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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
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 73112-7293
OKLAHOMA CITY, OKLAHOMA (Zip Code)
(Address of principal executive offices)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
UNITS
(EACH CONSISTING OF ONE SHARE OF COMMON STOCK, $.0001 PAR VALUE PER SHARE, AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT)
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
(EACH EXERCISABLE TO PURCHASE ONE SHARE OF COMMON STOCK, $.0001 PAR VALUE
PER SHARE ON OR BEFORE NOVEMBER 6, 2002)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
Advantage Marketing Systems, Inc., an Oklahoma corporation ("Company" or
"Registrant"), hereby registers pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended, units (the "Units") each consisting of one
share of Common Stock, $.0001 par value per share, and one Redeemable Common
Stock Purchase Warrant, and registers Redeemable Common Stock Purchase Warrants
(the "Warrants"), each exercisable for the purchase of one share of Common
Stock, $.0001 par value per share on or before November 6, 2002. The Board of
Directors of the Company has authorized the issuance of up to 1,625,000 Units
and 1,625,000 Warrants in accordance with the provisions of that certain Unit
and Warrant Agreement between the Company and U.S. Stock Transfer Corp., dated
November 6, 1997 (the "Unit and Warrant Agreement"), as amended and restated.
The following description of certain matters relating to the Units and
Warrants is a summary and is qualified in its entirety by the provisions of the
Unit and Warrant Agreement which has been filed as an exhibit hereto. See "Item
2. Exhibits."
UNITS
Each Unit consists of one share of Common Stock and one Warrant. The Common
Stock and Warrants comprising the Units separated on December 8, 1997. Prior to
the Separation Date, each share of Common Stock and each Warrant comprising each
Unit traded only as a Unit. On and after the Separation Date, the Common Stock
and Warrants comprising the Units traded only as separate securities, additional
certificates evidencing the Units will not be countersigned and delivered, and,
in lieu thereof, only certificates evidencing the shares of Common Stock and the
Warrants underlying the Units will be countersigned and delivered in replacement
of the surrendered certificates evidencing the Units. The holders of the Common
Stock underlying the Units will possess all rights as holders of such Common
Stock.
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Each Warrant entitles the holder to purchase one share of Common Stock at
any time on and after the Separation Date, upon payment of the exercise price of
$3.40. The number and kind of securities or other property for which the
Warrants are exercisable are subject to adjustments in certain events, such as
mergers, reorganizations or stock splits, to prevent dilution. Unless previously
redeemed, the Warrants are exercisable on and after the Separation Date and on
or before 5:00 p.m., New York City time on November 6, 2002, and then only in
the event (i) a current prospectus under the Securities Act of 1933, as amended
(the "1933 Act"), relating to the shares of Common Stock issuable upon exercise
of the Warrants is then in effect and (ii) such Common Stock is qualified for
sale or exemption from qualification under the applicable securities laws of the
state in which each holder exercising the Warrants resides.
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The Warrants are subject to redemption at any time by the Company, on not
less than 30 days' prior written notice, at a price of $0.25 per Warrant, after
the Separation Date and only after the closing sale price per share of the
Common Stock as reported on the Nasdaq SmallCap Market, for a period of 20
consecutive trading days, has been at or above 200 percent of the exercise
price, as adjusted, of the Warrants. Holders of Warrants will automatically
forfeit their rights to purchase the shares of Common Stock or other securities
or property issuable and deliverable upon exercise of the Warrants unless the
Warrants are exercised before the close of business on the business day
immediately prior to the date set for redemption. All of the outstanding
Warrants must be redeemed if any are redeemed. A notice of redemption shall be
mailed to the registered holder of the Warrants by first class mail, postage
prepaid, within five business days after the Company determines to exercise its
right of redemption, but not less than 30 days before the date fixed for
redemption. The notice of redemption shall specify the per Warrant redemption
price to be paid, and that the right to exercise the Warrants shall terminate at
5:00 p.m. New York City time on the business day immediately preceding the date
fixed for redemption. The Warrants will only be redeemable if, on the date the
Warrants are called for redemption, there is an effective registration statement
and current prospectus covering the shares of Common Stock or other securities
issuable upon exercise of the Warrants.
