<PAGE> 1
As filed with the Securities and Exchange Commission on October 3, 1996
File No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
CREATIVE LEARNING PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
New Jersey 22-2930106
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
150 Morris Avenue, Suite 205, Springfield, New Jersey 07081
(Address of Principal Executive Offices) (Zip Code)
Consulting Agreement dated as of August 7, 1996
(Full Title of the Plan)
Mr. Peter J. Jegou
Creative Learning Products, Inc.
150 Morris Avenue, Suite 205
Springfield, NJ 07081
(201) 467-0266
(Name, Address and Telephone Number of Agent for Service)
Copy to:
Robert W. Berend, Esq.
Gold & Wachtel, LLP
110 East 59th Street
New York, NY 10022
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
- ---------- ---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Common Stock, 3,000,000 $0.75 $2,250,000 $776
no par value shares
</TABLE>
- ---------------------
(1) Estimated solely for the purpose of calculating the registration fee.
The proposed maximum offering price and the registration fee for the
shares to be issued upon the exercise of the CLPI Warrants are
computed, pursuant to Rule 457(h), on the basis of the exercise price
of the CLPI Warrants as set forth in the Consulting Agreement.
<PAGE> 2
PROSPECTUS
CREATIVE LEARNING PRODUCTS, INC.
3,000,000 SHARES
OF
COMMON STOCK, NO PAR VALUE
ISSUABLE UPON THE EXERCISE OF WARRANTS
EXPIRING APRIL 16, 1999 AND AUGUST 6, 1999
-----------------------
CONSULTING AGREEMENT DATED AS OF AUGUST 7, 1996 BY AND BETWEEN
CREATIVE LEARNING PRODUCTS, INC. AND LEE S. ROSEN
-----------------------
This Prospectus relates to an offering by Creative Learning Products,
Inc. ("CLPI") of an aggregate of 3,000,000 shares of CLPI's Common Stock, no par
value (the "Common Stock"), to be issued to Lee S. Rosen (the "Consultant") upon
the exercise of (1) a warrant expiring April 16, 1999 (the "April Warrant") and
(2) a Warrant expiring August 6, 1999 (the "August Warrant") granted pursuant to
a written consulting agreement dated as of August 7, 1996 (the "Agreement") by
and among CLPI and the Consultant.
-----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
This Prospectus does not constitute an offer to sell securities in any
state to any person to whom it is unlawful to make such offer in such state.
-----------------------
The date of this Prospectus is October 3, 1996
<PAGE> 3
AVAILABLE INFORMATION
CLPI is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the following regional
offices of the Commission: 7 World Trade Center, Suite 1300, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of this material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission at the following Web site address: http://www.sec.gov.
Because the Common Stock is traded on the National Association of Securities
Dealers Automated Quotation ("Nasdaq") System, reports, proxy and information
statements and other information concerning CLPI can also be inspected by
contacting the National Association of Securities Dealers, Inc. (the "NASD"),
Nasdaq Reports Section , at 1735 K Street, N.W., Washington, D.C. 20006-1506.
CLPI has filed with the Commission a Registration Statement on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to an aggregate of 3,000,000 shares of the
Common Stock to be issued to the Consultant upon the exercise of the April
Warrant and the August Warrant granted pursuant to the Agreement. This
Prospectus, which is Part I of the Registration Statement, omits certain
information contained in the Registration Statement. For further information
with respect to CLPI and the shares of the Common Stock offered by this
Prospectus, reference is made to the Registration Statement, including the
exhibits thereto. Statements in this Prospectus as to any document are not
necessarily complete and, where any such document is an exhibit to the
Registration Statement or is incorporated herein by reference, each such
statement is qualified in all respects by the provisions of such exhibit or
other document, to which reference is hereby made for a full statement of the
provisions thereof. A copy of the Registration Statement, with exhibits, may be
obtained from the Commission's office in Washington, D.C. (at the above address)
upon payment of the fees prescribed by the rules and regulations of the
Commission, or examined there without charge.
2
<PAGE> 4
CLPI will provide without charge to each person to whom a Prospectus
has been delivered, upon the written or oral request of such person, a copy of
any or all of the information that has been incorporated by reference in the
Prospectus (not including exhibits to such information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that the Prospectus incorporates). Requests for such copies
should be directed to Creative Learning Products, Inc., Attention: Walter J.
Krzanowski, Chief Financial Officer, 150 Morris Avenue, Suite 205, Springfield,
NJ 07089, Telephone: (201) 467-0266.
No person has been authorized by CLPI to give any information or to
make any representation other than as contained in this Prospectus and, if given
or made, such information or representation must not be relied upon as having
been authorized by CLPI. Neither the delivery of this Prospectus nor any
distribution of the shares of the Common Stock underlying the warrants under the
terms of the Agreement (which constitutes the plan) shall, under any
circumstances, create any implication that there has been no change in the
affairs of CLPI since the date hereof.
3
<PAGE> 5
CONSULTING AGREEMENT DATED AS OF AUGUST 7, 1996 BY AND BETWEEN
CREATIVE LEARNING PRODUCTS, INC.
