<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ADVANTAGE MARKETING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
OKLAHOMA 73-1323256
(State of incorporation (I.R.S. Employer
or organization) Identification No.)
2601 NORTHWEST EXPRESSWAY, SUITE 1210W
OKLAHOMA CITY, OKLAHOMA 73112-7293
(Address of principal executive offices) (Zip Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which
to be registered each class is to be registered
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.0001 PAR VALUE
1997-A WARRANTS
(EACH EXERCISABLE TO PURCHASE ONE SHARE OF COMMON STOCK)
- -------------------------------------------------------------------------------
<PAGE>
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
Advantage Marketing Systems, Inc., an Oklahoma corporation ("Company" or
"Registrant"), pursuant to its Certificate of Incorporation, as amended, is
authorized to issue up to 500,000,000 shares of capital stock, consisting of
495,000,000 shares of Common Stock, $.0001 par value ("Common Stock"), and
5,000,000 shares of Preferred Stock, $.0001 par value ("Preferred Stock").
The following description of certain matters relating to the Common Stock,
Preferred Stock and 1997-A Warrants of Registrant is a summary and is qualified
in its entirety by the provisions of the Registrant's Certificate of
Incorporation, as amended, Bylaws, as amended, and the Warrant Agreement between
Registrant and U.S. Stock Transfer Corp., as amended and restated. See "Item 2.
Exhibits."
COMMON STOCK
The holders of outstanding shares of Common Stock are entitled to receive
dividends out of assets legally available at such times and in such amounts as
the Board of Directors may, from time to time, determine, and upon liquidation
and dissolution are entitled to receive all assets available for distribution to
the shareholders, subject to any rights that holders of Preferred Stock may
have. Holders of Common Stock are entitled to one vote per share on matters
voted upon by the shareholders. The Common Stock has no preemptive rights and
no subscription, redemption or conversion privileges. The Common Stock does not
have cumulative voting rights, which means that holders of a majority of shares
voting for the election of directors can elect all members of the Board of
Directors subject to election. In general, a majority vote of shares
represented at a meeting of shareholders at which a quorum is present (generally
the holders of a majority of the shares entitled to vote, in person or by proxy)
is sufficient for all actions that require the vote or concurrence of
shareholders, subject to and possibly in connection with the voting rights of
the holders of Preferred Stock.
PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more series,
and the Board of Directors of the Company, without further approval of its
shareholders, is authorized to fix the relative rights, preferences, privileges
and restrictions applicable to each series of Preferred Stock. Management of
the Company believes that having such a class of Preferred Stock provides the
Company with greater flexibility in financing, acquisitions and other corporate
activities. In the the event of any such issuance of Preferred Stock, the
holders of Common Stock will not have any preemptive or similar rights to
acquire any of such Preferred Stock.
1997-A WARRANTS
The Company has 337,211 authorized outstanding 1997-A Warrants. Each 1997-A
Warrant entitles the holder to purchase one share of Common Stock at any time
after April 16, 1997, and on or before November 6, 2002, for an exercise price
of $3.40. The 1997-A Warrants contain provisions that protect the holder thereof
against dilution by adjustment of the number of shares of Common Stock or other
securities of the Company purchasable upon exercise of the 1997-A Warrants in
certain events, such as stock dividends, stock splits, mergers, sale of
substantially all of the Company's assets, and for other extraordinary events.
At any time, upon 30 days' written notice, the
1
<PAGE>
Company may redeem in whole and not in part, unexercised 1997-A Warrants for
$.0001 per warrant at any time. If any 1997-A Warrants called for redemption are
not exercised by such time, such 1997-A Warrants will cease to be exercisable,
and the holders thereof will be entitled only to receive the redemption price.
All 1997-A Warrants not exercised or redeemed will expire on November 6, 2002.
Holders of 1997-A Warrants will not, as such, have any of the rights of
shareholders of the Company.
In certain cases, the sale of securities by the Company upon exercise of
1997-A Warrants could violate the securities laws of the United States, certain
states thereof or other jurisdictions. The Company has agreed to use its best
efforts to cause a registration statement with respect to such securities under
the Securities Act of 1933 (the "1933 Act") to continue to be effective during
the term of the 1997-A Warrants and to take such other actions under the laws of
various states as may be required to cause the sale of securities upon exercise
of 1997-A Warrants to be lawful. However, the Company will not be required to
honor the exercise of 1997-A Warrants if, in the opinion of counsel, the sale of
securities upon such exercise would be unlawful. In certain cases, the Company
may, but is not required to, purchase 1997-A Warrants submitted for exercise for
a cash price equal to the difference between the market price of the securities
obtainable upon such exercise and the exercise price of such 1997-A Warrants.
The 1997-A Warrants may be exercised by filling out and signing the
appropriate form on the reverse side of the warrant certificate and mailing or
delivering the warrant certificate to the Warrant Agent in time to reach the
Warrant Agent by the expiration or any redemption date, accompanied by payment
in full of the exercise price for the 1997-A Warrants being exercised in United
States funds (in cash or by check or bank draft payable to the order of the
Company). Common Stock certificates will be issued as soon as practicable after
exercise and payment of the exercise price as described above.
The 1997-A Warrants contain provisions that protect the holder thereof
against dilution by adjustment of the number of shares of Common Stock or other
securities of the Company purchasable upon exercise of the 1997-A Warrants in
certain events, such as stock dividends, stock splits, mergers, sale of
substantially all of the Company's assets, and for other extraordinary events.
TRANSFER AGENT AND WARRANT AGENT
U.S. Stock Transfer Corp. is the transfer agent for the Common Stock and
the Warrant Agent for the Warrants, whose address is 1745 Gardena Avenue, Suite
200, Glendale, California 91204-2991.
SHAREHOLDER ACTION
Pursuant to the amended Certificate of Incorporation and the Bylaws of the
Company, with respect to any act or action required of or by the holders of
Common Stock of the Company, the affirmative vote of the holders of a majority
of the issued and outstanding shares of the Common Stock entitled to vote
thereon is sufficient to authorize, affirm, ratify or consent to such act or
actions, except as otherwise provided in its Bylaws or in the Certificate of
Incorporation or the Oklahoma General Corporation Act.
Pursuant to the Oklahoma General Corporation Act, shareholders may take
actions without the holding of a meeting by written consent or consents signed
by the holders of a sufficient number of shares to approve the transaction had
all of the outstanding shares of the capital stock of the Company entitled to
vote thereon been present at a meeting. The Company is required to provide
prompt notice of any corporate action taken without a meeting to those
shareholders who have not consented in writing to such
2
<PAGE>
corporate action. At any time that the Company has 1,000 or more shareholders
of record, pursuant to the Oklahoma General Corporation Act, any act or action
required of or by the holders of the Company's capital stock entitled to vote
thereon may only be taken pursuant to unanimous affirmative written consent of
the shareholders.