The Warrants may be exercised upon surrender of the certificate(s) therefor
on or prior to 5:00 p.m. New York City time on November 6, 2002 or, if the
Warrants are called for redemption, the business day prior to the redemption
date, as explained above, at the offices of the Company's warrant agent (the
"Warrant Agent") with the subscription on the reverse side of the certificate
completed and executed as indicated, accompanied by payment of the full exercise
price for the number of Warrants being exercised.
In certain cases, the sale of securities by the Company upon exercise of
the Warrants could violate the securities laws of the United States, certain
states or other jurisdictions. The Company has agreed to maintain an effective
registration statement under the 1933 Act at its expense with respect to the
securities underlying the Warrants (and, if necessary, to allow their public
resale without restriction) at all times during the period in which the Warrants
are exercisable. The Company will use its best efforts, and to take such
actions under the laws of various states, as may be required to cause the sale
of the securities underlying the Warrants upon their exercise to be lawful.
However, the Company is not required to honor the exercise of the 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
the 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.
The 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 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.
The Company is not required to issue fractional shares of Common Stock
and, in lieu thereof, will make a cash payment based upon the current market
value of such shares. The holders of the Warrants will not possess any rights
as shareholders of the Company unless and until the holders exercise the
Warrants and then only as a holder of the Common Stock.
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DESCRIPTION OF OTHER SECURITIES OF THE COMPANY
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., which are incorporated by reference.
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 of the Company 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 and 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 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
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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 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.
TRANSFER AGENT AND WARRANT AGENT
U.S. Stock Transfer Corp. is the transfer agent and registrar for the Units
and Common Stock and the Warrant Agent for the Warrants and 1997-A Warrants,
whose address is 1745 Gardena Avenue, Suite 200, Glendale, California 91204-
2991.
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
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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 is 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 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
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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.
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 Unit of Registrant is incorporated by
reference to Exhibit 4.10 of the Amendment No. 2 to the
Registration Statement on Form SB-2 (Registration No. 333-34885)
filed with the Commission on November 3, 1997.
1.3 Form of certificate of the Redeemable Common Stock Purchase
Warrant of Registrant is incorporated by reference to Exhibit 4.8
of the Amendment No. 1 to the Registration Statement on Form SB-2
(Registration No. 333-34885) filed with the Commission on October
20, 1997.
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. 333-34885) filed with the Commission on
September 3, 1997.
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. 333-34885) filed with the Commission on
September 3, 1997.
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2.3 The Unit and Warrant Agreement between the Registrant and U.S.
Stock Transfer Corp. dated November 6, 1997, as amended and
restated on January 8, 1998.
2.4 The Warrant Agreement between the Registrant and U.S. Stock
Transfer Corp. is incorporated by reference to Exhibit 2.3 of
Amendment No. 2 to the Registration Statement on Form 8-A filed
with the Commission on January 13, 1998.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, on this 14th day of January, 1998.
ADVANTAGE MARKETING SYSTEMS, INC.
By: /s/ ROGER P. BARESEL
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Roger P. Baresel, President
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EXHIBIT 2.3
UNIT AND WARRANT AGREEMENT
BETWEEN
ADVANTAGE MARKETING SYSTEMS, INC.