AND
LEE S. ROSEN
-----------------------
3,000,000 SHARES OF THE COMMON STOCK, NO PAR VALUE,
ISSUABLE UPON THE EXERCISE OF WARRANTS EXPIRING
APRIL 16, 1999 AND AUGUST 6, 1999
PART I
ITEM 1. PLAN INFORMATION
GENERAL PLAN INFORMATION
Creative Learning Products, Inc., a New Jersey corporation ("CLPI"), is
offering by this Prospectus an aggregate of 3,000,000 shares (the "Shares") of
CLPI's Common Stock, no par value (the "Common Stock"), to be issued upon the
exercise of two Common Stock purchase warrants issued pursuant to a written
consulting agreement dated as of August 7, 1996 (the "Agreement") by and among
CLPI and Lee S. Rosen (the "Consultant"). Under the Agreement the Consultant has
provided, and will continue to provide, certain consulting services, as
hereinafter described, to CLPI. The Consultant has accepted, as compensation for
his services, (1) a Common Stock purchase warrant expiring April 16, 1999 (the
"April Warrant") to purchase 2,000,000 shares of the Common Stock and (2) a
Common Stock purchase warrant expiring August 6, 1999 (the "August Warrant" and
together with the April Warrant hereinafter collectively referred to as the
"Warrants") to purchase 1,000,000 shares of the Common Stock. The purpose of the
form of compensation provided for in the Agreement is to provide the Consultant
with an opportunity to acquire the Shares on favorable terms by exercising the
Warrants and thereby create a proprietary interest in the progress and success
of the business of CLPI and provide him with maximum incentive to perform his
consulting services at the highest possible level.
The following description of the Agreement is only a summary and does
not purport to be complete. It is qualified in its entirety by reference to the
complete text of the Agreement, a copy of which is filed as Exhibit 4(b) to the
Registration Statement of which this Prospectus is a part and is incorporated
herein by this reference.
Pursuant to the Agreement, the Consultant agreed to assist CLPI (1)
with respect to CLPI's relationships with its
4
<PAGE> 6
shareholders, potential investors in CLPI and industry analysts, but not with
respect to the offer or sale of securities in a capital raising transaction and
(2) in obtaining gaming vessels and dockage therefor. Although the Consultant
has been providing similar financial public relations services pursuant to a
consulting agreement dated as of April 16, 1996 with CLPI, he agreed in the
Agreement to assume the duties as well of a former consultant to CLPI. Services
have been, and will continue to be, provided by the Consultant as CLPI may
reasonably request. The term of the Agreement is for two years commencing on
August 7, 1996. Either CLPI or the Consultant may terminate the Agreement
earlier for cause (as such term is defined, see "Forfeitures and Penalties").
CLPI has agreed to file this Registration Statement with respect to the
Shares. CLPI will pay all expenses related to this Registration Statement. The
Consultant has represented that he has acquired the Warrants for investment
purposes only and not with a view to, or in connection with, the resale or
distribution thereof.
Upon issuance the Shares shall be deemed fully paid and nonassessable
and shall be free and clear of all liens and encumbrances.
The Agreement is not subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") and is not qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code").
CLPI and its subsidiaries are referred to herein as the "Company."
SECURITIES TO BE OFFERED
Pursuant to the Agreement, the number of the shares of the Common Stock
as to which the April Warrant was granted and is to be exercised is 2,000,000
shares and the number of the shares of the Common Stock as to which the August
Warrant was granted and is to be exercised is 1,000,000 shares.
EMPLOYEES WHO MAY PARTICIPATE IN THE PLAN
The Consultant may exercise the Warrants prior to their Expiration
Dates (as such term is defined, see "Purchase of Securities Pursuant to the Plan
and Payment For Securities Offered").
5
<PAGE> 7
PURCHASE OF SECURITIES PURSUANT TO THE PLAN AND PAYMENT FOR SECURITIES OFFERED
The April Warrant may be exercised on and after February 7, 1997 and
until the close of business on April 16, 1999 (the "April Warrant Expiration
Date") for up to 2,000,000 shares of the Common Stock at an exercise price of
$0.75 per share. The August Warrant may be exercised on and after February 7,
1997 and until the close of business on August 6, 1999 (the "August Warrant
Expiration Date" and together with the April Warrant Expiration Date hereinafter
collectively referred to as the "Expiration Dates") for up to 1,000,000 shares
of the Common Stock at an exercise price of $0.75 per share. CLPI has reserved
the right to lower the exercise price of the Warrants.
Subject to the limitations in the preceding paragraph, the Consultant
may exercise the Warrants with respect to all of the Shares then available for
purchase or with respect to such lesser number of shares of the Shares as he,
from time to time, desires prior to the Expiration Dates or the earlier
termination of the Warrants.
The Warrants will be deemed exercised upon receipt by CLPI, at its
principal office, during the term of the Warrants of (a) a written notice signed
by the Consultant advising of the Consultant's exercise of the Warrants with
respect to the specified number of shares of the Shares and (b) payment in the
form of a check, bank draft or money order of the full purchase price for the
number of shares of the Shares covered by the notice. A check, bank draft or
money order will be accepted as payment, subject to collection, and stock
certificates registered in the name of the Consultant for the number of shares
of the Shares covered by such exercise will be delivered by CLPI within five
business days after such collection. The shares of the Common Stock to be issued
upon exercise will be issued from authorized but unissued shares (or, if
available and the Board of Directors of CLPI so directs, from treasury shares)
and CLPI will not purchase shares in the open market for such purpose.
WITHDRAWAL FROM THE PLAN; ASSIGNMENT OF INTEREST
The Warrants may not be assigned or transferred in whole or in part by
the Consultant except under the laws of descent and distribution.