ANTI-TAKEOVER PROVISIONS
The Certificate of Incorporation and Bylaws of the Company, as amended, and
the Oklahoma General Corporation Act include a number of provisions which may
have the effect of encouraging persons considering unsolicited tender offers or
other unilateral takeover proposals to negotiate with the Board of Directors
rather than pursue non-negotiated takeover attempts. The Company believes that
the benefits of these provisions outweigh the potential disadvantages of
discouraging such proposals because, among other things, negotiation of such
proposals might result in an improvement of their terms. The description below
relating to provisions of the Certificate of Incorporation and the Bylaws of the
Company is intended as a summary only and is qualified in its entirety by
reference to the Certificate of Incorporation and the Bylaws of the Company.
See "Item 2. Exhibits."
CLASSIFIED BOARD OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be
comprised of three classes of directors, each class constituting approximately
one-third of the total number of directors with each class serving staggered
three-year terms. The classification of the directors makes it more difficult
for shareholders to change the composition of the Board of Directors. The
Company believes, however, that the longer time required to elect a majority of
a classified board of directors will help ensure continuity and stability of the
Company's management and policies.
The classification provision may also have the effect of discouraging a
third-party from accumulating large blocks of the Common Stock of the Company or
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its shareholders. Accordingly, shareholders
could be deprived of certain opportunities to sell their shares of Common Stock
at a higher market price than might otherwise be the case.
PREFERRED STOCK
The Certificate of Incorporation of the Company authorizes the issuance of
Preferred Stock in classes, and the Board of Directors of the Company to set and
determine the voting rights, redemption rights, conversion rights and other
rights relating to each such class of Preferred Stock. In some circumstances,
the Preferred Stock could be issued and have the effect of preventing a merger,
tender offer or other takeover attempt which the Board of Directors opposes.
OKLAHOMA ANTI-TAKEOVER STATUTES
The Company will be subject to Section 1090.3 and Sections 1145 through
1155 of the Oklahoma General Corporation Act.
Subject to certain exceptions, Section 1090.3 of the Oklahoma General
Corporation Act prohibits a publicly-held Oklahoma corporation from engaging in
a "business combination" with an "interested
3
<PAGE>
shareholder" for a period of three years after the date of the transaction in
which such person became an interested shareholder, unless the interested
shareholder attained such status with approval of the board of directors or the
business combination is approved in a prescribed manner, or certain other
conditions are satisfied. A "business combination" includes mergers, asset
sales, and other transactions resulting in a financial benefit to the interested
shareholder. Subject to certain exceptions, an "interested shareholder" is a
person who, together with affiliates and associates, owns, or within the past
three years did own, 15 percent or more of the corporation's voting stock.
In general, Sections 1145 through 1155 of the Oklahoma General Corporation
Act provide that shares ("interested shares") of voting stock acquired (within
the meaning of a "control share acquisition") become nonvoting stock for a
period of three years following such control share acquisition, unless a
majority of the holders of non-interested shares approve a resolution
reinstating the interested shares with the same voting rights that such shares
had before such interested shares became control shares. Any person ("acquiring
person") who proposes to make a control share acquisition may, at the person's
election, and any acquiring person who has made a control share acquisition is
required to, deliver an acquiring person statement to the corporation disclosing
certain prescribed information regarding the acquisition. The corporation is
required to present to the next annual meeting of the shareholders the
reinstatement of voting rights with respect to the control shares that resulted
in the control share acquisition, unless the acquiring person requests a special
meeting of shareholders for such purpose and undertakes to pay the costs and
expenses of such special meeting. In the event voting rights of control shares
acquired in a control share acquisition are reinstated in full and the acquiring
person has acquired control shares with a majority or more of all voting power,
all shareholders of the corporation have dissenters' rights entitling them to
receive the fair value of their shares which will not be less than the highest
price paid per share by the acquiring person in the control share acquisition.
A "control share acquisition" includes the acquisition by any person
(including persons acting as a group) of ownership of, or the power to direct
the exercise of voting power with respect to, control shares (generally shares
having more than 20 percent of all voting power in the election of directors of
a publicly held corporation), subject to certain exceptions including (i) an
acquisition pursuant to an agreement of merger, consolidation, or share
acquisition to which the corporation is a party and is effected in compliance
with certain Sections of the Oklahoma General Corporation Act, (ii) an
acquisition by a person of additional shares within the range of voting power
for which such person has received approval pursuant to a resolution by the
majority of the holders of non-interested shares, (iii) an increase in voting
power resulting from any action taken by the corporation, provided the person
whose voting power is thereby affected is not an affiliate of the corporation,
(iv) an acquisition pursuant to proxy solicitation under and in accordance with
the Securities Exchange Act of 1934, as amended, or the laws of Oklahoma, and
(v) an acquisition from any person whose previous acquisition of shares did not
constitute a control share acquisition, provided the acquisition does not result
in the acquiring person holding voting power within a higher range of voting
power than that of the person from whom the control shares were acquired.
The anti-takeover provisions of the Oklahoma General Corporation Act may
have the effect of discouraging a third party from acquiring large blocks of the
Common Stock of the Company within a short period or attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its shareholders.
4
<PAGE>
ITEM 2. EXHIBITS
1.1 Form of certificate of Common Stock of Registrant is incorporated by
reference to Exhibit 4.1 of the Registration Statement on Form SB-2
(Registration No. 33-80629) filed with the Commission on December 18,
1995.
1.2 Form of certificate of the 1997-A Warrants as amended.
2.1 Certificate of Incorporation of Registrant is incorporated by
reference to Exhibit 3.1 of the Registration Statement on Form SB-2
(Registration No. 33-80629) filed with the Commission on December 18,
1995.
2.2 Bylaws of Registrant (as amended and restated) are incorporated by
reference to Exhibit 3.2 of the Registration Statement on Form SB-2
(Registration No. 33-80629) filed with the Commission on December 18,
1995.
2.3 The Warrant Agreement between the Registrant and U.S. Stock Transfer
Corp. as amended and restated.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, on this 8th day of January, 1998.
ADVANTAGE MARKETING SYSTEMS, INC.
By: /s/ ROGER P. BARESEL
-----------------------------
Roger P. Baresel, President
<PAGE>
EXHIBIT 1.2
VOID (UNLESS EXTENDED) AFTER 5:00 P.M. CENTRAL STANDARD TIME
ON NOVEMBER 6, 2002
ADVANTAGE MARKETING SYSTEMS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF OKLAHOMA
1997-A WARRANTS
WARRANTS
----------------
| |
| |
----------------
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of 1997-A Warrants
(the "Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from Advantage Marketing Systems, Inc., a corporation incorporated
under the laws of the State of Oklahoma (the "Company"), subject to the terms
and conditions set forth hereinafter and in the Warrant Agreement hereinafter
referred to, one fully paid and nonassessable share of Common Stock, $.0001 par
value, of the Company (the "Common Stock") upon presentation and surrender of
this Warrant Certificate with the instructions for the registration and delivery
of Common Stock filed in, at any time prior to 5:00 p.m. Central Standard time
("close of business"), on November 6, 2002, at the stock transfer office in
Glendale, California, of U.S. Stock Transfer Corp., Warrant Agent of the
Company ("Warrant Agent") or of its successor warrant agent or, if there be no
successor warrant agent, at the corporate offices of the Company, and upon
payment of $3.40 per share (the "Purchase Price") and any applicable taxes paid
either in cash, or by check, payable in lawful money of the United States of
America to the order of the Company. Each Warrant entitles the holder initially
to purchase one share of Common Stock at the Purchase Price. The number and
kind of securities or other property for which the Warrants are exercisable are
subject to further adjustment in certain events, such as mergers, splits, stock
dividends, recapitalization and the like. At any time, upon not less than 30
days' notice (the "Notice Period"), the Company may at its option redeem all
unexercised Warrants for $.0001 per Warrant at any time after expiration of the
Notice Period before the Expiration Date. In the event the Company exercises
its right to redeem the Warrants, the Warrants will be exercisable until close
of business on the business day immediately preceding the date fixed for
redemption in such notice. All Warrants not theretofore exercised or redeemed
will expire on November 6, 2002.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of January 16, 1997, as amended
and restated January 8, 1998 (the "Warrant Agreement"), between the Company and
the Warrant Agent, to all of which terms, provisions and conditions the
registered holder of this Warrant Certificate consents by acceptance hereof.
