<PAGE>
As filed with the Securities and Exchange Commission on March 17, 1998
S.E.C. File No. 33-
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------------------------
AMERICAN EDUCATIONAL PRODUCTS, INC.
--------------------------------
(Name of Small Business Issuer in its Charter)
COLORADO 84-1012129
- ------------------------------- --------------------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
6550 GUNPARK DRIVE, SUITE 200
BOULDER, COLORADO 80301
------------------------------------------------------------
(Address of principal executive offices, including Zip Code)
AMERICAN EDUCATIONAL PRODUCTS, INC.
1997 STOCK INCENTIVE PLAN
------------------------------------
Full title of the plan
Clifford C. Thygesen
6550 Gunpark Drive, Suite 200
Boulder, Colorado 80301
---------------------------------------
Name and address of agent for service
(303) 527-3230
---------------------------------------
Telephone number, including area code,
of agent for service
Copy To:
Clifford L. Neuman, Esq.
Nathan L. Stone, Esq.
Neuman & Drennen
Temple-Bowron House
1507 Pine Street
Boulder, Colorado 80302
(303) 449-2100
----------------------------------------
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date of the
Registration Statement.
===========================================================================
<PAGE>
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- ---------------------------------------------------------------------------
Title of Proposed Proposed
Securities Maximum Maximum Amount
to be Amount Offering Aggregate of
Registered to be Price Offering Registration
Price Registered Per Share Price (1) Fee
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 50,700 Shares $ 3.875 (1) $ 196,462.50 $ 57.96
$.05 par value 98,300 Shares $ 4.500 (1) $ 442,350.00 $ 130.49
10,000 Shares $ 5.375 (1) $ 53,750.00 $ 15.86
2,700 Shares $ 7.125 (1) $ 19,237.50 $ 5.68
10,000 Shares $ 5.625 (1) $ 56,250.00 $ 16.59
14,600 Shares $ 7.66 (2) $ 111,836.00 $ 32.99
Total $ 879,886 $ 259.57
- ---------------------------------------------------------------------------
(1) Based on the exercise price of the options in accordance with
paragraph (h) of Rule 457.
(2) Estimated solely for the purpose of calculating the registration fee
in accordance with paragraphs (c) and (h) of Rule 457 on the basis
of the average of the bid and asked prices of the Common Stock on
March 3, 1998, as quoted on the Nasdaq SmallCap Market.
</TABLE>
<PAGE>
<PAGE>
PROSPECTUS
AMERICAN EDUCATIONAL PRODUCTS, INC.
6550 Gunpark Drive, Suite 200
Boulder, Colorado 80301
Telephone: (303) 527-3230
_______________________________________________
186,300 Shares
AMERICAN EDUCATIONAL PRODUCTS, INC.
Common Stock
($.05 Par Value)
Under
AMERICAN EDUCATIONAL PRODUCTS, INC.
1997 STOCK INCENTIVE PLAN
_______________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________________________________________
The date of this Prospectus is _____________________________________, 1998.
<PAGE>
<PAGE>
TABLE OF CONTENTS
Item 1. Plan Information . . . . . . . . . . . . . . . . . . . . . . . -3-
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
The Plan: Adoption. . . . . . . . . . . . . . . . . . . . . . -3-
Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
Duration and Modifications . . . . . . . . . . . . . . . . . . -3-
Class and Amount of Securities Subject to the Plan . . . . . . -3-
Administration . . . . . . . . . . . . . . . . . . . . . . . . -4-
Adjustment for Changes in Securities . . . . . . . . . . . . . -4-
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . -5-
Granting of Options. . . . . . . . . . . . . . . . . . . . . . -5-
Exercise of Options. . . . . . . . . . . . . . . . . . . . . . -6-
Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . -6-
Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Termination of Employment. . . . . . . . . . . . . . . . . . . -8-
Transferability of Options . . . . . . . . . . . . . . . . . . -8-
Resale of Shares Acquired Upon Exercise of Options . . . . . . -9-
Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . -9-
Outstanding Options. . . . . . . . . . . . . . . . . . . . . .-11-
Item 2. Registrant Information and Employee Plan Annual Information. .-11-
Item 3. Incorporation of Documents by Reference. . . . . . . . . . . .-12-
Item 4. Description of Securities. . . . . . . . . . . . . . . . . . .-12-
Item 5. Interests of Named Experts and Counsel . . . . . . . . . . . .-12-
Item 6. Indemnification of Directors and Officers. . . . . . . . . . .-13-
Item 7. Exemption from Registration Claimed. . . . . . . . . . . . . .-17-
Item 8. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . .-19-
Item 9. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . .-19-
<PAGE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.
- ------ ----------------
Company
-------
American Educational Products, Inc, (hereinafter referred to as
"AEP" or the "Company") is a Colorado corporation having its principal
executive offices at 6550 Gunpark Drive, Suite 200, Boulder, Colorado 80301
(telephone number: (303) 527-3230)
The use of masculine pronouns in this Prospectus is done for
convenience only and refers to both males and females.
The Plan: Adoption
-------------------
The Board of Directors adopted the 1997 Stock Incentive Plan
(hereinafter referred to as the "Plan") on June 2, 1997. The Plan was
ratified and approved by the Company's shareholders at the Annual Meeting of
Shareholders held June 2, 1997.
The Plan was created pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended, and authorizes the Company to offer its
employees up to 186,300 shares of Common Stock.
The Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974; and the Plan is not subject to the
qualification requirements under Section 401(a) of the Code.
Purpose
-------
The general purpose of the Plan is to provide directors,
executive officers, and key employees of the Company and of any present or
future parent or subsidiary of the Company, who have contributed to the
continued growth and development of the Company, with an opportunity to
acquire a proprietary interest in the Company and thus to create in such
directors, executive officers, and key employees an increased interest in, and
a greater concern for, the welfare of the Company.
Duration and Modifications
--------------------------
Options may be granted under the Plan at any time up to June 1,
2007, when the Plan will expire except as to any options outstanding, which
options will remain in effect until they have been exercised or have expired,
provided that all such options shall expire no later than June 1, 2012.
Class and Amount of Securities Subject to the Plan
--------------------------------------------------
Subject to adjustment as described below, an aggregate of up to
186,300 shares of the Company's common stock, $.05 par value, are authorized
to be issued upon exercise of options granted under the Plan.
Under the terms of the Plan, shares subject to and not issued
under an option which expires or terminates or is cancelled for any reason
during the term of the Plan are again available for the granting of options
under the Plan.
Administration
--------------
A Committee ("Committee") of the Company's Board of Directors
(the "Board") consisting of not less than two (2) "disinterested" members of
the Board (within the meaning of Rule 16b-3(c)(2)(1) promulgated under the
Securities Exchange Act of 1934, as amended) is responsible for the
administration of the Plan. The Committee members may be removed or replaced
by a vote of the majority of the Board. Any or all powers and functions of
the committee may at any time be exercised by the Board; provided, however,
that such exercise by the Board must involve a majority of disinterested Board
members (within the meaning of Rule 16b-3(c)(2)(1) promulgated under the
Exchange Act. All determinations by the Committee or Board are final and
conclusive.
The Committee is authorized, subject to the provisions of the
Plan, to:
(1) Determine the directors, executive officers and key
employees to whom Options shall be granted, the time when such Options shall
be granted, the number of shares which shall be subject to each Option, the
purchase price or exercise price of each share which shall be subject to each
Option, the periods during which such Options shall be exercisable (whether in
whole or in part) and the other terms and provisions with respect to the
Options (which need not be identical);
(2) Determine, upon review of relevant information and in
accordance with other provisions below, the fair market value of the Common
Stock underlying the Options;
(3) Construe the Plan and Options granted thereunder;
(4) Accelerate or defer (with consent of the Optionee) the
exercise of any Option, consistent with other provisions in the Plan;
(5) Authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option;
(6) Prescribe, amend and rescind rules and regulations
relating to the Plan;
(7) Make all other determinations deemed necessary or
advisable for the administration of the Plan.
Adjustment for Changes in Securities
------------------------------------
The Plan requires the Board to make appropriate adjustments in
the number and kind of shares available under the Plan and in the number,
price and kind of shares covered by options granted or to be granted under the
Plan, in the event of a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of the Company's Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration". The foregoing
notwithstanding, no issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made, with respect to the number or
price of shares of Common Stock subject to an Option.