FORFEITURES AND PENALTIES
The Agreement may be terminated upon (a) the Consultant's or CLPI's
material breach of his or its covenants and agreements under the Agreement or
(b) the Consultant (i) being convicted of a felony under the laws of any state
or the United States, whether directed toward the Company or otherwise, or (ii)
6
<PAGE> 8
committing larceny, embezzlement or other act of fraud or dishonesty against the
Company, or (ii) using the Company's facilities or premises for the conduct of
illegal or unlawful activities, transactions or businesses. The defaulting party
has 30 days to cure any default under (a) above. If the Agreement is terminated
prior to the full exercise of the Warrants for reasons other than the default of
CLPI, the Warrants shall terminate as to the shares for which they have not been
exercised on a pro rata basis.
TAX EFFECTS OF PLAN PARTICIPATION
The following is a summary of the Federal income tax provisions under
the Code currently applicable to the Warrants, including the consequences of
exercise, based upon advice to CLPI by Gold & Wachtel, LLP, its counsel. The
Consultant should consult his own tax advisors concerning legislative or
administrative developments, as well as his individual Federal income tax
position before exercising the Warrants or disposing of any shares of the Shares
acquired upon the exercise of the Warrants. CLPI makes no representation as to
the tax status or effect of the Warrants under the Code or the tax consequences
under the laws of any state or other jurisdiction of the granting of the
Warrants, any exercise thereof or of any sale of any shares of the Shares
acquired pursuant thereto.
The grant of the Warrants under the Agreement has no immediate tax
consequences to the Consultant or CLPI under the Code. Upon the exercise of the
Warrants, the Consultant will recognize ordinary income and CLPI will be
entitled to a deduction in an amount equal to the excess of the fair market
value of the shares of the Shares as to which the Warrants are exercised over
the exercise price on the date of the exercise of the Warrants. The Consultant's
tax basis in such shares of the Shares will be the exercise price plus the
amount of ordinary income recognized by the Consultant, and the Consultant's
holding period will commence on the date of exercise.
Upon a subsequent sale of any shares of the Shares, any difference
between the tax basis of such shares of the Shares and the amount realized on
the sale is treated under the Code as short-term or long-term capital gain or
loss, depending on the holding period of such shares of the Shares.
Ordinary income recognized by virtue of the exercise of a Warrant is
subject to applicable withholding as required by law.
7
<PAGE> 9
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE AGREEMENT ANNUAL INFORMATION
CLPI will provide, without charge, to the Consultant, upon its written
or oral request, a copy of CLPI's latest Annual Report on Form 10-KSB for the
fiscal year ended May 31, 1996, which document is incorporated herein by this
reference in this Prospectus and is made a part hereof. There is also
incorporated herein by this reference and made a part hereof, all documents
filed and to be filed by CLPI pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act prior to the filing of a post-effective amendment to the
Registration Statement which indicates that all securities offered by this
Prospectus have been sold or which deregisters all securities then remaining
unsold. Requests for such information should be directed to Walter J.
Krzanowski, Chief Financial Officer, Creative Learning Products, Inc., 150
Morris Avenue, Suite 205, Springfield, NJ 07081; Telephone: (201) 467-0266.
8
<PAGE> 10
TABLE OF CONTENTS
Page
----
Available Information................................ 2
Plan Information
General Plan Information......................... 4
Securities To Be Offered......................... 5
Employees Who May
Participate in the Plan........................ 5
Purchase of Securities
Pursuant to the Plan and
Payment For Securities
Offered...................................... 6
Withdrawal from the Plan;
Assignment of Interest......................... 6
Forfeitures and Penalties........................ 6
Tax Effects of Plan
Participation.................................. 7
Registrant Information and
Employee Agreement Annual
Information...................................... 8
CREATIVE LEARNING PRODUCTS, INC.
3,000,000 SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF WARRANTS EXPIRING APRIL 16, 1999 AND AUGUST 6, 1999.
Prospectus dated October 3, 1996
<PAGE> 11
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The Registrant's Annual Report on Form 10-KSB for the fiscal year ended
May 31, 1996 is incorporated by reference in this Registration Statement and
made a part hereof. There is also incorporated herein by reference hereto and
made a part hereof the Registrant's Registration Statement on Form 8A dated
April 25, 1989 and all other documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities offered by the Prospectus have been sold or which deregisters all
securities then remaining unsold. Such documents shall be deemed to be
incorporated by this reference and to be made a part hereof from the date of
filing of such documents. In addition, the audited consolidated financial
statements of the Registrant to be included in subsequently filed documents will
be incorporated herein in reliance upon the reports of BDO Seidman, LLP
pertaining to such financial statements (to the extent covered by consents filed
with the Securities and Exchange Commission) given upon the authority of such
firms as experts in accounting and auditing.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The consolidated financial statements of the Registrant appearing in
the Registrant's Annual Report on Form 10-KSB for the fiscal year ended May 31,
1996 have been audited by BDO Seidman, LLP, independent auditors, as set forth
in such firm's report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein in reliance on the
report of BDO Seidman, LLP pertaining to such financial statements given on the
authority of such firm as experts in accounting and auditing.
The validity of the securities offered hereby will be passed upon for
the Registrant by Gold & Wachtel, LLP, 110 East 59th Street, New York, New York
10022. Gold & Wachtel, LLP is the holder of 178,750 shares of the Registrant's
Common Stock, no par value (the "Common Stock"), and a Common Stock purchase
warrant to purchase 114,387 shares of the Common Stock at $1.311 per share (both
the number of shares and the exercise price being
10
<PAGE> 12
subject to further adjustments pursuant to the antidilution provision thereof),
the shares and the warrant being received in lieu of payments for legal fees.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VI of the Articles of Incorporation of the Registrant provides
indemnification of persons including directors and officers of the Registrant to
the fullest extent permitted by the Business Corporation Act of the State of New
Jersey (the "BCA").