The Warrant Agreement is incorporated herein by reference and made a part
hereof, and reference is made to the Warrant Agreement for a full description of
the rights, limitations of rights, obligations, duties and immunities of the
Warrant Agent, the Company and the holders of this Warrant Certificates. Copies
of the Warrant Agreement are available for inspection at the stock transfer
office of the Warrant Agent or may be obtained upon written request addressed to
the Warrant Agent at its stock transfer office at 1745 Gardena Avenue, Suite
200, Glendale, California 91204-2991.
<PAGE>
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of the Warrants, Common
Stock or other Securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon exercise of the
Warrants would violate the securities laws of the United States, certain states
thereof or other jurisdictions. The Company has agreed to use its best efforts
to cause a registration statement to be effective during the term of the
Warrants with respect to such sales under the Securities Act of 1933, and to
take such action under the laws of various states as may be required to cause
the sale of securities upon exercise to be lawful. However, the Company will
not be required to honor the exercise of Warrants if, in the opinion of the
Board of Directors, upon advice of counsel, the sale of securities upon such
exercise would be unlawful in certain cases, the Company may, but is not
required to, purchase Warrants submitted for exercise for a cash price equal to
the difference between the market price of the securities obtainable upon such
exercise and the exercise price of such Warrants.
This Warrant Certificate, with or without other Certificates, upon surrender
to the Warrant Agent, any successor warrant agent or, in the absence of any
successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any recapitalization, issuance of stock, reclassification
of stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance or otherwise) or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Warrant Agreement) or
to receive dividends or subscription rights or otherwise until the Warrants
evidenced by this Warrant Certificate shall have been exercised and the Common
Stock purchasable upon the exercise thereof shall have become deliverable as
provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books of the Company's Common stock or other
class of stock purchasable upon the exercise of the Warrants evidenced by this
Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent, and every other holder of a Warrant
Certificate that (i) this Warrant Certificate is transferable on the registry
books of the Warrant Agent only upon the terms and conditions set forth in the
Warrant Agreement, and (ii) the Company and the Warrant Agent may deem and treat
the person in whose name this Warrant Certificate is registered as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Warrant Agent) for all purposes
whatever, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
The Company shall not be required to issue or deliver any certificate for
shares of Common Stock or other securities upon the exercise of Warrants
evidenced by this Warrant Certificate until any tax which may be payable in
respect thereof by the holder of this Warrant Certificate pursuant to the
Warrant Agreement shall have been paid, such tax being payable by the holder of
this Warrant Certificate at the time of surrender.
2
<PAGE>
This Warrant Certificate shall not be valid or obligatory for any purposes
until it shall have been countersigned by the Warrant Agent.
Dated:
ADVANTAGE MARKETING SYSTEMS, INC.
/S/ John W. Hail
Chairman and Chief Executive Officer
/S/ Roger P. Baresel
Secretary
Countersigned:
U.S. STOCK TRANSFER CORP.
1745 Gardena Avenue, Suite 200
Glendale, California 91024-2991
By:
Warrant Agent Authorized Signature
3
<PAGE>
SUBSCRIPTION
(TO BE EXECUTED BY THE WARRANT HOLDER IF HE DESIRES TO EXERCISE
THE WARRANT IN WHOLE OR IN PART)
To: ADVANTAGE MARKETING SYSTEMS, INC.
The undersigned (_________________________________________________________)
Please insert Social Security or other number of Subscriber
hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant Certificate for, and to purchase thereunder, _______________
shares of Common Stock provided for therein and tenders payment herewith to the
order of ADVANTAGE MARKETING SYSTEMS, INC. in the amount of $________________.
The undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name: _______________________________________________________________________
Address: ____________________________________________________________________
Deliver to: _________________________________________________________________
Address: ____________________________________________________________________
and if said number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant Certificate for the
balance remaining of shares of Common Stock purchasable under the within Warrant
Certificate be registered in the name of, and delivered to the undersigned at
the address stated below:
Address: ____________________________________________________________________
Dated: ____________________, 199__ Signature
_____________________________________
(Signature must conform in all respects
to the name of Warrant Holder as
specified in the case of this Warrant
Certificate in every particular,
without alteration, enlargement or any
change whatever.)
ASSIGNMENT
(TO BE SIGNED ONLY UPON ASSIGNMENT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________________________________________________________
______________________________________________________________________________
Warrants evidenced by the within Warrant Certificate, and appoints
______________________________________________________________________________
Attorney to transfer said Warrant Certificate and Warrants on the books of
Advantage Marketing
Systems, Inc. with the full power of substitution in the premises.
Dated: ____________________, 199__
In the presence of:
__________________________________
Signature Guaranteed: _________________________________________
(Signature must conform in all respects
to the name of Warrant Holder as
specified on the face of this Warrant
Certificate in every particular,
without alteration, enlargement or any
change whatsoever, and the signature
must be guaranteed in the usual manner)
4
<PAGE>
EXHIBIT 2.3
WARRANT AGREEMENT
BETWEEN
ADVANTAGE MARKETING SYSTEMS, INC.
AND
U.S. STOCK TRANSFER CORPORATION
DATED AS OF JANUARY 16, 1997
(AS AMENDED AND RESTATED JANUARY 8, 1998)
THIS WARRANT AGREEMENT, dated as of January 16, 1997 and as amended
and restated as of January 8, 1998, is between Advantage Marketing Systems,
Inc., an Oklahoma corporation (the "Company"), and U.S. Stock Transfer
Corporation (the "Warrant Agent").