The Plan also provides that, upon the dissolution or liquidation
of the Company, any outstanding Option will terminate immediately prior to
the consummation of such action, unless otherwise provided by the Board. The
Board may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his Option as to all or any part of the
Optioned Stock, including shares as to which the Option would not otherwise be
exercisable. In the event of a proposed sale of all or substantially all of
the assets of the Company, or the merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless such successor corporation does not agree to
assume the Option or to substitute an equivalent Option, in which case the
Board shall, in lieu of such assumption or substitution provide for the
Optionee to have the right to exercise the Option as to all of the Optioned
Stock, including shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Board shall notify the Optionee that the Option shall be fully exercisable for
a period of fifteen (15) days form the date of such notice, and the Option
will terminate upon the expiration of such period.
If, as a result of accelerating the time period during which all
Options are exercisable in full in the event of a merger or asset transaction
an Optionee would incur liability under Section 16(b) of the Securities
Exchange Act of 1934, such Optionee may request the Company to, and the
Company is obligated to, repurchase such Option for cash equal to the excess
of the fair market value on the advanced termination date of the shares
subject to the Option over the Option exercise price.
Eligibility
-----------
Except as otherwise provided in the Plan, Non-qualified Options
("NSO's") may be granted to directors, officer, key salaried employees of the
Company and consultants and advisors to the Company, or any subsidiary or
parent corporation, now existing or hereinafter formed or acquired. Any
person who shall have retired from active employment by the Company shall not
be eligible to receive a NSO.
Incentive Options ("ISO's")may be granted only to salaried
officers or key employees of the Company or any subsidiary corporation or
parent corporation of the Company now existing or hereafter formed or
acquired, and not to any director or officer who is not also an employee.
Granting of Options
-------------------
The Plan provides that the Committee shall have the authority, in
its discretion, to determine the directors, executive officers and key
employees to whom Options shall be granted, the time when such Options shall
be granted, the number of shares which shall be subject to each Option, the
purchase price or exercise price of each share which shall be subject to each
Option, the periods during which such Options shall be exercisable (whether in
whole or in part) and the other terms and provisions with respect to the
Options (which need not be identical).
There is no minimum or maximum amount of shares for which any one
eligible person may receive NSO's. However, the amount of aggregate fair
market value of the stock determined at the time of the grant of an ISO for
which any employee may be granted ISO's under the Plan in any calendar year
shall not exceed the sum of (i) $100,000 plus (ii) an unused limit carryover
amount for any year after the date of the Plan but prior to the calendar year
under consideration. The unused limit carryover amount shall be determined as
one-half of the amount by which $100,000 exceeds the aggregate fair market
value at the time of grant of an ISO under the Plan for which ISO's were
granted in any prior year, but carried over for not more than three (3) years.
For this purpose, ISO's granted in any year shall be deemed to first use up
the $100,000 current year limitation and then the unused limit carryover
amount from the earliest available year.
Each Option is to be evidenced by a written agreement (an "Option
Agreement") containing terms and conditions established by the Board
consistent with the provisions of the Plan.
Exercise of Options
-------------------
Any Option may be exercised by the Participant holding such
Option for such period or periods as the Committee shall determine at the date
of grant of such Option. In no event shall any ISO granted to a Participant
owning more than ten percent (10%) of the voting power of all classes of the
Company's Stock, or the stock of any Subsidiary or Parent corporation, be
exercisable by its terms after the expiration of five (5) years from the date
it is granted, nor shall any other ISO granted under this Plan be exercisable
by its terms after ten (10) years from the date it is granted. The Committee
shall have the right to accelerate, in whole or in part, the expiration date
of any Option; and to the extent that an Option is not exercised within the
period of exercisability specified therein, it shall expire as to the then
unexercised portion.
Although the Company intends to exert its best efforts so that
the shares purchasable upon the exercise of an Option, when it first becomes
exercisable, will be registered under, or exempt from the registration
requirements of, the Securities Act of 1933 (the "Act") and any applicable
state securities law, if the exercise of an Option would otherwise result in
the violation by the Company of any provision of the Act or of any state
securities law, the Company may require that such exercise be deferred until
the Company has taken appropriate action to avoid any such violation.
An Option holder will not be deemed the holder of any shares
subject to an Option until such shares are fully paid and issued to him upon
exercise of such Option.
Exercise Price
--------------
The purchase price for each share purchasable under any NSO
granted under the Plan shall be such amount as the Committee shall deem
appropriate.
The exercise price at which shares may be purchased under each
ISO cannot be less than 100% of the fair market value of the stock on the date
on which the Option is granted. If the Company's shares are listed on a
national securities exchange in the United States on any date on which the
fair market value per share is to be determined, the fair market value per
share shall be deemed to be the average of the high and low quotations at
which such shares are sold on such national securities exchange on such date.
If the shares are listed on a national securities exchange in the United
States on such date but the shares are not traded on such date, or such
national securities exchange is not open for business on such date, the fair
market value per share shall be determined as of the closest preceding date on
which such exchange shall have been open for business and the shares were
traded. If the shares are listed on more than one national securities
exchange in the United States on the date any such Option is granted, the
Committee shall determine which national securities exchange shall be used for
the purpose of determining the fair market value per share. If a public
market exists for the shares on any date on which the fair market value per
share is to be determined but the shares are not listed on a national
securities exchange in the United States, the fair market value per share
shall be deemed to be the mean between the closing bid and asked quotations in
the over-the-counter market for the shares on such date. If there are no bid
and asked quotations for the shares on such date, the fair market value per
share shall be deemed to be the mean between the closing bid and asked
quotations in the over-the-counter market for the shares on the closest date
preceding such date for which such quotations are available. If no public
market exists for the shares on any date on which the fair market value per
share is to be determined, the Committee shall, in its sole discretion and
best judgment, determine the fair market value of a share. For purposes of
the Plan, the determination by the Committee of the fair market value of a
share shall be conclusive..
If any grantee of an ISO (directly and under attribution rules of
the Code) stock possessing more than 10% of the total combined voting power of
AEP (or any parent or subsidiary of AEP) the Option price of that ISO shall be
not less than 110% of the fair market value of shares subject to the Option
and such Option shall not be exercisable after the expiration of five years
from its date of grant.
The exercise price for shares purchased must be paid in full at
the time of exercise; no shares will be issued until full payment is made.
Such payment may be made using any lawful consideration, including: (1) cash;
(2) check; (3) notes; or (4) in the discretion of the Committee, by
delivering shares of the Company's Common Stock, valued at its fair market
value determined as of the date of exercise of the Option, or a combination of
the foregoing.
Cash proceeds from the exercise of Options are added to the
general funds of the Company available for its corporate purposes.
Death
-----
If an Option holder dies while in the employ of the Company or a
Subsidiary or Parent, the person or persons to whom the Option is transferred
by will or the laws of descent and distribution, may, at any time within one
(1) year after the date of death, but no later than the date of expiration of
the Option, exercise the Option. Any Options or portions of Options of
deceased employees not so exercised will terminate.
Termination of Employment
-------------------------
Disability
----------
If the employment or service of an Optionee is terminated
by reason of disability [defined in Section 22(e)(3) of the Code in the case
of an ISO, and determined by the Board of Directors], the Option then held by
the Optionee may be exercised, to the extent the Option was exercisable at the
time of such termination, within one (1) year after such termination, but not
later than the date of expiration of the Option. Any Options, or portions
thereof, no so exercised will terminate.
Other Termination
-----------------
Upon termination of directorship or employment with the
Company, or a Subsidiary or Parent, for any reason except death or disability,
an Option holder may, at any time within three (3) months after the date of
such termination, but not later than the date of expiration of the Option,
exercise the Option to the extent he was entitled to do so on the date of such
termination; provided, however, that if such director or employee voluntarily
terminates his directorship or employment, or is discharged for cause, of
which the Board is the sole judge, his Option will expire immediately. An
Optionee whose directorship or employment is terminated by retirement in
accordance with the Company's normal retirement policies, as determined by the
Committee, will be permitted to exercise any Options held by such Optionee, to
the extent he was entitled to do so on the date of such retirement, within
three (3) months after the date of such termination, but not later than the
date on which such Options would otherwise expire. Any Options or portions of
Options of terminated employees not so exercised will terminate.