Section 14A:3-5(2) of the BCA empowers a corporation to indemnify a
corporate agent (which term includes a director or officer) against his or her
expenses and liabilities in connection with any proceeding involving the
corporate agent, other than a proceeding by, or in the right of, the
corporation, if such corporate agent acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to a criminal proceeding, such agent has no cause
to believe his or her conduct was unlawful. Subsection 14A:3-5(3) of the BCA
provides for similar indemnification of a corporate agent in a proceeding by, or
in the right of, the corporation, but requires court approval of the actual
indemnification. Subsections 14A:3-5(5) through Subsection 14A:3(5)(12) of the
BCA further define the procedures relating to indemnification.
See the last undertaking in Item 17 to this Registration Statement.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
All of the following exhibits except those designated with an asterisk
are incorporated herein by reference to a prior registration statement filed
under the Securities Act of 1933, as amended (the "Securities Act"), or a
periodic report filed by the Registrant pursuant to Section 13 or 15(d) of the
Exchange Act. Those exhibits designated with an asterisk are filed as an exhibit
to this Registration Statement.
Number Exhibits
- ------ --------
3(a) Copy of Articles of Incorporation of the Registrant.(1)
11
<PAGE> 13
Number Exhibits
- ------ --------
3(a)(1) Copy of Amendment to Articles of Incorporation of the Registrant
filed on December 30, 1988.(1)
3(a)(2) Copy of Amendment to Articles of Incorporation of the Registrant
filed on September 12, 1991.(2)
3(a)(3) Copy of Certificate of Designations and Preferences of the Series A
Preferred Stock of the Registrant filed on September 12, 1991.(2)
3(a)(4) Copy of Amendment to the Articles of Incorporation of the Registrant
filed on May 22, 1992.(2)
3(a)(5) Copy of Amendment to the Articles of Incorporation of the Registrant
filed on June 23, 1992.(2)
3(a)(6) Copy of Amendment to the Articles of Incorporation of the Registrant
filed on August 25, 1993.(2)
3(a)(7) Copy of Amendment to the Articles of Incorporation of the Registrant
filed on January 26, 1994.(3)
3(b) Copy of Amended and Restated By-Laws of the Registrant as adopted by
shareholders on January 12, 1994.(3)
4(a) Specimen of Common Stock Certificate after one- for-four reverse
stock split effective January 26, 1994.(3)
4(b) Copy of Consulting Agreement dated as of April 16, 1996 by and
between the Registrant and Lee S. Rosen.(4)
*4(b)(1) Copy of Consulting Agreement dated as of August 7, 1996 by and
between the Registrant and Lee S. Rosen.
*4(b)(2) Form of Common Stock Purchase Warrant expiring April 16, 1999 issued
by the Registrant to Lee S. Rosen.
*4(b)(3) Form of Common Stock Purchase Warrant expiring August 6, 1999 issued
by the Registrant to Lee S. Rosen.
*5 Opinion of Gold & Wachtel, LLP.
*23(a) Consent of Gold & Wachtel, LLP is included in its Opinion filed as
Exhibit 5.
*23(b) Consent of BDO Seidman, LLP.
12
<PAGE> 14
- ---------------------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-18, File No. 33-27027, and incorporated herein by this reference.
(2) Filed as an exhibit to the Registrant's Annual Report on Form 10-KSB
for the year ended May 31, 1993 and incorporated herein by this
reference.
(3) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB
for the quarter ended February 28, 1994 and incorporated herein by this
reference.
(4) Filed as an Exhibit to the Registrant's Annual Report on Form 10-KSB
for the year ended May 31, 1996 and incorporated herein by this
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
13
<PAGE> 15
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
Prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
14
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on September 30, 1996.
CREATIVE LEARNING PRODUCTS, INC.
(Registrant)
By: /s/ Peter J. Jegou
-------------------------------
Peter J. Jegou
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on September 30, 1996.
Signature Title
- --------- -----
/s/ Peter J. Jegou Principal Executive Officer and
- -------------------------- Director
Peter J. Jegou
/s/ Walter J. Krzanowski Principal Financial and
- -------------------------- Accounting Officer
Walter J. Krzanowski
/s/ Carol A. Kulina-Jegou Director
- --------------------------
Carol A. Kulina-Jegou
15
<PAGE> 17
E X H I B I T S
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
Number Exhibit Number
- ------ ------- ------
<S> <C> <C>
4(b)(1) Copy of Consulting Agreement
dated as of August 7, 1996 by
and between the Registrant and
Lee S. Rosen............................... E-1
4(b)(2) Form of Common Stock Purchase
Warrant expiring April 16, 1999
issued by the Registrant to
Lee S. Rosen............................... E-6
4(b)(3) Form of Common Stock Purchase
Warrant expiring August 6, 1999
issued by the Registrant to
Lee S. Rosen............................... E-14
5 Opinion of Gold and Wachtel, LLP........... E-22
23(a) Consent of Gold & Wachtel, LLP is
included in their opinion filed as
Exhibit 5 hereto
23(b) Consent of BDO Seidman, LLP................ E-24
</TABLE>
<PAGE> 1
CONSULTING AGREEMENT
AGREEMENT made as of this 7th day of August 1996 by and between
CREATIVE LEARNING PRODUCTS, INC., a New Jersey corporation ("CLPI"), and LEE S.