WHEREAS, the Company offered, sold and issued 337,211 1997-A Warrants
(each referred to herein as the "Warrant," or collectively as the "Warrants") as
a portion of units, each consisting of one share of Common Stock, $.0001 par
value per share (the "Common Stock"), and one Warrant, to the holders of Class A
Common Stock Purchase Warrants and Class B Common Stock Purchase Warrants (the
"Public Warrants") pursuant to modification of the terms of the Public Warrants
(the "Warrant Modification Offering") and to the Company's shareholders holding
non-transferable rights (the "Rights Offering"). The Warrant Modification
Offering and the Rights Offering are collectively referred to herein as the
"Offering." Each Warrant represents the right to purchase one share of Common
Stock for an initial purchase price of $12.00 per share, upon the terms and
conditions and subject to adjustment in certain circumstances, all as set forth
in this Agreement;
WHEREAS, the Company desires, pursuant to amendment and restatement of
this Agreement, to reduce the initial $12.00 purchase price of the Warrants to
$3.40 (the "Purchase Price"), upon the terms and conditions and subject to
adjustment in certain circumstances, all as set forth in this Agreement and
extend the period that the Warrants are exercisable from January 31, 1999, to
November 6, 2002;
WHEREAS, the Company desires to retain the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in connection
with the issuance, transfer, exchange and replacement of the certificates
evidencing the Warrants to be issued under this Agreement (the "Warrant
Certificates") and the exercise of the Warrants; and
WHEREAS, the Company desires to enter into this Agreement to set forth
the terms and conditions of the Warrants and the rights of the holders thereof
and to set forth the respective rights and obligations of the Company and the
Warrant Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the Agreement is amended and restated, and the
parties hereto agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions in this Agreement, and the Warrant Agent accepts such appointment.
SECTION 2. DATE, DENOMINATION AND EXECUTION OF WARRANT CERTIFICATES.
The Warrant Certificates (and the Subscription Form and the Form of Assignment
to be printed on the reverse thereof) shall be in
1
<PAGE>
registered form only and shall be substantially of the tenor and purport recited
in Exhibit A hereto, and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law, or with any rule or regulation made pursuant
thereto, or with any rule or regulation of any stock exchange on which the
Common Stock or Warrants may be listed, or to conform to usage. Each Warrant
Certificate shall entitle the registered holder thereof, subject to the
provisions of this Agreement and of the Warrant Certificate, to purchase after
April 16, 1997 and on or before the close of business on November 6, 2002 (the
"Expiration Date"), one fully paid and non-assessable share of Common Stock for
each Warrant evidenced by such Warrant Certificate, at the Purchase Price,
subject to adjusted as provided in this Agreement. At any time on or before
expiration of the Expiration Date, the previously established Expiration Date
may be extended without limitation and as many times as the Company shall
determine in its sole and absolute discretion. In the event the Expiration Date
is extended, the Company shall promptly provide written notice to the holders of
the Warrants of the extended Expiration Date. Each Warrant Certificate issued as
a part of the Offering shall be dated the date of the Final Prospectus which
forms a part of the Registration Statement on Form SB-2 pursuant to which the
Units, shares of Common Stock and Warrants are registered under the Securities
Act of 1933, as amended; each other Warrant Certificate shall be dated the date
on which the Warrant Agent receives valid issuance instructions from the Company
or, if such instructions specify another date, such other date.
For purposes of this Agreement, the term "close of business" on any
given date shall mean 5:00 p.m., Central Standard time, on such date; provided,
however, that if such date is not a business day, it shall mean 5:00 p.m.,
Central Standard time, on the next succeeding business day. For purposes of
this Agreement, the term "business day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in New York City, New
York, are authorized or obligated by law to be closed.
Each Warrant Certificate shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President or a Vice
President, either manually or by facsimile signature printed thereon, and shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. Each Warrant Certificate shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof by the
Company, such Warrant Certificate, nevertheless, may be countersigned by the
Warrant Agent, issued and delivered with the same force and effect as though the
person who signed such Warrant Certificate had not ceased to be such officer of
the Company.
SECTION 3. SUBSEQUENT ISSUE OF WARRANT CERTIFICATES. Subsequent to
their original issuance, no Warrant Certificates shall be reissued except (i)
Warrant Certificates issued upon transfer thereof in accordance with Section 4
hereof, (ii) Warrant Certificates issued upon any combination, split-up, or
exchange of Warrant Certificates pursuant to Section 4 hereof, (iii) Warrant
Certificates issued in replacement of mutilated, destroyed, lost or stolen
Warrant Certificates pursuant to Section 5 hereof, (iv) Warrant Certificates
issued upon the partial exercise of Warrant Certificates pursuant to Section 7
hereof, and (v) Warrant Certificates issued pursuant to Section 22 hereof to
reflect any adjustment or change in the Purchase Price or the number or kind of
shares purchasable thereunder. The Warrant Agent is hereby irrevocably
authorized to countersign and deliver, in accordance with the provisions of
Sections 4, 5, 7 and 22, the new Warrant Certificates required for purposes
thereof, and the Company, whenever required by the Warrant Agent, will supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purposes.
SECTION 4. TRANSFERS AND EXCHANGES OF WARRANT CERTIFICATES. The
Warrant Agent shall keep or cause to be kept books for registration of ownership
and transfer of the Warrant Certificates issued in accordance with this
Agreement. Such registers shall show the names and addresses of the respective
holders of the Warrant Certificates and the number of Warrants evidenced by each
such Warrant Certificate.
The Warrant Agent shall, from time to time, register the transfer of
any outstanding Warrants upon the books to be maintained by the Warrant Agent
for that purpose, upon surrender of the Warrant Certificate
2
<PAGE>
evidencing such Warrants, with the Form of Assignment duly filled in and
executed, to the Warrant Agent at its stock transfer office in Glendale,
California, at any time on or before the Expiration Date, and upon payment to
the Warrant Agent for the account of the Company of an amount equal to any
applicable transfer tax. Payment of the amount of such tax may be made in cash,
or by certified or official bank check, payable in lawful money of the United
States of America to the order of the Company.
Upon receipt of a Warrant Certificate, with the Form of Assignment
duly filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered
Warrant Certificate and countersign and deliver to the transferee a new Warrant
Certificate for the number of full Warrants transferred to such transferee;
provided, however, that in case the registered holder of any Warrant Certificate
- -----------------
shall elect to transfer fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent in addition shall promptly countersign and
deliver to such registered holder a new Warrant Certificate or Certificates for
the number of full Warrants not so transferred.
Any Warrant Certificate or Certificates may be exchanged at the option
of the holder thereof for another Warrant Certificate or Certificates of
different denominations, of like tenor and representing in the aggregate the
same number of Warrants, upon surrender of such Warrant Certificate or
Certificates, with the Form of Assignment duly filled in and executed, to the
Warrant Agent, at any time or from time to time after the close of business on
the date hereof and prior to the close of business on the Expiration Date. The
Warrant Agent shall promptly cancel the surrendered Warrant Certificate and
deliver the new Warrant Certificate pursuant to the provisions of this Section.
SECTION 5. MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES.
Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of any
Warrant Certificate, and in the case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and in the case of mutilation, upon
surrender and cancellation of the Warrant Certificate, the Warrant Agent shall
countersign and deliver a new Warrant Certificate of like tenor for the same
number of Warrants.
