and all such counterparts shall together constitute but one and
the same instrument.
20.7 Failure to Perform. If the Company fails to perform any of its
obligations hereunder, it shall be liable to the Warrant Holder for all
damages, costs and expenses resulting from the failure, including, but not
limited to, all reasonable attorney's fees and disbursements.
20.8 Paragraph Headings. Paragraph headings used in this Warrant are
for convenience only and shall not be taken or construed to define or limit
any of the terms or provisions of this Warrant. Unless otherwise provided, or
unless the context shall otherwise require, the use of the singular shall
include the plural and the use of any gender shall include all genders.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first written above.
AMERICAN EDUCATIONAL PRODUCTS, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
Attest:
______________________________
Secretary
Corporate Stock Transfer, Inc.]
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
Attest:
____________________________________
Secretary
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
Each Warrant entitles the Warrant Holder to purchase one share of Common
Stock. The Warrants may only be exercised when either (a) a current
registration statement under the Securities Act of 1933, as amended, is
effective or (b) an exemption from such registration is available to the
Company, in either case, without undue expense or hardship. Additionally,
Warrants are only exercisable when such exercise, and the issuance of the
underlying Common Stock, can be effected in compliance with applicable state
Blue Sky laws. The Warrants are subject to redemption and may not be
exercised after the redemption date.
W-__________ __________ Warrants
CUSIP ____________
WARRANT CERTIFICATE
American Educational Products, Inc.
This Warrant Certificate certifies that _______________ or registered
assigns (the "Warrant Holder"), is the registered owner of the above-indicated
number of Warrants ("Warrants") expiring at 5:00 p.m., Denver, Colorado, local
time, on _______________ (the "Expiration Date"). Each Warrant entitles the
Warrant Holder to purchase from American Educational Products, Inc. (the
"Company"), a Colorado corporation, at any time before the Expiration Date,
one fully paid and non-assessable share of Common Stock of the Company at a
purchase price of $__________ per share (the "Exercise Price) upon surrender
of this Warrant Certificate, with the exercise form hereon duly completed and
executed, with payment of the Exercise Price, at the principal office of the
Company, but only subject to the conditions set forth herein and in the
Warrant Agreement. In addition, the Warrant Holder has the right to convert
the Warrants evidenced by this Certificate into shares of Common Stock as
provided in Section 4.6 of the Warrant Agreement. All unexercised Warrants
may be redeemed by the Company (i) upon 30 calendar days prior written notice
to registered Warrant Holders and (ii) under certain conditions set forth in
the Agreement between the Company and Corporate Stock Transfer, Inc.] as the
Warrant Agent (the "Warrant Agreement"). No Warrant may be exercised or
converted after such 30-day period. The Exercise Price, the number of shares
purchasable upon exercise or conversion of each Warrant, the number of
Warrants outstanding and the Expiration Date are subject to adjustments upon
the occurrence of certain events set forth in the Warrant Agreement.
Reference is hereby made to the other provisions of this Warrant Certificate
and the provisions of the Warrant Agreement, all of which are hereby
incorporated by reference herein and made a part of this Warrant Certificate
and which shall for all purposes have the same effect as though fully set
forth at this place.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants, subject to any adjustments made in accordance with the Warrant
Terms, shall be issued to the transferee in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement.
The Warrant Holder of the Warrants evidenced by this Warrant Certificate
may exercise all or any whole number of such Warrants in the manner stated
hereon and in the Warrant Agreement. The Exercise Price shall be payable in
lawful money of the United States of America in cash or by certified or
cashier's check or bank draft payable to the order of the Company. Upon any
exercise of any Warrants evidenced by this Warrant Certificate in an amount
less than the number of Warrants so evidenced, there shall be issued to the
Warrant Holder a new Warrant Certificate evidencing the number of Warrants not
so exercised. No adjustment shall be made for any dividends on any shares
issued upon exercise of this Warrant.
No Warrant may be exercised after 5:00 p.m., Colorado time, on the
Expiration Date, and any Warrant not exercised by such time shall become void.
COPIES OF THE WARRANT AGREEMENT, WHICH DEFINES THE RIGHTS,
RESPONSIBILITIES AND OBLIGATIONS OF THE COMPANY AND THE WARRANT HOLDERS, ARE
ON FILE WITH THE WARRANT AGENT. ANY WARRANT HOLDER MAY OBTAIN A COPY OF THE
WARRANT AGREEMENT, FREE OF CHARGE, BY A REQUEST TO THE PRINCIPAL OFFICE OF THE
WARRANT AGENT.
This Warrant Certificate, when surrendered to the Warrant Agent, in
person or by attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement,
without payment of a charge, except for any tax or other governmental charge
imposed in connection with such exchange, for another Warrant Certificate or
Warrant Certificates of like tenor and evidencing a like number of Warrants,
subject to any adjustment made in accordance with the Warrant Agreement.