ROSEN (the "Consultant").
WHEREAS, CLPI's Common Stock, no par value (the "Common Stock"), is
traded on the National Association of Securities Dealers Automated Quotation
("NASDAQ") System;
WHEREAS, CLPI and Lyle K. Pfeffer ("Pfeffer") entered into a Consulting
Agreement dated as of April 16, 1996 (the "Pfeffer Agreement") pursuant to which
Pfeffer agreed, among other things, to perform certain consulting services for
CLPI through April 15, 1998, unless the Pfeffer Agreement was terminated sooner;
WHEREAS, subsequent to their execution of the Agreement, CLPI and
Pfeffer have acknowledged and agreed that Pfeffer is currently unable to perform
in accordance with the Pfeffer Agreement and that, accordingly, have agreed to
terminate the Pfeffer Agreement, to cancel the Common Stock purchase warrant
expiring April 15, 1999 (the "Pfeffer Warrant") issued pursuant thereto and to
have CLPI withdraw the Registration Statement on Form S-8 under the Securities
Act of 1933, as amended (the "Securities Act"), related thereto;
WHEREAS, the Consultant is engaged in the business of providing
consulting services with respect to financial public relations and investor
relations and also entered into a Consulting Agreement also dated as of April
16, 1996 (the "Consulting Agreement") to perform such services for CLPI;
WHEREAS, CLPI desires to engage the Consultant (1) to provide the
financial public relations services and investor relations services for CLPI
that Pfeffer was obligated to perform pursuant to the Agreement and in addition
to the services he is already performing pursuant to the Consulting Agreement
and (2) to assist CLPI in obtaining gaming vessels and dockage for the same, and
the Consultant is willing to render such services, on the terms and conditions
as hereinafter more fully set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. CLPI hereby engages and retains the Consultant, and the Consultant
hereby accepts such engagement and retention, to render to CLPI the consulting
services hereinafter described in Section 2 hereof for a period commencing on
the date
<PAGE> 2
hereof and terminating August 6, 1998 (the "Term"), unless terminated sooner as
provided in Section 6 hereof.
2. The Consultant's services hereunder shall consist of consultations
with the officers and directors of CLPI with respect to (a) CLPI's relationships
with its shareholders, potential investors in CLPI and industry securities
analysts and (b) assisting CLPI in obtaining gaming vessels and the dockage
therefor, as CLPI may from time to time reasonably request during the Term. The
services to be rendered by the Consultant shall include, but not be limited to,
(x) coordinating and arranging "road shows" or individual meetings at which
representatives of CLPI shall meet with its shareholders, potential investors in
CLPI and industry securities analysts, (y) assisting in the dissemination of
appropriate information with respect to CLPI and its subsidiaries; and (z)
locating appropriate gaming vessels for sale or lease to CLPI and appropriate
sites at which such vessels may be docked.
3. In full consideration for the services to be rendered by the
Consultant to CLPI, CLPI shall (a) in consideration of the Consultant assuming
what were the obligations of Pfeffer under the Pfeffer Agreement, issue to the
Consultant a Common Stock purchase warrant expiring April 16, 1999 (the
"Substitute Warrant") to purchase 2,000,000 shares of the Common Stock at $.75
per share, which were the number of shares and the exercise price subject to the
Pfeffer Warrant, and (b), in consideration of the Consultant performing the
services with respect to the gaming vessels, a Common Stock purchase warrant
expiring August 6, 1999 (the "New Warrant") to purchase 1,000,000 shares at $.75
per share. In consideration of the Consultant's services, CLPI also shall pay to
the Consultant a fee of $266,667, which was the cash fee payable to Pfeffer
under the Pfeffer Agreement. Pursuant to the Consulting Agreement, CLPI was
obligated to pay a fee of $133,333 and to issue a Common Stock purchase warrant
expiring April 15, 1999 (the "Consultant's Warrant") to purchase 1,000,000
shares of the Common Stock at $.75 per share. CLPI and the Consultant both
acknowledge that the Consultant's Warrant was issued to the Consultant and that
the aggregate fees of $400,000 were paid to the Consultant through a credit to
the exercise price of the Consultant's Warrant upon its exercise. CLPI shall
register the shares of the Common Stock underlying the Substitute Warrant and
the New Warrant (the "Underlying Shares") under the Securities Act in a
Registration Statement on Form S-8. The Consultant represents and warrants that
he is acquiring the Substitute Warrant and the New Warrant and, if the
Underlying Shares are issued to him before such time as the Underlying Shares
are so registered under the Securities Act, the Underlying Shares for investment
purposes only, and not with a view to, or in connection with the resale or
distribution thereof. CLPI represents that, upon issuance, the Underlying Shares
shall be fully paid and non-assessable and shall be free and clear of all
security interests, liens and encumbrances
2
<PAGE> 3
arising from acts of CLPI. The Substitute Warrant, the New Warrant and/or the
Underlying Shares shall not be subject to termination or forfeiture upon
termination of this Agreement under Section 6 thereof, except that CLPI may
prorate the number of shares of the Underlying Shares if CLPI terminates this
Agreement for Cause under Section 6 thereof. The number of shares of the
Underlying Shares as to which the Substitute Warrant or the New Warrant may be
exercised after any such termination by CLPI shall be the product of (a), in the
case of the Substitute Warrant, 2,000,000 and (b), in the case of the New
Warrant, 1,000,000 and a fraction, the numerator of which shall be the number of
days of the Term which have elapsed prior to the effective date of termination
and the denominator of which shall be 730.