SECTION 6. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE. The
number and kind of securities or other property purchasable upon exercise of a
Warrant shall be subject to adjustment from time to time upon the occurrence,
after the date hereof, of the following events:
6.1 In case the Company shall, other than in connection with the
Offering, (i) pay a dividend in, or make a distribution of, shares of Common
Stock or of capital stock convertible into Common Stock on its outstanding
Common Stock ("Stock Dividend"), (ii) subdivide its outstanding shares of Common
Stock into a greater number of such shares ("Forward Split") or (iii) combine
its outstanding shares of Common Stock into a smaller number of such shares
("Reverse Split"), the total number of shares of Common Stock and the number of
shares of capital stock convertible into Common Stock purchasable upon the
exercise of each Warrant outstanding immediately prior thereto shall be adjusted
so that the holder of any Warrant Certificate thereafter surrendered for
exercise shall be entitled to receive at the same aggregate Purchase Price the
number of shares of Common Stock and the number of shares of capital stock
convertible into Common Stock which such holder would have owned or have been
entitled to receive immediately following the happening of any of the events
described above had such Warrant been exercised in full immediately prior to the
happening of such event. Any adjustment made pursuant to this Subsection shall,
in the case of a Stock Dividend, become effective as of the record date therefor
and, in the case of a Forward Split or Reverse Split, be made as of the
effective date thereof. If, as a result of an adjustment made pursuant to this
Subsection, the holder of any Warrant thereafter surrendered for exercise shall
become-entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Warrant
Agent) shall determine the allocation of the adjusted Purchase Price between or
among shares of such classes of capital stock.
6.2 In the event of any adjustment of the total number of shares of
Common Stock purchasable upon the exercise of Warrants pursuant to Subsection
6.1, the Purchase Price of each such Warrant shall remain
3
<PAGE>
unchanged, but the number of shares of capital stock obtainable on exercise of
each such Warrant shall be adjusted as provided in Subsection 6.1.
6.3 In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in Subsection 6.1 or Subsection 6.5), any
holder of Warrants, upon exercise thereof, shall be entitled to receive, in lieu
of the Common Stock to which he would have become entitled upon exercise
immediately prior to such reorganization or reclassification, the shares (of any
class or classes) or other securities or property of the Company (or cash) that
he would have been entitled to receive at the same aggregate Purchase Price upon
such reorganization or reclassification if the Warrants held had been exercised
immediately prior thereto; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and shall be evidenced by a Board resolution filed with the
Warrant Agent) shall be made for the application of this Section 6 with respect
to the rights and interests thereafter of the holders of Warrants (including,
but not limited to, the allocation of the Purchase Price between or among shares
of classes of capital stock), to the end that this Section 6 (including the
adjustments of the number of shares of Common Stock or other securities
purchasable) shall thereafter be reflected, as nearly as reasonably practicable,
in all subsequent exercises of the Warrants for any shares or securities or
other property (or cash) thereafter deliverable upon the exercise of the
Warrants.
6.4 Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this Section
6, the Company will promptly file with the Warrant Agent a certificate signed by
the Chairman of the Board, Chief Executive Officer or the President, or a Vice
President of the Company and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company setting forth (i) the number
and kind of shares purchasable, as so adjusted, (ii) stating that such
adjustments in the number or kind of shares or other securities conform to the
requirements of this Section 6, and (iii) setting forth a brief statement of the
facts accounting for such adjustments. Such certificates shall be conclusive
evidence of the correctness of such adjustments. Promptly after receipt of such
certificate, the Company, or the Warrant Agent at the Company's request, will
deliver, by first-class, postage prepaid mail, a brief summary thereof (to be
supplied by the Company) to the registered holders of the outstanding Warrant
Certificates; provided, however, that failure to file or to give any notice
-----------------
required under this Subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section 6; and provided
--------
further, that, where appropriate, such notice may be given in advance and
- -------
included as part of the notice required to be given pursuant to Section 12
hereof.
6.5 In case of any consolidation of the Company with, or merger of
the Company with, or merger of the Company into, another corporation (other than
a consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the corporation formed by such consolidation or
merger or the corporation which shall have acquired such assets, as the case may
be, shall execute and deliver to the Warrant Agent a supplemental warrant
agreement providing that the holder of each Warrant then outstanding shall have
the right thereafter (until the expiration of such Warrant) to receive, upon
exercise of such Warrant, solely the kind and amount of shares of stock and
other securities and property (or cash) receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of Common Stock of
the Company for which such Warrant might have been exercised immediately prior
to such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided in this Section 6. The above
provision of this Subsection 6.5 shall similarly apply to successive
consolidations, mergers, sales or transfers.
The Warrant Agent shall not be under any responsibility to determine
the correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, and (subject to
the provisions of Section 20 hereof) may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants with respect
thereto.
4
<PAGE>
6.6 Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Warrant Agreement.
6.7 The Company may retain a firm of independent public accountants
of recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board to make any computation required under this Section, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section 6.
6.8 For the purpose of this Section, the term "Common Stock" shall
mean (i) the class of stock designated as Common Stock in the Certificate of
Incorporation of the Company, as amended, at the date of this Agreement, or (ii)
any other class of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value, or from no par
value to par value, or from par value to no par value. In the event that at any
time as a result of an adjustment made pursuant to this Section 6, the holder of
any Warrant thereafter surrendered for exercise shall become entitled to receive
any shares of capital stock of the Company other than shares of Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in this Section, and all other provisions of this
Agreement, with respect to the Common Stock, shall apply on like terms to any
such other shares.
6.9 The Purchase Price may be reduced by the Company at any time,
temporarily or during the remaining period of exercise of the Warrants as
determined in the discretion of the Company, with respect to the Common Stock or
any other securities purchasable upon exercise of the Warrants. In the event
the Purchase Price is reduced in accordance with this Section 6.9, the Company
shall promptly provide written notice to the holders of the Warrants of the
reduced Purchase Price, the period that the Warrants will be exercisable at the
reduced Purchase Price, and the securities purchasable at the reduced Purchase
Price.
SECTION 7. EXERCISE AND REDEMPTION OF WARRANTS. Unless the Warrants
have been redeemed as provided in this Section 7, the registered holder of any
Warrant Certificate may exercise the Warrants evidenced thereby, in whole at any
time or in part from time to time at or prior to the close of business, on the
Expiration Date, subject to the provisions of Section 9, at which time the
Warrant Certificates shall be and become wholly void and of no value. Warrants
may be exercised by their holders or redeemed by the Company as follows:
7.1 Exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Subscription Form on the
reverse side thereof duly filled in and executed, to the Warrant Agent at its
stock transfer office in Glendale, California, together with payment to the
Company of the Purchase Price (as of the date of such surrender) of the Warrants
then being exercised and an amount equal to any applicable transfer tax and, if
requested by the Company, any other taxes or governmental charges which the
Company may be required by law to collect in respect of such exercise. Payment
of the Purchase Price and other amounts may be made in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company. No adjustment shall be made for any cash dividends,
whether paid or declared, on any securities issuable upon exercise of a Warrant.