A participant on a bona fide leave of absence shall be
considered an employee for purposes of the exercise of an Option and shall be
entitled to exercise such Option during such leave (but in the case of ISO's,
only to the extent that his employment is not determined to be interrupted
thereby for purposes of Section 422 of the Code) Also, a transfer from the
Company to a Parent or subsidiary or from a Parent or Subsidiary to the
Company will not be deemed a termination or interruption of employment for
purposes of the Plan.
Nothing in the Plan, or in any Option granted thereunder,
confers on any person any right with respect to continuation of employment or
retention in service in any capacity by the Company or a Parent or Subsidiary,
and the grant of an Option under the Plan shall not constitute an employment
agreement of any kind.
Transferability of Options
--------------------------
An Option granted under the Plan may not be transferred except by
will or the laws of descent and distribution and, during the lifetime of an
Optionee, the Option may be exercised only by him or his legal guardian or
legal representative.
Resale of Shares Acquired Upon Exercise of Options
--------------------------------------------------
Generally, Optionees who are not "affiliates" (controlling
persons) of the Company at the time of a proposed resale may sell shares
acquired after the date of this Prospectus upon exercise of Options granted
under the Plan without regard to securities law registration restrictions,
since such shares have been registered under the Securities Act of 1933 and
will not be "restricted securities." An "affiliate" is a person having sole
power or sharing the power to direct or cause the direction of the management
and policies of the Company. Unless a separate resale prospectus is prepared
and filed with the Securities and Exchange Commission ("SEC") by the Company,
affiliates must make resales of such shares in compliance with SEC Rule 144
(except that the holding period requirement of Rule 144 is not applicable to
the resale of such shares), or another available exemption from registration
under the Securities Act of 1933. Thus, affiliates are subject generally to
the same restrictions with regard to the resale of shares acquired under the
Plan as they are with respect to the resale of otherwise-acquired shares of
the Company's common stock, including the restrictions resulting from the
provisions of Section 16(b) of the Securities Exchange Act of 1934.
Section 16(b) of the Securities Exchange Act of 1934 provides for recapture by
the Company of "profit" realized by an officer, director or more than 10%
shareholder of the Company from any purchase (including the exercise of an
Option) and sale, or any sale and purchase, of any equity security of the
Company within any period of less than six months.
Tax Consequences
----------------
The Company has been advised that under the present provisions of
the Code, and subject to all regulations promulgated under Section 422
thereof, the federal income tax consequences with respect to Options which may
be granted under the Plan can be summarized as follows:
(1) An Optionee will not recognize income nor will the Company
be entitled to a deduction at the time an ISO is granted or exercised. Any
gain upon the subsequent sale of the shares acquired on exercise of an ISO is
subject to tax at capital gains rates; provided that the Optionee makes no
disposition of the shares within two (2) years after the ISO is granted or
within one year after the shares are transferred to the Optionee, whichever is
later. The spread between the ISO price and the fair market value of the
shares at the time o exercise is, however, a preference item and must be
recognized for purposes of the alternative minimum tax. The Company is not
entitled to any tax deduction if the Optionee satisfies the holding period
requirements described above.
(2) If the Optionee makes a disposition of shares purchased
upon exercise of an ISO before the expiration of the requisite holding periods
described above, the Optionee will be taxed as if he had received compensation
income in the year of disposition and the Company will be entitled to a
corresponding deduction in that year; provided it satisfies certain
withholding requirements. The holding period requirements are waived in the
event of the employee's death. The amount of income (and the Company's
deduction) will be equal to the difference between the ISO exercise price and
the fair market value of the shares on the date of exercise. Any balance of
the Optionee's gain on disposition of the shares will be subject to tax as a
capital gain determined under the normal capital asset holding period rules.
However, if the Optionee makes a disqualifying disposition of shares before
the expiration of the holding periods described above that is a sale or
exchange with respect to which a loss (if sustained) would be recognized (i.e.
not to a related party), the amount of compensation income recognized by the
Optionee (and the Company's deduction) will not exceed the excess, if any, of
the amount realized over the adjusted basis of the shares.
(3) Shares purchased upon the exercise of an ISO may be paid
for in whole or part by delivering previously acquired shares of Common Stock
of the Company. However, all stock acquired pursuant to the exercise of an ISO
is subject to the holding period rules and disqualifying disposition rules
described above, regardless of whether such stock is paid for with cash or
previously acquired shares. Furthermore, the exercise of an ISO with
previously acquired shares will be deemed to be an exchange to which Section
1036 of the Code applies. The Optionee's basis and holding period in the
number of shares of ISO stock that equals the number of previously acquired
shares used to exercise the ISO will be the same as the basis and holding
period of the previously acquired shares used to exercise the ISO. The
Optionee's basis in any remaining shares of ISO stock will be zero and his
holding period for those shares will begin on the date he acquires those
remaining shares.
(4) An Optionee will not recognize taxable income at the time
a NSO is granted, but taxable income will be recognized, and the Company will
be entitled to a deduction (provided it satisfies certain withholding
requirements) at the time of exercise of the NSO. The amount of income (and
the Company's deduction) will be equal to the difference between the NSO
exercise price and the fair market value of the shares on the date of
exercise. The income recognized will be taxed at ordinary income tax rates
for federal income tax purposes. On subsequent disposition of the shares
acquired upon exercise of a NSO, capital gain or loss, as determined under the
normal capital asset holding period rules, will be recognized in the amount of
the difference between the proceeds of sale and the fair market value of the
shares on the date of exercise.
(5) Where the NSO exercise price is paid in previously
acquired stock, the exercise is treated as a tax-free exchange of the shares
of previously acquired stock (without recognizing any taxable gain with
respect thereto) for a like number of new shares (with such new shares having
the same basis and holding period as the old). The Optionee's basis in any
remaining shares will equal the amount of compensation income recognized upon
exercise of the NSO and the holding period for such shares will begin on the
day the Optionee acquires them. This mode of payment does not affect the
ordinary income tax liability incurred upon exercise of the NSO described
above.
(6) If "statutory option stock" (stock acquired through the
exercise of an ISO and Options issued under an employee stock purchase plan)
is transferred to acquire shares offered under an Option, and if the
applicable holding periods for such statutory option stock have not been met
before such transfer, the transfer is considered a disqualifying disposition
and will result in ordinary income with respect to the stock disposed of, but
will not affect the tax treatment, as described above, for the stock received.
(7) In the case of officers and directors of the Company
subject to the short-swing profit provisions of Section 16(b) under the
Securities Exchange Act of 1934, the tax consequences of exercise of either an
ISO or NSO granted under the Plan will be deferred until at least six months
after exercise, unless such persons otherwise elect at the time of exercise.
However, the income when recognized will include any appreciation in value of
the acquired shares during the period of deferral, and the capital gain
holding period will not begin to run until the end of the period of deferral.
The foregoing summary description is based upon the presently
applicable provisions of the Code, and is subject to change in the event of a
change in either the Code or interpretations thereof. Each Optionee is urged
to consult his personal legal and tax advisor as to the legal and tax effects
of his individual situation and his participation in the Plan.
Outstanding Options
-------------------
As of March 3, 1998, Options had been granted for 171,700 shares
authorized to be issued pursuant to the Plan; and 171,700 Options were
outstanding and unexercised. On that date, 14,600 additional shares dedicated
to the Plan were available for future Option grant and purchase.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
- ------ -----------------------------------------------------------
American Educational Products, Inc. will provide without charge
to each person, including any beneficial owner, to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of any document
referred to herein in Item 3. under the caption "Incorporation of Certain
Documents by Reference," which documents are incorporated by reference in
American Educational Products, Inc.'s Section 10(a) prospectus, together with
a copy of the Plan, and/or a copy of American Educational Products, Inc.'s
latest annual report to shareholders. Such a request should be directed to
American Educational Products, Inc.
American Educational Products, Inc. is subject to the
informational reporting requirements of the Securities Exchange Act of 1934
and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
The reports, proxy and information statements and other information filed by
American Educational Products, Inc. can be inspected and copied (at prescribed
rates) at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W. Judiciary Plaza, Washington, D.C. 20549, as well as at the
following Regional Offices: Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511; and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material also
may be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
and are publicly available through the Commission's website at
http:\\www.sec.gov.