4. The Consultant shall be entitled to reimbursement by CLPI for such
reasonable out-of-pocket expenses as the Consultant may incur in performing
services under this Agreement and for which it furnishes appropriate
documentation to CLPI in accordance with the regulations of the Internal Revenue
Service and the policies of CLPI.
5. All final decisions with respect to actions to be taken by CLPI
based upon the Consultant's advice shall be those of CLPI.
6. This Agreement shall terminate prior to the expiration of the Term
upon the earliest of the events specified below:
a. by CLPI, upon notice to the Consultant, for Cause, which
shall be defined, for purposes of this subsection (a), as (i) the Consultant
being convicted of a felony under the laws of any state or the United States,
whether directed toward CLPI or otherwise, or (ii) committing larceny,
embezzlement or other act of fraud or dishonesty against CLPI, or (ii) using
CLPI's facilities or premises for the conduct of illegal or unlawful activities,
transactions or businesses; or
b. by either party, upon notice to the other, for Cause, which
shall be defined for purposes of this subsection (b) as the other party's
material breach of any of its covenants and agreements hereunder and the failure
to cure such breach within 30 days after notice thereof.
7. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to any principles
of conflict of laws. Any controversy or claim arising out of, or relating to,
this Agreement, or the breach thereof, shall be settled by arbitration in New
York, New York in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator(s) may be
entered in any court having
3
<PAGE> 4
jurisdiction thereof. The parties hereto consent to the personal jurisdiction of
the Federal and State courts located in the County of New York, State of New
York.
8. This Agreement may not be, and shall not be deemed or construed to
have been, modified, amended, rescinded, canceled or waived in whole or in part,
except by written instruments signed by the parties hereto.
9. Any and all notices or other communications or deliveries required
or permitted to be given or made shall be in writing and delivered personally,
or sent by certified or registered mail, return receipt requested and postage
prepaid, or sent by overnight courier service as follows:
If to CLPI, at:
150 Morris Avenue
Suite 205
Springfield, NJ 07081
Attention: Mr. Peter J. Jegou,
Chairman, President and Chief Executive Officer
With a copy to:
Gold & Wachtel, LLP
110 East 59th Street
New York, NY 10022
Attention: Robert W. Berend, Esq.
If to the Consultant, at:
17332 Saint James Court
Boca Raton, FL 33496
or at such other address as any party may specify by notice given to such other
party in accordance with this Section 9. The date of giving of any such notice
shall be the date of hand delivery, two (2) days after the date of the posting
of the mail or the date when deposited with the overnight courier.
10. Each party will be and act as an independent contractor and not as
agent or partner of, or joint venturer with, the other party for any purpose,
and no party by virtue of this Agreement shall have any right, power or
authority to act or create any obligation, express or implied, on behalf of the
other parties.
4
<PAGE> 5
11. No waiver of the provisions hereof shall be effective unless in
writing and signed by the party to be charged with such waiver. No waiver shall
be deemed a continuing waiver or waiver in respect of any subsequent breach or
default, either of similar or different nature, unless expressly so stated in
writing.
12. This Agreement shall inure to the benefit of, be enforceable by,
and shall be binding upon the parties and their respective legal
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have respectively executed this
Agreement as of the day and year first above written.
CREATIVE LEARNING PRODUCTS, INC.
By:_______________________________________________
Chairman, President and Chief Executive Officer
_______________________________________________
LEE S. ROSEN
5
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT OR LAWS, THE RULES AND
REGULATIONS THEREUNDER AND THE PROVISIONS
OF THIS WARRANT.
WARRANT TO PURCHASE 2,000,000 SHARES
OF COMMON STOCK OF
CREATIVE LEARNING PRODUCTS, INC.
ISSUED TO
LEE S. ROSEN
DATED: AUGUST 7, 1996
WARRANT NO. ____
(INCORPORATED UNDER THE LAWS OF THE STATE OF NEW JERSEY)
THIS CERTIFIES THAT LEE S. ROSEN (the "Warrant Holder") is the owner of
a Warrant, subject to adjustment as provided in Section 3 hereof, which entitles
the owner thereof to purchase, in whole or in part at any time, and from time to
time, during the period commencing on February 7, 1997 (the "Commencement Date")
and terminating at 5:00 P.M., New York Time, on April 16, 1999 (the "Expiration
Date"), 2,000,000 fully paid and nonassessable shares of the Common Stock, no
par value (the "Common Stock"), of Creative Learning Products, Inc., a New
Jersey corporation (hereinafter called the "Company"), at the purchase price per
share of $0.75 (the "Purchase Price"), subject to adjustment as provided in
Section 3 hereof, payable in lawful money of the United States of America upon
surrender of this Warrant and payment of the Purchase Price in lawful money of
the United States of America at the principal office of the Company (currently
150 Morris Avenue, Springfield, New Jersey 07081) or at such other place as the
Company may designate by written notice to the Warrant Holder.