7.2 Upon receipt of a Warrant Certificate, with the Subscription Form
duly filled in and executed, accompanied by payment of the Purchase Price of the
Warrants being exercised (and of an amount equal to any applicable taxes or
government charges as aforesaid), the Warrant Agent shall promptly request from
the Transfer Agent with respect to the securities to be issued and deliver to or
upon the order of the registered holder of such Warrant Certificate, in such
name or names as such registered holder may designate, a certificate or
certificates for the number of full shares of the securities to be purchased,
together with cash made available by the Company pursuant to Section 8 hereof in
respect of any fraction of a share of such securities otherwise issuable upon
such exercise. If the Warrant is then exercisable to purchase property other
than securities, the Warrant Agent shall take appropriate steps to cause such
property to be delivered to or upon the order of the registered holder of such
Warrant Certificate. In addition, if it is required by law, the Warrant Agent
will deliver to each warrant holder a prospectus which complies
5
<PAGE>
with the provisions of Section 9 of the Securities Act of 1933, as amended, and
the Company agrees to supply the Warrant Agent with sufficient number of
prospectuses for that purpose.
7.3 In case the registered holder of any Warrant Certificate shall
exercise fewer than all of the Warrants evidenced by such Warrant Certificate,
the Warrant Agent shall promptly countersign and deliver to the registered
holder of such Warrant Certificate, or to his duly authorized assigns, a new
Warrant Certificate or Certificates evidencing the number of Warrants that were
not so exercised.
7.4 Each person in whose name any certificate for securities is
issued upon the exercise of Warrants shall for all purposes be deemed to have
become the holder of record of the securities represented thereby as of, and
such certificate shall be dated, the date upon which the Warrant Certificate was
duly surrendered in proper form and payment of the Purchase Price (and of any
applicable taxes or other governmental charges) was made; provided, however,
-----------------
that if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares as of, and the certificate for such
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date), and the Warrant Agent shall be under no duty to deliver the
certificate for such shares until such date. The Company covenants and agrees
that it shall not cause its stock transfer books to be closed for a period of
more than 20 consecutive business days except upon consolidation, merger, sale
of all or substantially all of its assets, dissolution or liquidation or as
otherwise provided by law.
7.5 The Warrants outstanding at the time of a redemption may be
redeemed at the option of the Company, in its sole and absolute discretion and
in whole but not in part, at any time on not less than 30 days'(the "Notice
Period") written notice to the holders of such Warrants at a price equal to
$.0001 per Warrant (the "Redemption Price"). '-In the event the Company
exercises its right to redeem the Warrants, the Warrants will be exercisable
until the close of business of the business day immediately preceding the date
fixed for redemption in such notice (the "Redemption Date"). On the Redemption
Date the holders of record of the Warrants shall be entitled to payment of the
Redemption Price upon surrender of such redeemed Warrants to the Company at the
stock transfer office of the Warrant Agent in Glendale, California.
7.6 Notice of redemption of Warrants shall be given at least 30 days
prior to the Redemption Date by mailing, by registered or certified mail, return
receipt requested, a copy of such notice to all of the holders of record of
Warrants at their respective addresses appearing on the books or transfer
records of the Company or such other address designated in writing by the holder
of record to the Warrant Agent not less than 40 days prior to the Redemption
Date. The notice of redemption shall specify the Redemption Price to be paid,
the name and address of the Warrant Agent, the intention of the Company to
deposit the Redemption Price with the Warrant Agent on or before the Redemption
Date, and that the right to exercise the Warrants shall terminate at 5:00 p.m.
Central Standard City time on the business day immediately preceding the
Redemption Date.
7.7 From and after the Redemption Date, all rights of the holders of
Warrants (except the right to receive the Redemption Price) shall terminate, but
only if (i) on or prior to the Redemption Date the Company shall have
irrevocably deposited with the Warrant Agent as paying agent a sufficient amount
to pay on the Redemption Date the Redemption Price for all Warrants called for
redemption and (ii) the notice of redemption shall have stated the name and
address of the Warrant Agent and the intention of the Company to deposit such
amount with the Warrant Agent on or before the Redemption Date.
7.8 The Warrant Agent shall pay to the holders of record of redeemed
Warrants all moneys received by the Warrant Agent for the redemption of Warrants
to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
7.9 Any amounts deposited with the Warrant Agent that are not
required for redemption of Warrants may be withdrawn by the Company. Any
amounts deposited with the Warrant Agent that shall be unclaimed during the six
months following the Redemption Date may be withdrawn by the Company, and
thereafter the holders of the Warrants called for redemption for which such
funds were deposited shall look solely to the Company for
6
<PAGE>
payment. The Company shall be entitled to the interest, if any, on funds
deposited with the Warrant Agent, and the holders of redeemed Warrants shall
have no right to any such interest.
7.10 If the Company fails to make a sufficient deposit with the
Warrant Agent as provided above, the holder of any Warrants called for
redemption may at the option of the holder (i) by notice to the Company declare
the notice of redemption a nullity as to such holder or (ii) proceed against the
Company for the Redemption Price. If the holder brings an action against the
Company for the Redemption Price, the Company will pay reasonable attorneys'
fees of the holder. If the holder fails to bring an action against the Company
for the Redemption Price within 60 days after the Redemption Date, the holder
shall be deemed to have elected to declare the notice of redemption to be a
nullity as to such holder, and such notice shall be without any force or effect
as to such holder.
SECTION 8. FRACTIONAL INTERESTS. The Company shall not be required
to issue any Warrant Certificate evidencing a fraction of a Warrant or to issue
fractions of shares of securities on the exercise of the Warrants. If any
fraction (calculated to the nearest one-hundredth) of a Warrant or a share of
securities would, except for the provisions of this Section, be issuable on the
exercise of any Warrant, the Company shall purchase such fraction for an amount
in cash equal to the current value of such fraction computed on the basis of the
quoted closing high bid price on the trading day immediately preceding the day
upon which such Warrant Certificate was surrendered for exercise in accordance
with Section 7 hereof. By accepting a Warrant Certificate, the holder thereof
expressly waives any right to receive a Warrant Certificate evidencing any
fraction of a Warrant or to receive any fractional share of securities upon
exercise of a Warrant.
SECTION 9. RESERVATION OF SECURITIES AND PROPERTY; REGISTRATION OF
SECURITIES. The Company covenants that it will at all times, solely for the
purpose of issuance and delivery upon exercise of the Warrants, reserve and keep
available, free from preemptive and other rights, out of its authorized and
unissued shares of Common Stock, such number of shares of Common Stock as shall
then be issuable and all other securities and property as shall then be
deliverable upon the exercise of all outstanding Warrants. The Company
covenants that all securities which shall be so issuable shall, upon such issue,
be duly authorized, validly issued, fully paid and non-assessable.