<PAGE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
- ------ ---------------------------------------
The Registrant hereby states that (i) the documents listed in (a)
through (c) below are incorporated by reference in this Registration Statement
and (ii) all documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered
hereunder have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents.
(a) The Registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996, as filed with the Commission on April 11,
1997, SEC File No. 0-16310;
(b) All other reports filed pursuant to Section 13(a) or 15(d)
of the Exchange Act since the end of the fiscal year covered by the Registrant
document referred to in (a) above, including:
1. The Registrant's Quarterly Report on Form 10-QSB for
the fiscal quarter ended Sept. 30, 1997; as filed with the Commission on
November 17, 1997, SEC File No. 0-16310;
2. The Notice of Annual Meeting of Shareholders, Proxy
Statement and form of Proxy filed with the Securities and Exchange Commission
("Commission") on April 30, 1997, in connection with the Registrant's Annual
Meeting of Shareholders on June 2, 1997;
(c) The description of the Registrant's Common Stock, $.05 par
value, contained in the Registrant's Amendment No. 1 to Registration Statement
on Form S-2, as filed with the Commission on August 20, 1992, SEC File No. 0-
16310, as amended, including any amendment or report filed for the purpose of
updating such description.
ITEM 4. DESCRIPTION OF SECURITIES.
- ------ -------------------------
Not applicable. The class of securities to be offered is
registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
- ------ --------------------------------------
Clifford L. Neuman, a partner in the law firm of Neuman &
Drennen, LLC, is the beneficial owner of 12,000 shares of Common Stock and
12,000 Options of the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ------ -----------------------------------------
The only statute, charter provision, bylaw, contract, or other
arrangements under which any controlling person, director or officers of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such, are as follows:
(a) Sections 7-109-101 through 7-109-110 of the Colorado Corporation
Code provide as follows:
7-109-101. Definitions. As used in this article:
----------
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation,
is or was serving at the corporation's request as a director,
officer, partner, trustee, employee, fiduciary, or agent of another
domestic or foreign corporation or other person or of an employee
benefit plan. A director is considered to be serving an employee
benefit plan at the corporation's request if his or her duties to
the corporation also impose duties on, or otherwise involve services
by, the director to the plan or to participants in or beneficiaries
of the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine, including
an excise tax assessed with respect to an employee benefit plan, or
reasonable expenses.
(5) "Official capacity" means, when used with respect to a
director, the office of director in a corporation and, when used
with respect to a person other than a director as contemplated in
section 7-109-107, the office in a corporation held by the officer
or the employment, fiduciary, or agency relationship undertaken by
the employee, fiduciary, or agent on behalf of the corporation.
"Official capacity" does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
7-109-102. Authority to indemnify directors.
----------
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to a proceeding
because the person is or was a director against liability incurred
in the proceeding if:
(a) The person conducted himself or herself in good faith;
and
(b) The person reasonable believed:
(I) In the case of conduct in an official capacity
with the corporation, that his or her conduct was in the
corporation's best interests; and
(II) In all other cases, that his or her conduct
was at least not opposed to the corporation's best
interests; and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(2) A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the
interests of the participants in or beneficiaries of the plan is
conduct that satisfies the requirement of subparagraph (II) of
paragraph (b) of subsection (1) of this section. A director's
conduct with respect to an employee benefit plan for a purpose that
the director did not reasonably believe to be in the interests of
the participants in or beneficiaries of the plan shall be deemed not
to satisfy the requirements of paragraph (a) of subsection (1) of
this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meet the
standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not
involving action in an official capacity, in which proceeding the
director was adjudged liable on the basis that he or she derived an
improper personal benefit.
(5) Indemnification permitted under this section in connection with
a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
7-109-103. Mandatory indemnification of directors.
----------
Unless limited by its articles of incorporation, a corporation shall
indemnify a person who was wholly successful, on the merits or otherwise,
in the defense of any proceeding to which the person was a party because
the person is or was a director, against reasonable expenses incurred by
him or her in connection with the proceeding.
7-109-104. Advance of expenses to directors.
----------
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of
final disposition of the proceeding if:
(a) The director furnishes to the corporation a written
affirmation of the director's good faith belief that he or she has
met the standard of conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written
undertaking, executed personally or on the director's behalf, to
repay the advance if it is ultimately determined that he or she did
not meet the standard of conduct; and
(c) A determination is made that the facts then known to
those making the determination would not preclude indemnification
under this article.
(2) The undertaking required by paragraph (b) of subsection (1) of
this section shall be an unlimited general obligation of the
director but need not be secured and may be accepted without
reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in section 7-109-106.
7-109-105. Court-ordered indemnification of directors.
----------
(1) Unless otherwise provided in the articles of incorporation, a
director who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application, the
court, after giving any notice the court considers necessary, may
order indemnification in the following manner:
(a) If it determines that the director is entitled to
mandatory indemnification under section 7-109-103, the court shall
order indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is fairly and
reasonable entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the standard of
conduct set forth in section 7-109-102 (1) or was adjudged liable in
the circumstances described in section 7-109-102 (4), the court may
order such indemnification as the court deems proper; except that
the indemnification with respect to any proceeding in which
liability shall have been adjudged in the circumstances described in
section 7-109-102 (4) is limited to reasonable expenses incurred in
connection with the proceeding and reasonable expenses incurred to
obtain court-ordered indemnification.
7-109-106. Determination and authorization of indemnification of
---------- directors.
(1) A corporation may not indemnify a director under section 7-109-
102 unless authorized in the specific case after a determination has
been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct
set forth in section 7-109-102. A corporation shall not advance
expenses to a director under section 7-109-104 unless authorized in
the specific case after the written affirmation and undertaking
required by section 7-109-104 (1) (a) and (1) (b) are received and
the determination required by section 7-109-104 (1) (c) has been
made.
(2) The determinations required by subsection (1) of this section
shall be made:
(a) By the board of directors by a majority vote of those
present at a meeting at which a quorum is present, and only those
directors not parties to the proceeding shall be counted in
satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a
committee of the board of directors designated by the board of
directors, which committee shall consist of two or more directors
not parties to the proceeding; except that directors who are parties
to the proceeding may participate in the designation of directors
for the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a)
of subsection (2) of this section, and a committee cannot be
established under paragraph (b) of subsection (2) of this section,
or, even if a quorum is obtained or a committee is designated, if a
majority of the directors constituting such quorum or such committee
so directs, the determination required to be made by subsection (1)
of this section shall be made:
(a) By independent legal counsel selected by a vote of the
board of directors or the committee in the manner specified in
paragraph (a) or (b) of subsection (2) of this section or, if a
quorum of the full board cannot be obtained and a committee cannot
be established, by independent legal counsel selected by a majority
vote of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall
be made in the same manner as the determination that indemnification
or advance of expenses is permissible; except that, if the
determination that indemnification or advance of expenses is
permissible is made by independent legal counsel, authorization of
indemnification and advance of expenses shall be made by the body
that selected such counsel.
7-109-107. Indemnification of officers, employees, fiduciaries,
and
---------- agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under
section 7-109-103, and is entitled to apply for court-ordered
indemnification under section 7-109-105, in each case to the same
extent as a director;
(b) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the
same extent as to a director; and
(c) A corporation may also indemnify and advance expenses to
an officer, employee, fiduciary, or agent who is not a director to a
greater extent, if not inconsistent with public policy, and if
provided for by its bylaws, general or specific action of its board
of directors or shareholders, or contract.
7-109-108. Insurance.
----------
A corporation may purchase and maintain insurance on behalf of a person
who is or was a director, officer, employee, fiduciary, or agent of the
corporation, or who, while a director, officer, employee, fiduciary, or
agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of another domestic or foreign corporation or other
person or of an employee benefit plan, against liability asserted against
or incurred by the person in that capacity or arising from his or her
status as a director, officer, employee, fiduciary, or agent, whether or
not the corporation would have power to indemnify the person against the
same liability under section 7-109-102, 7-109-103, or 7-109-107. Any
such insurance may be procured from any insurance company designated by
the board of directors, whether such insurance company is formed under
the laws of this state or any other jurisdiction of the United States or
elsewhere, including any insurance company in which the corporation has
an equity or any other interest through stock ownership or otherwise.
7-109-109. Limitation of indemnification of directors.