AND
U.S. STOCK TRANSFER CORPORATION
DATED AS OF NOVEMBER 6, 1997
(as amended and restated January 8, 1998)
THIS WARRANT AGREEMENT, having an effective date of November 6, 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, at or about the time that it is entering into this
Agreement, proposes to offer and sell to public investors up to 1,000,000 shares
of Common Stock, $.0001 par value (the "Common Stock") and 1,000,000 Redeemable
Common Stock Purchase Warrants (each referred to herein as the "Warrant" or
collectively as the "Warrants") in 1,300,000 units of one share of Common Stock
and one Warrant (the "Units"), with an over-allotment option for an additional
195,000 Units (the "Offering"). Each Warrant entitles the holder thereto to
purchase one share of Common Stock for a purchase price of $3.40 (the "Purchase
Price"). The securities purchasable upon exercise of each Warrant, as well as
the Purchase Price thereof, is subject to the terms and conditions, including
adjustment in certain circumstances, of this Agreement;
WHEREAS, the Company proposes to issue to Paulson Investment Company, Inc.
and Joseph Charles & Assoc., Inc., the representatives of the several
underwriters of the Offering (the "Representatives") and their assigns warrants
(the "Representatives' Warrants") to purchase up to 130,000 Units;
WHEREAS, the Warrant Agent also serves as the Stock Transfer Agent and
Registrar of the Company's Common Stock.
WHEREAS, the Company desires to retain the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing to act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the
Units (the "Unit Certificates") and the Warrants (the "Warrant Certificates")
(collectively and individually the Unit Certificates and Warrant Certificates
are referred to as the "Certificates" or "Certificate") to be issued in
connection with the Offering and to the Representatives and their assigns upon
exercise of the Representatives' Warrants under this Agreement 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 Units and 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 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 CERTIFICATES. The
Certificates (and the Subscription and the Assignment to be printed on the
reverse thereof) shall be in registered form only and shall be substantially of
the tenor and purport recited in Exhibits A and B 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
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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 Certificate shall entitle the registered holder thereof, subject to
the provisions of this Agreement and of the Warrant Certificate, to purchase on
and after the Separation Date 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 Certificate, upon payment of the
Purchase Price per share described in Section 6 hereof. 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 Unit Certificate issued as a
part of the Offering shall be dated the date of the of the Prospectus (the
"Final Prospectus) comprising in part of the Offering shall be dated November 6,
1997; each other 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., New York City time, on such date; provided, however,
that if such date is not a business day, it shall mean 5:00 p.m., New York City
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 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 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
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 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 Certificate had not ceased to be such officer of the Company.
SECTION 3. SUBSEQUENT ISSUE OF CERTIFICATES. Subsequent to their original
issuance, no Certificates shall be reissued except (i) Certificates issued upon
transfer thereof in accordance with Section 4 hereof, (ii) Certificates issued
upon any combination, split-up, or exchange of Certificates pursuant to Section
4 hereof, (iii) Certificates issued in replacement of mutilated, destroyed, lost
or stolen Certificates pursuant to Section 5 hereof, (iv) Certificates issued
upon the partial exercise of the Warrants pursuant to Section 7 hereof, and (v)
Certificates issued pursuant to Section 22 hereof to reflect any adjustment or
change in the Purchase Price or the number or kind of shares or securities
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 hereof, the new Certificates required for purposes thereof, and the
Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Certificates duly executed on behalf of the Company for such purposes.
SECTION 4. TRANSFERS AND EXCHANGES OF CERTIFICATES. The Warrant Agent
shall keep or cause to be kept books for registration of ownership and transfer
of the Certificates issued in accordance with this Agreement. Such registers
shall show the names and addresses of the respective holders of the Certificates
and the number of shares of Common Stock, if applicable, and the Warrants
evidenced by each such Certificate.
The Warrant Agent shall, from time to time, register the transfer of any
outstanding Units and Warrants upon the books to be maintained by the Warrant
Agent for that purpose, upon surrender of the Certificate evidencing such Units
or Warrants, with the Assignment duly filled in and executed, to the Warrant
Agent at its stock transfer office 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 Certificate, with the Assignment duly completed and
executed, accompanied by payment of
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an amount equal to any applicable transfer tax, the Warrant Agent shall promptly
cancel the surrendered Certificate and countersign and deliver to the transferee
a new Certificate for the number of full Units or Warrants transferred to such
transferee; provided, however, that in case the registered holder of any
Certificate shall elect to transfer fewer than all of the Units or Warrants
evidenced by such Certificate, the Warrant Agent shall also promptly countersign
and deliver to such registered holder a new Certificate or Certificates for the
number of full Warrants not so transferred.