The Company covenants that if any securities, required to be reserved
for the purpose of issue upon exercise of the Warrants hereunder, require
registration with or approval of any governmental authority under any federal or
state law before such securities may be issued upon exercise of Warrants, the
Company will in good faith and as expeditiously as possible endeavor to cause
such securities to be duly registered, or approved, as the case may be, and, to
the extent practicable, take all such action in anticipation of and prior to the
exercise of the Warrants, including, without limitation, filing a Registration
Statement on the appropriate form and all post-effective amendments to such
Registration Statement necessary to permit a public offering of the securities
underlying the Warrants at any and all times during the term of the Warrants;
provided, however, that in no event shall such securities be issued, and the
- -----------------
Company is authorized to refuse to honor the exercise of any Warrant, if such
exercise would result in the opinion of the Company's Board of Directors, upon
advice of counsel, in the violation of any law; and provided further that, in
----------------
the case of a Warrant exercisable solely for securities listed on a securities
exchange or for which there are at least two independent market makers, in lieu
of obtaining such registration or approval, the Company may elect to redeem
Warrants submitted to the Warrant Agent for exercise for a price equal to the
difference between the aggregate low asked price, or closing price, as the case
may be, of the securities for which such Warrant is exercisable on the date of
such submission and the Purchase Price of such Warrants. In the event of such
redemption, the Company will pay to the holder of such Warrants the above-
described redemption price in cash within 10 business days after receipt of
notice from the Warrant Agent that such Warrants have been submitted for
exercise.
SECTION 10. REDUCTION OF CONVERSION PRICE BELOW PAR VALUE. Before
taking any action that would cause an adjustment pursuant to Section 6 hereof
reducing the portion of the Purchase Price required to purchase one share of
capital stock below the then par value (if any) of a share of such capital
stock, the Company will use its best efforts to take any corporate action which,
in the opinion of its counsel, may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such capital
stock.
7
<PAGE>
SECTION 11. PAYMENT OF TAXES. The Company covenants and agrees that
it will pay when due and payable any and all federal and state documentary stamp
and other original issue taxes which may be payable in respect of the original
issuance of the Warrant Certificates, or any shares of Common Stock or other
securities upon the exercise of Warrants. The Company shall not, however, be
required (i) to pay any tax which may be payable in respect of any transfer
involved in the transfer and delivery of Warrant Certificates or the issuance or
delivery of certificates for Common Stock or other securities in a name other
than that of the registered holder of the Warrant Certificate surrendered for
purchase or (ii) to issue or deliver any certificate for shares of Common Stock
or other securities upon the exercise of any Warrant Certificate until any such
tax shall have been paid, all such tax being payable by the holder of such
Warrant Certificate at the time of surrender.
SECTION 12. NOTICE OF CERTAIN CORPORATE ACTION. In case the Company
after the date hereof shall, other than in connection with the Offering, propose
(i) to offer to the holders of Common Stock rights to subscribe to or purchase
any additional shares of any class of its capital stock, any evidences of its
indebtedness or assets, or any other rights or options or (ii) to effect any
reclassification of Common Stock (other than a reclassification involving merely
the subdivision or combination of outstanding shares of Common Stock) or any
capital reorganization, or any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is required, or
any sale, transfer or other disposition of its property and assets substantially
as an entirety, or the liquidation, voluntary or involuntary dissolution or
winding-up of the Company, then, in each such case, the Company shall file with
the Warrant Agent and the Company (or the Warrant Agent on its behalf) shall
mail (by first-class, postage prepaid mail) to all registered holders of the
Warrant Certificates notice of such proposed action, which notice shall specify
the date on which the books of the Company shall close or a record be taken for
such offer of rights or options, or the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up shall take place
or commence, as the case may be, and which shall also specify any record date
for determination of holders of Common Stock entitled to vote thereon or
participate therein and shall set forth such facts with respect thereto as shall
be reasonably necessary to indicate any adjustments in the number or kind of
shares or other securities purchasable upon exercise of Warrants which will be
required as a result of such action. Such notice shall be filed and mailed in
the case of any action covered by clause (i) above, at least 10 days prior to
the record date for determining holders of the Common Stock for purposes of such
action or, if a record is not to be taken, the date as of which the holders of
shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (ii) above, at least 20 days prior to
the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and the
date on which it is expected that holders of shares of Common Stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up.
Failure to give any such notice or any defect therein shall not affect
the legality or validity of any transaction listed in this Section 12.
SECTION 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANT
CERTIFICATES, ETC. Upon the exercise, or conversion of any Warrant, the Warrant
Agent shall promptly deposit the payment into an escrow account established by
mutual agreement of the Company and the Warrant Agent at a federally insured
commercial bank. All funds deposited in the escrow account will be disbursed on
a weekly basis to the Company once they have been determined by the Warrant
Agent to be collected funds. Once the funds are determined to be collected, the
Warrant Agent shall cause the share certificate(s) representing the exercised
warrants to be issued.
The Warrant Agent shall keep copies of this Agreement available for
inspection by holders of Warrants during normal business hours at its stock
transfer office. Copies of this Agreement may be obtained upon written request
addressed to the Warrant Agent at its stock transfer office in Glendale,
California.
SECTION 14. WARRANT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Warrant Certificate shall be entitled to vote, receive
dividends or be deemed the holder of Common Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Warrants
represented thereby for
8
<PAGE>
any purpose whatever, nor shall anything contained herein or in any Warrant
Certificate be construed to confer upon the holder of any Warrant Certificate,
as such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance or otherwise), or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 12 hereof), or to
receive dividend or subscription rights, or otherwise, until such Warrant
Certificate shall have been exercised in accordance with the provisions hereof
and the receipt of the Purchase Price and any other amounts payable upon such
exercise by the Warrant Agent.
SECTION 15. RIGHT OF ACTION. All rights of action in respect to this
Agreement are vested in the respective registered holders of the Warrant
Certificates; and any registered holder of any Warrant Certificate, without the
consent of the Warrant Agent or of the holder of any Warrant Certificate, may,
on his own behalf for his own benefit, enforce, and may institute and maintain
any suit, action or preceding against the Company suitable to enforce, or
otherwise in respect of, the holder's right to exercise the Warrants evidenced
by such Warrant Certificate, for the purchase of shares of the Common Stock and
any other securities and property of the Company in the manner provided in the
Warrant Certificate and in this Agreement.
SECTION 16. AGREEMENT OF HOLDERS OF WARRANT CERTIFICATES. Every
holder of a Warrant Certificate, by accepting the same, consents and agrees with
the Company, the Warrant Agent and every other holder of a Warrant Certificate
that:
16.1 The Warrant Certificates are transferable on the registry books
of the Warrant Agent only upon the terms and conditions set forth in this
Agreement; and
16.2 The Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute owner of the
Warrant (notwithstanding any notation of ownership or other writing thereon made
by anyone other than the Company or the Warrant Agent) for all purposes
whatsoever, and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary.
SECTION 17. CANCELLATION OF WARRANT CERTIFICATES. In the event that
the Company shall purchase or otherwise acquire any Warrant Certificate or
Certificates after the issuance thereof, such Warrant Certificate or
Certificates shall thereupon be delivered to the Warrant Agent and be canceled
by it and retired. The Warrant Agent shall also cancel any Warrant Certificate
delivered to it for exercise, in whole or in part, or delivered to it for
transfer, split-up, combination or exchange. Warrant Certificates so canceled
shall be delivered by the Warrant Agent to the Company from time to time, or
disposed of in accordance with the instructions of the Company.