1. Exercise
The Warrant evidenced hereby may be exercised from time to time, in
whole or in part, from the Commencement Date until the Expiration Date, provided
that in no event may any fractional share of the Common Stock be issued. In the
event that a fractional share would otherwise be issued as a result of any
adjustment made pursuant to Section 3 hereof or otherwise, payment for such
fractional share shall be made on the basis of the Market Price on
<PAGE> 2
the date of exercise. For the purpose of this Section 1, the term "Market Price"
shall mean (a) if the Common Stock is traded on a national securities exchange
or on the National Association of Securities Dealers Automated Quotation
("NASDAQ") System, the closing sales price (or, if no sales on that day, the
high bid price) or (b) if the Common Stock is not traded as provided in
subsection (a), the closing bid price as reported in the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD") or in the pink
sheets by the National Quotation Bureau, Inc.
Upon any exercise of the Warrant evidenced hereby, the form of election
to purchase set forth as Exhibit A hereto shall be properly completed, executed
and delivered to the Company, together with full payment to the Company of the
Purchase Price for the shares as to which the Warrant is exercised by certified
check or bank draft. In the event that there is only a partial exercise of the
Warrant evidenced hereby, there shall be issued to the Warrant Holder a new
Warrant Certificate, in all respects similar to this Warrant Certificate,
evidencing the number of shares of the Common Stock still available for
exercise.
Upon receipt of full payment and properly completed documentation, the
Company shall then cause the Transfer Agent for the Common Stock to issue fully
paid and nonassessable shares of the Common Stock as are represented by the
exercise.
If this Warrant shall be surrendered upon exercise within any period
during which the transfer books for the Common Stock are closed for any purpose,
the Company shall not be required to make delivery of certificates for shares of
the Common Stock until the date of the reopening of said transfer books.
2. Expiration Date
The Warrant evidenced hereby may not be exercised before the
Commencement Date or after the Expiration Date with respect to the shares of the
Common Stock as to which the Warrant may be exercised and, to the extent not
exercised by the Expiration Date, the Warrant evidenced hereby shall become
void.
3. Adjustments
Subject to the provisions of this Section 3, the Purchase Price and the
shares of the Common Stock as to which the Warrant may be exercised shall be
subject to adjustment from time to time as hereinafter set forth:
(a) If at any time, or from time to time, the Company shall,
by subdivision, consolidation, or reclassification of shares, or otherwise,
change as a whole the outstanding shares of the Common Stock into a different
number or class of shares, the
2
<PAGE> 3
number and class of shares so changed shall replace the shares outstanding
immediately prior to such change and the Purchase Price and the number of shares
purchasable under the Warrant immediately prior to the date on which such change
shall become effective shall be proportionately adjusted.
(b) Irrespective of any adjustments or change in the Purchase
Price or the number of securities actually purchasable under the Warrant, the
Warrant theretofore and thereafter issued may continue to express the exercise
price and the number of securities purchasable thereunder as the Purchase Price
and the number of securities purchasable were expressed in the Warrant when
initially issued.
(c) If at any time while the Warrant is outstanding, the
Company shall consolidate with, or merge into, another corporation, firm or
entity, or otherwise enter into a form of business combination, the holder of
the Warrant shall thereafter be entitled upon exercise thereof to purchase, with
respect to each security purchasable thereunder immediately prior to the date on
which such consolidation or merger or other form of business combination shall
become effective, the securities or property to which a holder of one such
security would have been entitled upon such consolidation or merger or other
form of business combination, without any change in, or payment in addition to,
the Purchase Price in effect immediately prior to such consolidation or merger
or other form of business combination, and the Company shall take such steps in
connection with such consolidation or merger or other form of business
combination as may be necessary to assure that all the provisions of the Warrant
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any securities or property thereafter deliverable upon the exercise of the
Warrant.
(d) The Board of Directors of the Company, in its discretion,
may, at any time during the exercise period of the Warrant, extend the exercise
period or reduce the Purchase Price for all warrants then outstanding.
(e) Upon the happening of any event requiring the adjustment
of the exercise price hereunder, the Company shall forthwith give written notice
thereof to the registered holder of the Warrant stating the adjusted Purchase
Price and the adjusted number of securities purchasable upon the exercise
thereof resulting from such event and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
certificate of the Company's independent public accountants shall be conclusive
evidence of the correctness of any computation made hereunder.
3
<PAGE> 4
4. Notice to Warrant Holder
Nothing contained herein shall be construed as conferring upon the
Warrant Holder the right to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders for the election of
directors of the Company or any other matter, or any other rights whatsoever as
a shareholder of the Company; provided, however, that in the event that:
(a) the Company shall take action to make any distribution
(other than cash dividends payable out of earnings or earned surplus) on the
Common Stock;
(b) the Company shall take action to offer for subscription
pro rata to the holders of the Common Stock any additional shares of stock of
any class or other rights or securities convertible into the Common Stock;
(c) the Company shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the Company (other
than a change in par value, or a change from par value to no par value, or a
change from no par value to par value, or a subdivision or combination of the
Common Stock), or a consolidation or merger of the Company into, or a sale of
all or substantially all of its assets to, another corporation; or
(d) the Company shall take action looking to a voluntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall, (x) at least 10 days
prior to the date on which the books of the Company shall close or a record date
shall be taken for such distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, cause
notice thereof to be sent to the Warrant Holder at the address appearing on the
Warrant register of the Company and, (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, cause at least 10 days' prior written notice of the date when the
same shall take place to be given to the Warrant Holder in the same manner. Such
notice in accordance with the foregoing clause (x) shall also specify, in the
case of any such distribution or subscription rights, the date on which the
holders of the Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (y) shall also specify the date on which
the holders of the Common Stock shall be entitled to exchange their shares of
the Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Failure to give such notice or
any defect therein shall not affect the legality or
4
<PAGE> 5
validity of any of the matters set forth in this Section 5 inclusive.