Any Certificate or Certificates may be exchanged at the option of the
holder thereof for another Certificate or Certificates of different
denominations, of like tenor and representing in the aggregate the same number
of Units or Warrants, upon surrender of such Certificate or Certificates, with
the Assignment duly completed 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 Certificate and deliver the new Certificate pursuant to
the provisions of this Section.
In the event of the issuance of new Certificates pursuant to this Section 4
in replacement of the Unit Certificates after December 8, 1997, or such later
date if such date is extended by Paulson Investment Company, Inc., in its sole
discretion, pursuant to appropriate advance notice by the Company to the holders
of the Units (the "Separation Date"), the Warrant Agent, in its capacity as
Warrant Agent and as Transfer Agent and Registrar of the Common Stock, shall
promptly cancel the surrendered Unit Certificate and countersign and deliver to
the person entitled to receive the new Certificates in accordance with this
Section 4 certificates evidencing separately the shares of Common Stock and
Warrants evidenced by the surrendered Unit Certificate and the surrendered Unit
Certificate shall be canceled.
SECTION 5. MUTILATED, DESTROYED, LOST OR STOLEN 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 Certificate, and,
in the case of loss, theft or destruction, such 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 Certificate, the Warrant Agent shall countersign and deliver
a new Certificate of like tenor for the same number of Warrants. In the event
of the issuance of a new Certificate pursuant to this Section 5 after the
Separation Date in replacement of a Unit Certificate, the Warrant Agent, in its
capacity as Warrant Agent and Transfer Agent and Registrar of the Common Stock,
shall countersign and deliver a certificate evidencing the number of shares of
Common Stock and a Warrant Certificate evidencing the number of Warrants
evidenced by the lost, stolen, destroyed or mutilated Unit Certificate.
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 (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 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.
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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 unchanged, but the number of
shares of capital stock purchasable upon 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 the holder 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
the holder 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
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 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.
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6.6 Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of the Warrants, the Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar 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 par
value to no par value, or from no par value to par value. In the event that at
any time as a result of an adjustment made pursuant to this Section 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 for not less than 20 days 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 provide not less than 15 days prior 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
Certificate may exercise the Warrants evidenced thereby in whole at any time or
in part from time to time on or after the Separation Date and at or prior to the
close of business on the Expiration Date, subject to the provisions of Section 9
hereof, at which time the Warrant evidenced by any Certificate 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
Certificate evidencing such Warrants, with the Subscription on the reverse side
thereof duly completed and executed, to the Warrant Agent at its stock transfer
office, 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 Certificate, with the Subscription duly completed
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 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 Certificate. In addition, if it
is required by law, the Warrant Agent will deliver to each warrant holder a
prospectus which complies with the provisions of Section 9 of the Securities
Act, and the Company
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agrees to supply the Warrant Agent with sufficient number of prospectuses for
such purpose.
7.3 In case the registered holder of any Certificate shall exercise fewer
than all of the Warrants evidenced by such Certificate, the Warrant Agent shall
promptly countersign and deliver to the registered holder of such Certificate or
Certificates, or to his duly authorized assigns, a new Certificate or
Certificates evidencing the number of Warrants that were not so exercised. In
the event exercised Warrants are evidenced by a Unit Certificate, the Warrant
Agent shall also promptly countersign and deliver to the registered holder a
certificate or certificates evidencing the number of shares of Common Stock
evidenced by the Unit Certificate and the Unit Certificate shall be canceled.