----------
(1) A provision treating a corporation's indemnification of, or
advance of expenses to, directors that is contained in its articles
of incorporation or bylaws, in a resolution of its shareholders or
board of directors, or in a contract, except an insurance policy, or
otherwise, is valid only to the extent the provision is not
inconsistent with sections 7-109-101 to 7-109-108. If the article
of incorporation limit indemnification or advance of expenses,
indemnification and advance of expenses are valid only to the extent
not inconsistent with the articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in
connection with an appearance as a witness in a proceeding at a time
when he or she has not been made a named defendant or respondent in
the proceeding.
7-109-110. Notice to shareholder of indemnification of director.
----------
If a corporation indemnifies or advances expenses to a director under
this article in connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice of the
indemnification or advance to the shareholders with or before the notice
of the next shareholders' meeting. If the next shareholder action is
taken without a meeting at the instigation of the board of directors,
such notice shall be given to the shareholders at or before the time the
first shareholder signs a writing consenting to such action.
* * *
(b) Article XI of the Amended and Restated Articles of Incorporation of
the Registrant provides, in pertinent part:
a. A director of this Corporation shall not be liable to the
corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except to the
extent that such an exemption from liability or limitation
thereof is not permitted under the General Corporation
Laws of the State of Colorado as the same exists or may
hereafter be amended.
b. Any repeal or modification of the foregoing paragraph a.
by the stockholders of the corporation shall not adversely
affect any right or protection of a director of the
corporation existing at the time of such repeal or
modification.
(c) Article VIII of the Amended and Restated Articles of Incorporation
of the Registrant provides:
The Corporation may and shall indemnify each Director,
Officer and any employee or agent of the Corporation, his
heirs, executors and administrators, against any and all
expenses and liability reasonably incurred by him in
connection with any action, suit or proceeding to which he
may be a party by reason of his being or having been a
director, officer, employee or agent of the Corporation to
the full extent required or permitted by the Colorado
Corporation Code, as amended.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
- ------ -----------------------------------
Not applicable. No Restricted Securities are to be reoffered or
resold pursuant to this Registration Statement.
ITEM 8. EXHIBITS.
- ------ --------
Exhibit Description
- ------- -----------
4.1 American Educational Products, Inc. 1997 Stock Incentive Plan, as amended
5.0 Opinion of Neuman & Drennen, LLC
23.1 Consent of Neuman & Drennen, LLC (contained in Exhibit 5.0)
23.2 Consent of Hein & Associates, LLP, Certified Public Accountants
ITEM 9. UNDERTAKINGS.
- ------ ------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change in the
information in the registration statement; and
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boulder, Colorado, on March 17,
1998.
AMERICAN EDUCATIONAL PRODUCTS, INC.
By: /s/ Clifford C Thygesen
------------------------------------------
Clifford C. Thygesen, President and Chief
Executive Officer
POWER OF ATTORNEY
-----------------
Each of the directors of the Registrant and each other person
whose signature appears below, by his execution hereof, authorizes Clifford C.
Thygesen to act as his attorney in fact to sign, on his behalf individually
and in each capacity stated below, and file all amendments and post-effective
amendments to, the Registration Statement, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission
and such other applicable governmental/regulatory agencies, hereby ratifying
and confirming all that Clifford C. Thygesen or his substitute or substitutes,
may do or cause to be done by virtue hereof, and the Registrant hereby confers
like authority to sign and file on its behalf.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dated indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Clifford C. Thygesen President, Director 3/17/98
- --------------------------- --------
Clifford C. Thygesen
/s/ Frank L. Jennings Vice President, 3/17/98
- --------------------------- Chief Financial Officer, --------
Frank L. Jennings Chief Accounting Officer
/s/ Robert A. Scott Secretary, Director 3/17/98
- --------------------------- --------
Robert A. Scott
/s/ Clifford L. Neuman Assistant Secretary, 3/17/98
- --------------------------- Director --------
Clifford L. Neuman
<PAGE>
EXHIBIT 4.1
-----------
AMERICAN EDUCATIONAL PRODUCTS, INC.
1997 STOCK INCENTIVE PLAN
I. PURPOSE.
--------
A. This Stock Incentive Plan (the "Plan") is adopted by the
Board of Directors of American Educational Products, Inc., a Colorado
corporation (the "Company"), on June 2,1997 to enable the Company to afford
certain of its directors, executive officers and key employees and the
directors, executive officers and key employees of any subsidiary corporation
or parent corporation of the Company who are responsible for the continued
growth of the Company, an opportunity to acquire a proprietary interest in the
Company and thus to create in such directors, executive officers and key
employees and increased interest in, and a greater concern for, the welfare of
the Company.
B. The stock options ("Options") offered pursuant to the Plan
are a matter of separate inducement and are not in lieu of any salary or other
compensation for the services of such directors, executive officers or key
employees.
C. The Options granted under the Plan are intended to be either
incentive stock options ("Incentive Options") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") or Options
that do not meet the requirements for Incentive Options ("Non-Qualified
Options"), but the Company makes no warranty as to the qualification of any
Option as an Incentive Option.
II. ADMINISTRATION OF THE PLAN.
---------------------------
A. Procedure.
----------
The Plan shall be administered by the Board of Directors of the
Company or a Committee of the Board of Directors.
1. Subject to subparagraph (2), the Board of Directors may
appoint a Committee consisting of not less than two members of the Board of
Directors to administer the Plan on behalf of the Board of Directors, subject
to such terms and conditions as the Board of Directors may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by
the Board of Directors. All members of the Committee shall be "disinterested
persons" within the meaning of Rule 16b-3(c)(2)(i) (or any successor rule or
regulation) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). A majority of the members of the Committee shall
constitute a quorum, and the act of a majority of the members of the Committee
shall be the act of the Committee. Any member of the Committee may be removed
at any time, either with or without cause, by resolution adopted by the Board
of Directors, and any vacancy on the Committee may at any time be filled by
resolution adopted by the Board of Directors.
2. Any or all powers and functions of the Committee may at
any time, and from time to time, be exercised by the Board of Directors;
provided, however, that with respect to the participation in the Plan by
members of the Board of Directors, such powers and functions of the Committee
may be exercised by the Board of Directors only if, at the time of such
exercise, a majority of the members of the Board of Directors, as the case may
be, and a majority of the directors acting in a particular matter, are
"disinterested persons" within the meaning of Rule 16b-3(c)(2)(i) (or any
successor rule or regulation) promulgated under the Exchange Act. Any
reference in the Plan to the Committee shall be deemed also to refer to the
Board of Directors, to the extent that the Board of Directors is exercising
any of the powers and functions of the Committee. No action of the Board of
Directors under the Plan shall act to invalidate the Plan or any benefits
granted hereunder.
3. Subject to the foregoing subparagraphs (1) and (2), from
time to time the Board of Directors may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies however caused,
or remove all members of the Committee and thereafter directly administer the
Plan.
B. Powers of the Committee.
------------------------
Subject to the provisions of the Plan, the Committee shall have
the authority, in its discretion:
1. to determine the directors, executive officers and key
employees to whom Options shall be granted, the time when such Options shall
be granted, the number of shares which shall be subject to each Option, the
purchase price or exercise price of each share which shall be subject to each
Option, the periods during which such Options shall be exercisable (whether in
whole or in part) and the other terms and provisions with respect to the
Options (which need not be identical);
2. to determine, upon review of relevant information and in
accordance with Article IX hereof, the fair market value of the Common Stock
underlying the Options;
3. to construe the Plan and Options granted thereunder;
4. to accelerate or defer (with the consent of the
Optionee) the exercise of any Option, consistent with the provisions of the
Plan;
5. to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an option;
6. to prescribe, amend and rescind rules and regulations
relating to the Plan;
7. to make all other determinations deemed necessary or
advisable for the administration of the Plan.
C. Agreements With Optionee.
-------------------------
Without limiting the foregoing, the Committee shall also have the
authority to require, in its discretion, as a condition to the granting of any
Option, that the Participant agree not to sell or otherwise dispose of shares
acquired pursuant to the Option for a prescribed period following the date of
acquisition of such shares and that in the event of termination of a
directorship or employment of such Participant, other than as a result of
dismissal without cause, the Participant will not, for a period to be fixed at
the time of the grant of the Option, enter into any employment or participate
directly or indirectly in any business or enterprise which is competitive with
the business of the Company or any subsidiary corporation or parent
corporation of the Company, or enter into any employment in which such
employee or director will be called upon to utilize special knowledge obtained
through his or her directorship or employment with the Company or any
subsidiary corporation or parent corporation thereof.