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone) for all purposes and the
Company shall not be affected by any notice to the contrary. No Warrant
Holder, as such, shall have the rights of a stockholder of the Company, either
at law or in equity, and the rights of the Warrant Holder, as such, are
limited to those rights expressly provided in the Warrant Agreement and in the
Warrant Certificates.
The Company shall not be required to issue fractions of Warrants upon any
such adjustment or to issue fractions of shares upon the exercise of any
Warrants after any such adjustment, but the Company, in lieu of issuing any
such fractional interest, shall pay an amount in cash equal to such fraction
times the current market value of one Warrant or one share, as the case may
be, determined in accordance with the Warrant Agreement.
Unless the amendment is able to be effected by the Company in accordance
with the Warrant Agreement, the Warrant Agreement is subject to amendment only
upon the approval of holders of not less than a majority of the outstanding
Warrants, except that no such amendment shall accelerate the Expiration Date
or increase the Exercise Price without the approval of all the holders of all
outstanding Warrants. A copy of the Warrant Agreement shall be available at
all reasonable times at the principal office of the Warrant Agent for
inspection for any Warrant Holder. As a condition of such inspection, the
Company may require any Warrant Holder to submit his Warrant Certificate for
inspection.
IMPORTANT: The Warrants represented by this Certificate may not be
exercised by a Warrant Holder unless at the time of exercise the underlying
shares of Common Stock are qualified for sale, by registration or otherwise,
in the state where the Warrant Holder resides or unless the issuance of the
shares of Common Stock would be exempt under the applicable state securities
laws. Although the underlying shares of Common Stock were qualified for sale
in the states in which the Warrants were originally sold, the Company may not
continue such qualifications for the life of the Warrants. Moreover, the
Company may not qualify the underlying shares of Common Stock in any other
states. Further, a registration statement under the Securities Act of 1933,
as amended, covering the exercise of the Warrants must be in effect and
current at the time of exercise unless the issuance of shares of Common Stock
upon any exercise is exempt from the registration requirements of the
Securities Act of 1933, as amended. Notwithstanding the provisions hereof,
unless such registration statement and qualification are in effect and current
at the time of exercise, or unless exemptions are available, the Company may
decline to permit the exercise of the Warrants and the holder hereof would
then only have the choice of either attempting to sell the Warrants, if a
market existed therefor, or letting the Warrants expire.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its President and by its Secretary, each by a facsimile of said
officers' signatures, and has caused a facsimile of its corporate seal to be
imprinted hereon.
Dated: ___________________ AMERICAN EDUCATIONAL PRODUCTS, INC.
a Colorado corporation
By________________________ By:
____________________________________
Secretary Clifford D. Thygesen, President
<PAGE>
ASSIGNMENT
(Form of Assignment to be Executed if the Warrant Holder
Desires to Transfer Warrants Evidenced Hereby)
FOR VALUE RECEIVED, ____________________________ hereby sells, assigns
and transfers to
__________________________________________________________________.
(Please print name and address including zip code)
Please insert social security, federal
tax ID number or other identifying
number:
____________________________________
___________________________________ Warrants represented by this Warrant
Certificate and does hereby irrevocably constitute and appoint ______________
, Attorney, to transfer said Warrants on the books of the Company with full
power of substitution.
Dated:__________________ ____________________________________
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate.)
SIGNATURE GUARANTEED:
______________________________
Note: Any transfer or assignment of this Warrant Certificate is subject to
compliance with the restrictions on transfer imposed under the Warrant
Agreement.
<PAGE>
EXERCISE
(Form of Exercise to be Executed if the Warrant Holder
Desires to Exercise Warrants Evidenced Hereby)
TO THE COMPANY:
The undersigned hereby irrevocably elects to exercise _______________
Warrants represented by this Warrant Certificate and to purchase thereunder
the full number of shares of Common Stock issuable upon exercise of said
Warrants and enclose $__________ as the purchase price therefor, and requests
that certificates for such shares shall be issued in the name of, and cash for
any fractional shares shall be paid to,
Please insert Social Security Number or
other identifying number:
________________________________________
______________________________________________________________________________
_______
(Please print name and address, including zip code)
and, if said number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant Certificate for the unexercised
number of Warrants may be assigned under the form of Assignment appearing
hereon.
Dated:__________________ Signature:
__________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of this Warrant
Certificate)
SIGNATURE GUARANTEED:
______________________________
IMPORTANT: Signature guarantee must be made by a participant of STAMP or
another signature guarantee program acceptable to the Securities and Exchange
Commission, the Securities Transfer Association and the Transfer Agent of the
Company or the Company.