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 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, on not less than 30 days' (the "Notice Period") written notice
to the holders of such Warrants at a price equal to $0.25 per Warrant (the
"Redemption Price"). The right to redeem the Warrants may be exercised by the
Company only in the event (i) the closing sale price for the Company's shares of
Common Stock has exceeded 200 percent of the Purchase Price, as so adjusted
during any period of at least 20 consecutive trading days whether immediately
preceding or otherwise any notice of redemption, (ii) the Company has an
effective registration statement (or post-effective amendment to an existing
registration statement) pertaining to the securities underlying the Warrants,
which registration statement would enable a Warrant holder to exercise the
Warrants under the Securities Act, and (iii) expiration of the 30-day notice
period before the Expiration Date. '-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.
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 Warrant Agent 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. New York 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 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
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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 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 In the event 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 Certificate evidencing a fraction of a Unit or 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 8, 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 Certificate was surrendered for exercise in accordance
with Section 7 hereof. By accepting a Certificate, the holder thereof expressly
waives any right to receive a 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 file a Registration Statement on the appropriate form and all post-
effective amendments to such Registration Statement necessary to permit the
offer and sale of the securities underlying the Warrants pursuant to the
Securities Act 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
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and legally issue fully paid and non-assessable shares of such capital stock.
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 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 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 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 until any such tax shall have been paid, all
such tax being payable by the holder of such 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
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 WARRANTS. Upon the
exercise 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 the stock
transfer office of the Warrant Agent. Copies of this Agreement may be obtained
upon written request addressed to the Warrant Agent at its stock transfer
office.
SECTION 14. CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder, as
such, of any Warrant 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 by a
certificate for any purpose whatever, nor shall anything contained herein or in
any Certificate be construed to confer upon the holder of any Warrant, as such,
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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 shall have
been exercised in accordance with the provisions of this Agreement 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 Certificates;
and any registered holder of any Certificate, without the consent of the Warrant
Agent or of the holder of any 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 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 Certificate and in this Agreement.
SECTION 16. AGREEMENT OF HOLDERS OF CERTIFICATES. Every holder of a
Certificate, by accepting the same, consents and agrees with the Company, the
Warrant Agent and every other holder of a Certificate that:
16.1 The 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 Certificate is registered as the absolute owner of the Unit or
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 CERTIFICATES. In the event that the Company
shall purchase or otherwise acquire any Certificate or Certificates after the
issuance thereof, such 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 Certificate delivered to it for exercise, in whole or in part,
or delivered to it for transfer, split-up, combination or exchange.
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 instrument or
agreement 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 the case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, any of the Certificates shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Certificates so
countersigned; and in the case that at any time the Certificates shall not have
been countersigned, any successor to the Warrant Agent may countersign such
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 Certificates shall
have the full force provided in the Certificates and in this Agreement.
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In the case that at any time the name of the Warrant Agent shall be changed
and at such time any of the Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Certificates so countersigned; and in case at that time any of the
Certificates shall not have been countersigned, the Warrant Agent may
countersign such Certificates either in its prior name or in its changed name;
and in such cases such Certificates shall have the full force provided in the
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 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 any two of 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
Certificates (except its countersignature on the 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 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 Certificate; nor shall it be responsible
for any change in the number of shares of Common Stock required under the
provisions of Section 6 hereof 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 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 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
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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 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 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 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 CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or the Certificates to the contrary, the Company
may, at its option, issue new 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 Certificates made in accordance with the
provisions of this Agreement.
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 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
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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 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 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 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 Certificates and which shall not
adversely affect the interests of the holders of 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 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.
SECTION 28. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement or
in the 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 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
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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement, as
amended and restated, to be duly executed, all as of the 8th day of January,
1998.
ADVANTAGE MARKETING SYSTEMS, INC.
By: /s/ ROGER P. BARESEL
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Roger P. Baresel, President
U.S. STOCK TRANSFER CORP.
By:
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