D. Effect of Committee's Decision.
-------------------------------
All decisions, determinations and interpretations of the Committee
shall be final and binding on all Optionees and any other holders of any
Options granted under the Plan.
III. ELIGIBILITY.
------------
A. Non-Qualified Options may be granted to directors, officers,
other salaried key employees or consultants of the Company, or any subsidiary
corporation or parent corporation of the Company now existing or hereafter
formed or acquired, except as hereafter provided. Any person who shall have
retired from active employment by the Company, although such person shall have
entered into a consulting contract with the Company, shall not be eligible to
receive an Option.
B. An Incentive Option may be granted only to salaried officers
or key employees of the Company or any subsidiary corporation or parent
corporation of the Company now existing or hereafter formed or acquired, and
not to any director or officer who is not also an employee.
IV. AMOUNT OF STOCK.
----------------
A. The total number of shares of Common Stock of the Company
which may be purchased pursuant to the exercise of Options granted under the
Plan shall not exceed, in the aggregate, 186,300 shares of the authorized
Common Stock, $.05 par value per share, of the Company (the "Shares"). Shares
which are subject to Options shall be counted only once in determining whether
the maximum number of shares which may be purchased or acquired under the Plan
has been exceeded.
B. Shares which may be acquired under the Plan may either be
authorized but unissued Shares, Shares of issued stock held in the Company's
treasury, or both, at the discretion of the Company. If and to the extent
that Options granted under the Plan expire or terminate without having been
exercised, new Options may be granted with respect to the Shares covered by
such expired or terminated Options, provided that the grant and the terms of
such new Options shall in all respects comply with the provisions of the Plan.
V. EFFECTIVE DATE AND TERM OF THE PLAN.
------------------------------------
A. The Plan shall become effective on the date (the "Effective
Date") on which it is adopted by the Board of Directors of the Company.
B. The Company may, from time to time during the period
beginning on the Effective Date and ending on June 1, 2007 (the "Termination
Date") grant to persons eligible to participate in the Plan, Options under the
terms of the Plan. Options granted prior to the Termination Date may extend
beyond that date, in accordance with the terms thereof. In no event shall the
expiration date be later than June 1, 2012 five (5) years following the
Termination Date.
C. As used in the Plan, the terms "subsidiary corporation" and
"parent corporation" shall have the meanings ascribed to such terms,
respectively, in Sections 425(f) and 425(e) of the Code.
D. An employee, executive officer or director to whom Options
are granted hereunder may be referred to herein as a "Participant".
VI. LIMITATION ON INCENTIVE OPTIONS.
--------------------------------
The amount of aggregate fair market value of the stock determined at the
time of the grant of the Incentive Option for which any employee may be
granted Incentive Options under this Plan in any calendar year shall not
exceed the sum of (i) $100,000.00 plus (ii) an unused limit carryover amount
for any year after the date of this Plan but prior to the calendar year under
consideration. The unused limit carryover amount shall be determined as one-
half of the amount by which $100,000.00 exceeds the aggregate fair market
value at the time of grant of an Incentive Option under this Plan for which
Incentive Options were granted in any prior year, but carried over for not
more than three (3) years. For this purpose, Incentive Options granted in any
year shall be deemed to first use up the $100,000.00 current year limitation
and then the unused limit carryover amount from the earliest available year.
VII. TERMS OF OPTIONS.
-----------------
Stock Options granted pursuant to this Plan shall be evidenced by written
agreements which shall comply with the following terms and conditions:
A. Time of Exercise.
-----------------
Any Option may be exercised by the Participant holding such Option
for such period or periods as the Committee shall determine at the date of
grant of such Option. In no event shall any Incentive Option granted to a
Participant owning more than ten percent (10%) of the voting power of all
classes of the Company's stock, or the stock of any subsidiary corporation or
parent corporation, be exercisable by its terms after the expiration of
five (5) years from the date it is granted, nor shall any other Incentive
Option granted under this Plan be exercisable by its terms after ten (10)
years from the date it is granted. The Committee shall have the right to
accelerate, in whole or in part, the expiration date of any Option; and to the
extent that an Option is not exercised within the period of exercisability
specified therein, it shall expire as to the then unexercised portion.
B. Transferability.
----------------
Any Option granted under this Plan shall not be transferrable by
the director, executive officer or key employee holding same and may be
exercised by the director, executive officer or key employee only during his
lifetime, except that the Option may be exercisable after the death of such
director, executive officer or key employee in accordance with the laws of
descent and distribution.
C. Option Price.
-------------
1. The purchase price for each Share purchasable under any
Non-Qualified Option granted hereunder shall be such amount as the Committee
shall deem appropriate.
2. The purchase price for shares of stock subject to any
Incentive Option under this Plan, shall not be less than the fair market value
of the stock on the date of the grant of the Incentive Option, which fair
market value shall be determined in good faith at the time of the grant of the
Incentive Option by the Committee administering this Plan. In the event that
any Incentive Option is granted to an employee owning more than ten percent
(10%) of the voting power of all classes of the Company's stock, the purchase
price per share of the stock subject to such an Incentive Option shall not be
less than 110% of the fair market value of the stock on the date of the grant
of such Incentive Option determined in good faith by the Committee.
D. Consideration for Shares.
-------------------------
The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Committee and may consist entirely of cash, check, other shares of common
stock of the Company which have a fair market value on the date of surrender
equal to the aggregate exercise price of the shares as to which said Option
shall be exercised, or any combination of such methods of payment, or such
other consideration and method of payment for issuance of shares to the extent
permitted under applicable provisions of the Colorado Corporation Code and the
Company's Articles of Incorporation and Bylaws.
E. Vesting.
--------
Any Options granted pursuant to this Plan may be made subject to
vesting by the Committee in its discretion.
VIII. SHAREHOLDER APPROVAL.
---------------------
This Plan shall not be valid unless it shall be approved by the
shareholders of the Company at a regular or special meeting of shareholders.
which shall be held within the period of twelve (12) months following the
effective date of this Plan set forth above. The Company's shareholders
approved the Plan at an Annual Meeting held June 2, 1997.
IX. METHOD OF DETERMINATION OF FAIR MARKET VALUE.
---------------------------------------------
A. If the Shares are listed on a national securities exchange in
the United States on any date on which the fair market value per Share is to
be determined, the fair market value per Share shall be deemed to be the
average of the high and low quotations at which such Shares are sold on such
national securities exchange on such date. If the Shares are listed on a
national securities exchange in the United States on such date but the Shares
are not traded on such date, or such national securities exchange is not open
for business on such date, the fair market value per Share shall be determined
as of the closest preceding date on which such exchange shall have been open
for business and the Shares were traded. If the Shares are listed on more
than one national securities exchange in the United States on the date any
such Option is granted, the Committee shall determine which national
securities exchange shall be used for the purpose of determining the fair
market value per Share.
B. If a public market exists for the Shares on any date on which
the fair market value per Share is to be determined but the Shares are not
listed on a national securities exchange in the United States, the fair market
value per Share shall be deemed to be the mean between the closing bid and
asked quotations in the over-the-counter market for the Shares on such date.
If there are no bid and asked quotations for the Shares on such date, the fair
market value per Share shall be deemed to be the mean between the closing bid
and asked quotations in the over-the-counter market for the Shares on the
closest date preceding such date for which such quotations are available.
C. If no public market exists for the Shares on any date on
which the fair market value per Share is to be determined, the Committee
shall, in its sole discretion and best judgment, determine the fair market
value of a Share.
For purposes of this Plan, the determination by the Committee of the fair
market value of a Share shall be conclusive.