SECTION 18. CONCERNING THE WARRANT AGENT. The Company agrees to pay
to the Warrant Agent from time to time, on demand of the Warrant Agent,
reasonable compensation for all services rendered by it hereunder and also its
reasonable expenses and other reasonable disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Warrant Agent
for, and to hold it harmless against, any loss, liability or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Warrant
Agent, arising out of or in connection with the acceptance and administration of
this Agreement.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, any
of the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the
9
<PAGE>
countersignature of the original Warrant Agent and deliver such Warrant
Certificates so countersigned; and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant Certificates either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all such cases such Warrant Certificates shall have the full force provided in
the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrant Certificates so countersigned; and in case at that time
any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in
its changed name; and in such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
SECTION 20. DUTIES OF WARRANT AGENT. The Warrant Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Warrant
Certificates, by their acceptance thereof, shall be bound:
20.1 The Warrant Agent may consult with counsel satisfactory to it
(who may be counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Warrant Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such opinion; provided, however that the Warrant Agent shall have exercised
-----------------
reasonable care in the selection of such counsel.
20.2 Whenever in the performance of its duties under this Agreement,
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, Chief
Executive Officer or the President or a Vice President or the Secretary of the
Company and delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
20.3 The Warrant Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
20.4 The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on the Warrant Certificates and such
statements or recitals as describe the Warrant Agent or action taken or to be
taken by it) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
20.5 The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant Certificate;
nor shall it be responsible for any change in the number of shares of Common
Stock required under the provisions of Section 6 or responsible for the manner,
method or amount of any such change or the ascertaining of the existence of
facts that would require any such adjustment or change; nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Warrant Certificate or as to whether any shares of
Common Stock will, when issued, be validly issued, fully paid and nonassessable.
20.6 The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or take any other action likely to involve
expense unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity, as determined
in the sole
10
<PAGE>
discretion of the Warrant Agent, for any costs and expenses which may be
incurred. All rights of action under this Agreement or under any of the Warrants
may be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent, and any recovery of judgment
shall be for the ratable benefit of the registered holders of the Warrants, as
their respective rights or interests may appear.
20.7 The Warrant Agent and any shareholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal entity.
20.8 The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, Chief Executive Officer or President or a Vice President
or the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with the Warrant Agent's duties, and it shall not be
liable for any action taken or suffered or omitted by it in good faith in
accordance with instructions of any such officer.
20.9 The Warrant Agent will not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
20.10 The Warrant Agent will not incur any liability or
responsibility to the Company or to any holder of any Warrant Certificate for
any action taken, or any failure to take action, in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by the Warrant Agent to be genuine and to have
been signed, sent or presented by the proper party or parties.
20.11 The Warrant Agent will act hereunder solely as agent of the
Company in a ministerial capacity, and its duties will be determined solely by
the provisions hereof. The Warrant Agent will not be liable for anything which
it may do or refrain from doing in connection with this Agreement except for its
own negligence, bad faith or willful conduct.
SECTION 21. CHANGE OF WARRANT AGENT. The Warrant Agent may resign
and be discharged from its duties under this Agreement upon 30 days' prior
notice in writing mailed, by registered or certified mail, to the Company. The
Company may remove the Warrant Agent or any successor warrant agent upon 30
days' prior notice in writing, mailed to the Warrant Agent or successor warrant
agent, as the case may be, by registered or certified mail. If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent and shall, within 15 days
following such appointment, give notice thereof in writing to each registered
holder of the Warrant Certificates. If the Company shall fail to make such
appointment within a period of 15 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent, then the Company agrees to perform the
duties of the Warrant Agent hereunder until a successor Warrant Agent is
appointed. After appointment the successor Warrant Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent any
property at the time held by it pursuant to this Agreement, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Failure to give any notice provided for in this Section, however, or
any defect therein shall not affect the legality or validity of the resignation
or removal of the Warrant Agent or the appointment of the successor warrant
agent, as the case may be.
SECTION 22. ISSUANCE OF NEW WARRANT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or the Warrant Certificates to the
contrary, the Company may, at its option, issue new Warrant Certificates in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the number or kind of shares purchasable under the several Warrant
Certificates made in accordance with the provisions of this Agreement.
11
<PAGE>
SECTION 23. NOTICES. Notice or demand pursuant to this Agreement to
be given or made on the Company by the Warrant Agent or by the registered holder
of any Warrant Certificate shall be sufficiently given or made if sent by first
class or registered mail, postage prepaid, addressed (until another address is
filed in writing by the Company with the Warrant Agent) as follows:
Advantage Marketing Systems, Inc.
2601 Northwest Expressway, Suite 1210W
Oklahoma City, Oklahoma 73112-7293
Attention: President
Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be sufficiently given or made if
sent by first class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Warrant Agent with the Company) as
follows:
U.S. Stock Transfer Corporation
1745 Gardena Avenue, Suite 200
Glendale, California 91204-2291
Attention: Stock Transfer Department
Any notice or demand authorized to be given or made to the registered holder of
any Warrant Certificate under this Agreement shall be sufficiently given or made
if sent by first class or registered mail, postage prepaid, to the last address
of such holder as it shall appear on the registers maintained by the Warrant
Agent.
SECTION 24. MODIFICATION OF AGREEMENT. The Warrant Agent may,
without the consent or concurrence of the holders of the Warrant Certificates,
by supplemental agreement or otherwise, concur with the Company in making any
changes or corrections in this Agreement that the Warrant Agent shall have been
advised by counsel (who may be counsel for the Company) are necessary or
desirable to cure any ambiguity or to correct any defective or inconsistent
provision or clerical omission or mistake or manifest error herein contained, or
to make any other provisions in regard to matters or questions arising hereunder
and which shall not be inconsistent with the provisions of the Warrant
Certificates and which shall not adversely affect the interests of the holders
of Warrant Certificates. As of the date hereof, this Agreement contains the
entire and only agreement, understanding, representation, condition, warranty or
covenant between the parties hereto with respect to the matters herein,
supersedes any and all other agreements between the parties hereto relating to
such matters, and may be modified or amended only by a written agreement signed
by both parties hereto pursuant to the authority granted by the first sentence
of this Section.
SECTION 25. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 26. GOVERNING LAW. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Oklahoma and for all purposes shall be construed in
accordance with the laws of such state.
SECTION 27. TERMINATION. This Agreement shall terminate as of the
close of business on the Expiration Date, or such earlier date upon which all
Warrants shall have been exercised or redeemed, except that the Warrant Agent
shall account to the Company pursuant to Section 4 as to all Warrants
outstanding and all cash held by it as of the close of business on the
Expiration Date.
12
<PAGE>
SECTION 28. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement or
in the Warrant Certificates shall be construed to give to any person or
corporation other than the Company, the Warrant Agent, and their respective
successors and assigns hereunder and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent, their respective successors and assigns hereunder and the
registered holders of the Warrant Certificates.
SECTION 29. DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 30. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement, as
amended and restated, to be duly executed, as of this 8th day of January, 1998.
ADVANTAGE MARKETING SYSTEMS, INC.
By: /S/ROGER P. BARESEL
----------------------------------
Roger P. Baresel, President
U.S. STOCK TRANSFER CORP.
By:
----------------------------------
Name:
--------------------------------
Title:
---------------------------------
13