X. TERMINATION OF DIRECTORSHIP OR EMPLOYMENT.
------------------------------------------
A. Upon termination of the directorship or employment of any
Participant with the Company and all subsidiary corporations and parent
corporations of the Company, any Option previously granted to the Participant,
unless otherwise specified by the Committee in the Option, shall, to the
extent not theretofore exercised, terminate and become null and void, provided
that:
1. if the Participant shall die while serving as a director
or while in the employ of such corporation or during either the three (3) or
one (1) year period, whichever is applicable, specified in clause A.2 below
and at a time when such Participant was entitled to exercise an Option as
herein provided, the legal representative of such Participant, or such person
who acquired such Option by bequest or inheritance or by reason of the death
of the Participant, may, not later than one (1) year from the date of death,
exercise such Option, to the extent not theretofore exercised, in respect of
any or all of such number of Shares as specified by the Committee in such
Option; and
2. if the directorship or employment of any Participant to
whom such Option shall have been granted shall terminate by reason of the
Participant's retirement (at such age or upon such conditions as shall be
specified by the Committee), disability (as described in Section 22(e)(3) of
the Code) or dismissal by the employer other than for cause (as defined
below), and while such Participant is entitled to exercise such Option as
herein provided, such Participant shall have the right to exercise such
Option, to the extent not theretofore exercised, in respect of any or all of
such number of Shares as specified by the Committee in such Option, at any
time up to and including (i) three (3) months after the date of such
termination of directorship or employment in the case of termination by reason
of retirement or dismissal other than for cause, and (ii) one (1) year after
the date of termination of directorship or employment in the case of
termination by reason of disability.
In no event, however, shall any person be entitled to
exercise any Option after the expiration of the period of exercisability of
such Option as specified therein.
B. If a Participant voluntarily terminates his directorship or
employment, or is discharged for cause, any Option granted hereunder shall,
unless otherwise specified by the Committee in the Option, forthwith terminate
with respect to any unexercised portion thereof.
C. If an Option shall be exercised by the legal representative
of a deceased Participant, or by a person who acquired an Option or by bequest
or inheritance or by reason of the death of any Participant, written notice of
such exercise shall be accompanied by a certified copy of letter testamentary
or equivalent proof of the right of such legal representative or other person
to exercise such Option.
D. For the purposes of the Plan, the term "for cause" shall
mean:
1. with respect to an employee who is a party to a written
agreement with, or, alternatively, participates in a compensation or benefit
plan of the Company or a subsidiary corporation or parent corporation of the
Company, which agreement or plan contains a definition of "for cause" or
"cause" (or words of like import) for purposes of termination of employment
thereunder by the Company or such subsidiary corporation or parent corporation
of the Company, "for cause" or "cause" as defined in the most recent of such
agreements or plans; or
2. in all other cases, as determined by the Board of
Directors, in its sole discretion, (i) the willful commission by an employee
of a criminal or other act that causes or probably will cause substantial
economic damage to the Company or a subsidiary corporation or parent
corporation of the Company or substantial injury to the business reputation of
the Company or a subsidiary corporation or parent corporation of the Company;
(ii) the commission by an employee of an act of fraud in the performance of
such employee's duties on behalf of the Company or a subsidiary corporation or
parent corporation of the Company; (iii) the continuing willful failure of an
employee to perform the duties of such employee to the Company or a subsidiary
corporation or parent corporation of the Company (other than such failure
resulting from the employee's incapacity due to physical or mental illness)
after written notice thereof (specifying the particulars thereof in reasonable
detail) and a reasonable opportunity to be heard and cure such failure are
given to the employee by the Board of Directors; or (iv) the order of a court
of competent jurisdiction requiring the termination of the employee's
employment. For purposes of the Plan, no act, or failure to act, or the
employee's part shall be considered "willful" unless done or omitted to be
done by the employee not in good faith and without reasonable belief that the
employee's action or omission was in the best interest of the Company or a
subsidiary corporation or parent corporation of the Company.
E. For the purposes of the Plan, an employment relationship
shall be deemed to exist between an individual and a corporation if, at the
time of the determination, the individual was an "employee" of such
corporation for purposes of Section 422(a) of the Code. If an individual is
on maternity, military, or sick leave or other bona fide leave of absence,
such individual shall be considered an "employee" for purposes of the exercise
of an Option and shall be entitled to exercise such Option during such leave
if the period of such leave does not exceed ninety (90) days, or if longer, so
long as the individual's right to reemployment with his employer is guaranteed
either by statute or by contract. If the period of leave exceeds ninety (90)
days, the employment relationship shall be deemed to have terminated on the
ninety-first (91) day of such leave, unless the individual's right to
reemployment is guaranteed by statute or contract.
F. A termination of employment shall not be deemed to occur by
reason of (i) the transfer of a Participant from employment by the Company to
employment by a subsidiary corporation or a parent corporation of the Company,
or (ii) the transfer of a Participant from employment by a subsidiary
corporation or a parent corporation of the Company to employment by the
Company or by another subsidiary corporation or parent corporation of the
Company.
XI. RIGHT TO TERMINATE EMPLOYMENT.
------------------------------
The Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the
employment of any Participant; and it shall not impose any obligation on the
part of any Participant to remain in the employ of the Company or of any
subsidiary corporation or parent corporation thereof.
XII. PURCHASE FOR INVESTMENT.
------------------------
Except as hereafter provided, a Participant shall, upon any exercise of
an Option or Right, execute and deliver to the Company a written statement, in
form satisfactory to the Company, in which such Participant represents and
warrants that such Participant is purchasing or acquiring the Shares acquired
thereunder for such Participant's own account, for investment only and not
with a view to the resale or distribution thereof, and agrees that any
subsequent offer for sale or sale or distribution of any of such Shares shall
be made only pursuant to either (a) a Registration Statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"),
which Registration Statement has become effective and is current with regard
to the Shares being offered or sold; or (b) a specific exemption from the
registration requirements of the Securities Act, but in claiming such
exemption the holder shall, if so requested by the Company, prior to any offer
for sale or sale of such Shares, obtain a prior favorable written opinion, in
form and substance satisfactory to the Company, from counsel for or approved
by the Company, as to the applicability of such exemption thereto. The
foregoing restriction shall not apply to (i) issuances by the Company so long
as the Shares being issued are registered under the Securities Act and a
prospectus in respect thereof is current, or (ii) reofferings of Shares by
affiliates of the Company (as defined in Rule 405 or any successor rule or
regulation promulgated under the Securities Act) if the Shares being reoffered
are registered under the Securities Act and a prospectus in respect thereof is
current.
XIII. EXCHANGE, S.E.C. OR OTHER GOVERNMENTAL REQUIREMENTS.
----------------------------------------------------
If any law or regulation of the Securities and Exchange Commission, any
stock exchange, NASDAQ, or any governmental body having jurisdiction shall
require any action to be take in connection with the issuance of shares
pursuant to an Option under this Plan before shares can be delivered to an
Optionee, then the date for issuance of these shares shall be postponed until
such action can be taken.
XIV. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
-----------------------------------------------------
Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration". Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company,
the Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the
right to exercise his Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
In the event of a proposed sale of all or substantially all of the assets of
the Company, or the merger of the Company with or into another corporation,
the Option shall be assumed or an equivalent option shall be substituted by
such successor corporation or a parent or subsidiary of such successor
corporation, unless such successor corporation does not agree to assume the
Option or to substitute an equivalent option, in which case the Board shall,
in lieu of such assumption or substitution provide for the Optionee to have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. If the
Board makes an Option fully exercisable in lieu of assumption or substitution
in the event of a merger or sale of assets, the Board shall notify the
Optionee that the Option shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option will terminate
upon the expiration of such period.
If, as a result of accelerating the time period during which all Options
are exercisable in full in the event of a merger or asset transaction, any
Optionee would incur liability under Section 16(b) of the Securities Exchange
Act of 1934 as a result of the exercise of an accelerated Option, such
Optionee may request the Company to, and the Company shall be obligated to
repurchase such Option for cash equal to the excess of the fair market value
on the advanced termination date of the shares subject to the Option over the
Option exercise price.
XV. ORDER OF EXERCISE OF OPTIONS.
-----------------------------
No Option issued pursuant to this Plan shall be exercisable so long as
there is any outstanding Option issued at an earlier date with respect to such
Employee; Options must be exercised in the order in which they are granted.
Notwithstanding anything in this Plan to the contrary in connection with any
corporate transaction to which Section 425(a) of the Code is applicable, there
may be a substitution of a new Option for an old Option granted under this
Plan, or an assumption of an old Option granted under this Plan. Any Optionee
who has a new Option submitted for an old Option granted under this Plan
shall, in connection with the corporate transaction, lose his rights under the
old Option. Nothing in the terms of the assumed or substituted Option shall
confer upon the Optionee more favorable benefits than he had under the old
Option.
XVI. CHANGE IN CONTROL.
------------------
A. For purposes of the Plan, a "change in control" of the
Company occurs if (i) any "person" (defined as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act, as amended) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
Company's outstanding securities then entitled to vote for the election of
directors; or (ii) during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board of Directors cease
for any reason to constitute at least a majority thereof; or (iii) the Board
of Directors shall approve the sale of all or substantially all of the assets
of the Company or any merger, consolidation, issuance of securities or
purchase of assets, the result of which would be the occurrence of any event
described in clause (i) or (ii) above.
B. In the event of a change in control of the Company (defined
above), the Committee, in its discretion, may determine that, upon the
occurrence of a transaction described in the preceding paragraph, each Option
outstanding hereunder shall terminate within a specified number of days after
notice to the holder, and such holder shall receive, with respect to each
Share subject to such Option, an amount of cash equal to the excess of the
fair market value of such Share immediately prior to the occurrence of such
transaction over the exercise price per Share of such Option. The provisions
contained in the preceding sentence shall be inapplicable to an Option granted
within six (6) months before the occurrence of a transaction described above
if the holder of such Option is a director or officer of the Company or a
beneficial owner of the Company who is described in Section 16(a) of the
Exchange Act, unless such holder dies or becomes disabled (within the meaning
of Section 22(e)(3) of the Code) prior to the expiration of such six-month
period.)
C. Alternatively, the Committee may determine, in its
discretion, that all then outstanding Options shall immediately become
exercisable upon a change of control of the Company.
XVII. WITHHOLDING TAXES.
------------------
The Company may require an employee exercising a Non-Qualified Option
granted hereunder, or disposing of Shares acquired pursuant to the exercise of
an Incentive Option in a disqualifying disposition (within the meaning of
Section 421(b) of the Code), to reimburse the corporation that employs such
employee for any taxes required by any government to be withheld or otherwise
deducted and paid by such corporation in respect of the issuance or
disposition of such Shares. In lieu thereof, the employer corporation shall
have the right to withhold the amount of such taxes from any other sums due or
to become due from such corporation to the employee upon such terms and
conditions as the Committee shall prescribe. The employer corporation may, in
its discretion, hold the stock certificate to which such employee is entitled
upon the exercise of an Option as security for the payment of such withholding
tax liability, until cash sufficient to pay that liability has been
accumulated.
XVIII. AMENDMENT OF THE PLAN.
----------------------
The Board of Directors or the Committee may, from time to time, amend the
Plan, provided that, notwithstanding anything to the contrary herein, no
amendment shall be made, without the approval of the shareholders of the
Company, that will (i) increase the total number of Shares reserved for
Options under the Plan (other than an increase resulting from an adjustment
provided for in Article X, Termination of Directorship or Employment), (ii)
reduce the exercise price of any Incentive Option granted hereunder below the
price required by Article IX, Method of Determination of Fair Market Value;
(ii) modify the provisions of the Plan relating to eligibility, or (iv)
materially increase the benefits accruing to participants under the Plan. The
Board of Directors or the Committee shall be authorized to amend the Plan and
the Options granted thereunder to permit the Incentive Options granted
thereunder to qualify as "incentive stock options" within the meaning of
Section 422A of the Code. The rights and obligations under any Option granted
before amendment of the Plan or any unexercised portion of such Option shall
not be adversely affected by amendment of the Plan or the Option without the
consent of the holder of the Option.
XIX. TERMINATION OR SUSPENSION OF THE PLAN.
--------------------------------------
The Board of Directors or the Committee may at any time and for any or no
reason suspend or terminate the Plan. The Plan, unless sooner terminated
under Article V, Effective Date and Term of the Plan, or by action of the
Board of Directors, shall terminate at the close of business on the
Termination Date. An Option may not be granted while the Plan is suspended or
after it is terminated. Options granted while the Plan is in effect shall not
be altered or impaired by suspension or termination of the Plan, except upon
the consent of the person to whom the Option was granted. The power of the
Committee under Article II to construe and administer any Options granted
prior to the termination or suspension of the Plan shall continue after such
termination or during such suspension.
XX. GOVERNING LAW.
--------------
The Plan, such Options as may be granted thereunder, and all related
matters shall be governed by, and construed and enforced in accordance with,
the laws of the State of Colorado from time to time obtaining.
XXI. PARTIAL INVALIDITY.
-------------------
The invalidity or illegality of any provision herein shall not be deemed
to affect the validity of any other provision.
XXII. The foregoing Stock Incentive Plan of American Educational
Products, Inc. was approved by a majority of the Board of Directors of the
Company by unanimous consent in writing on June 2, 1997.
AMERICAN EDUCATIONAL PRODUCTS, INC.
By:
--------------------------------
Robert A. Scott, Secretary
The foregoing Stock Incentive Plan American Educational
Products, Inc. was approved by a majority of the shareholders of the Company
at the Annual Meeting of Shareholders on June 2, 1997.
By:
--------------------------------
Robert A. Scott, Secretary
<PAGE>
EXHIBIT 5.0
-----------
March 16, 1998
American Educational Products, Inc.
6550 Gunpark Drive, Suite 200
Boulder, Colorado 80301
Re: S.E.C. Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to American Educational Products, Inc. (the
"Company") in connection with a Registration Statement to be filed with the
United States Securities and Exchange Commission. Washington, D.C., pursuant
to the Securities Act of 1933, as amended, covering the registration of an
aggregate of 186,300 shares of the Company's $.05 par value Common Stock (the
"Common Stock") which may be issued from time to time by the Company pursuant
to the 1997 Stock Incentive Plan (the "Plan").
In connection with such representation of the Company, we have examined
and relied upon the original, or copies certified to our satisfaction, of (I)
the Articles of Incorporation and the Amended and Restated By-Laws of the
Company; (ii) certain minutes and records of the corporate proceedings of the
Company; (iii) the Registration Statement and exhibits thereto; (iv) the Plan;
and such other documents and instruments as we have deemed necessary for the
expression of the opinions contained herein.
In making the foregoing examinations, we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to various questions of fact
material to this opinion, we have relied, to the extent we deem reasonably
appropriate, upon representations or certificates of officers or directors of
the Company, and upon other documents, records and instruments of the Company.
Based upon the foregoing, we are of the opinion as follows:
1. The Company has been duly incorporated and organized under the laws
of the State of Colorado and is validly existing as a corporation in good
standing under the laws of that state.
2. The Company is authorized to issue up to 100,000,000 shares of $.05
par value Common Stock and up to 50,000,000 shares of $.001 par value
Preferred Stock.
3. The 186,300 shares of Common Stock which may be issued from time to
time by the Company in accordance with appropriate actions taken by the Board
of Directors, have been duly authorized, and when so issued and sold at prices
equal to or in excess of the par value per share of the Common Stock and in
accordance with the provisions of the Plan, will be validly issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement.
Sincerely.
Clifford L. Neuman
CLN:ms
<PAGE>
EXHIBIT 23.1
------------
March 16, 1998
American Educational Products, Inc.
6550 Gunpark Drive, Suite 200
Boulder, Colorado 80301
Re: S.E.C. Registration Statement on Form S-8
Ladies and Gentlemen:
We hereby consent to the inclusion of our opinion regarding the legality
of the securities being registered by the Form S-8 Registration Statement to
be filed with the United States Securities and Exchange Commission,
Washington, D.C., pursuant to the Securities Act of 1933, as amended, by
American Educational Products, Inc., a Colorado corporation (the "Company"),
in connection with the offering by the Company of up to 186,300 shares of
Common Stock, $.05 par value, under the 1997 Stock Incentive Plan as proposed
and more fully described in such Registration Statement.
We further consent to the reference in such Registration Statement to our
having given such opinions.
Sincerely,
Clifford L. Neuman
CLN:ms
<PAGE>
EXHIBIT 23.2
------------
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our report dated February 6,
1997 accompanying the financial statements of American Educational Products,
Inc. and Subsidiaries in the Form S-8 Registration Statement of American
Educational Products, Inc.
/s/Hein + Associates LLP
- ------------------------
Hein + Associates, LLP
Denver, Colorado
March 13, 1998