5. Investment Representation
The Warrant Holder, by his, her or its acceptance of this Warrant,
acknowledges that neither the Warrant nor the shares of the Common Stock
issuable upon exercise thereof have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, represents and
warrants to the Company that he, she or it is acquiring the Warrant for
investment and not with a view to, or in connection with, any distribution
thereof. The holder further represents and warrants that, if a registration
statement under the Securities Act is not effective with respect to the
underlying shares at the time of exercise, the Warrant Holder will acquire the
shares of the Common Stock for investment and not with a view to, or in
connection with, any distribution thereof.
6. Additional Limits on Transferability
This Warrant shall not be transferable by the Warrant Holder, directly
or indirectly, (including by way of merger or corporate reorganization). Any
attempt to transfer this Warrant in contravention of this Paragraph 6 shall be
void ab initio. This Warrant shall not be subject to execution, attachment or
other process.
7. Payment of Taxes
The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Common Stock issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for the Common Stock in a name other than that of
the registered holder of the Warrant in respect of which such shares are issued,
and in such case the Company shall not be required to issue or deliver any
certificates for the Common Stock or any Warrant for remaining shares until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company's satisfaction that such tax has been paid.
8. Mutilated or Missing Warrant
In case the Warrant shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and deliver in exchange and substitution
for, and upon cancellation of, the mutilated Warrant, or in lieu of, and in
substitution for, the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or
5
<PAGE> 6
destruction of such Warrant. Applicants for such substitute Warrant shall also
comply with such other reasonable regulations and pay such reasonable charges as
the Company may prescribe.
9. Reserve
The Company covenants and agrees that, from time to time, there will be
authorized and available for delivery a sufficient number of its shares of the
Common Stock or other securities into which the Warrant is then exercisable to
permit the exercise of the Warrant at the time outstanding as and when the
certificates shall, from time to time, be deliverable in accordance with Section
1 hereof. In the event that there are insufficient shares or other securities
for such purpose, the Company shall use its best efforts to seek shareholder
approval for an Amendment to the Company's Certificate of Incorporation and/or
to take such other action as is necessary or appropriate to cause such shares or
other securities to be authorized.
10. Governing Law
The Warrant evidenced hereby shall be construed and enforced in
accordance with the laws of the State of New Jersey applicable to contracts made
and to be performed in that State, without giving effect to any principles of
conflicts of laws.
IN WITNESS WHEREOF, Creative Learning Products, Inc. has caused this
Warrant to be signed manually by a duly authorized officer.
Dated: August 7, 1996 CREATIVE LEARNING PRODUCTS, INC.
By: ____________________________________
Peter J. Jegou, President
6
<PAGE> 7
EXHIBIT A
ELECTION TO PURCHASE
To Creative Learning Products, Inc.
c/o___________________________________
___________________________________
___________________________________
The undersigned hereby irrevocably elects to exercise the Warrant
represented by the within Warrant Certificate to purchase
shares of the Common Stock issuable upon the exercise of the Warrant and
requests that certificates for such shares shall be issued in the name of
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Taxpayer number)
and be delivered to_____________________________________________________________
(Name)
at______________________________________________________________________________
(Address)
and, if said number of shares of the Common Stock shall not be all the shares of
the Common Stock evidenced by the within Warrant Certificate, that a new Warrant
Certificate for the balance remaining of such said shares be registered in the
name of
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Taxpayer number)
and delivered to the undersigned at the address below stated.
Dated:________________, 19__
7
<PAGE> 8
Name of holder of Warrant Certificate:
________________________________________________________________________________
(please print)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Signature)
Note: The above signature must correspond with the
name as written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatever.
8
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT OR LAWS, THE RULES AND
REGULATIONS THEREUNDER AND THE PROVISIONS
OF THIS WARRANT.
WARRANT TO PURCHASE 1,000,000 SHARES
OF COMMON STOCK OF
CREATIVE LEARNING PRODUCTS, INC.
ISSUED TO
LEE S. ROSEN
DATED: AUGUST 7, 1996
WARRANT NO. ____
(INCORPORATED UNDER THE LAWS OF THE STATE OF NEW JERSEY)
THIS CERTIFIES THAT LEE S. ROSEN (the "Warrant Holder") is the owner of
a Warrant, subject to adjustment as provided in Section 3 hereof, which entitles
the owner thereof to purchase, in whole or in part at any time, and from time to
time, during the period commencing on February 7, 1997 (the "Commencement Date")
and terminating at 5:00 P.M., New York Time, on August 6, 1999 (the "Expiration
Date"), 1,000,000 fully paid and nonassessable shares of the Common Stock, no
par value (the "Common Stock"), of Creative Learning Products, Inc., a New
Jersey corporation (hereinafter called the "Company"), at the purchase price per
share of $0.75 (the "Purchase Price"), subject to adjustment as provided in
Section 3 hereof, payable in lawful money of the United States of America upon
surrender of this Warrant and payment of the Purchase Price in lawful money of
the United States of America at the principal office of the Company (currently
150 Morris Avenue, Springfield, New Jersey 07081) or at such other place as the
Company may designate by written notice to the Warrant Holder.
1. Exercise
The Warrant evidenced hereby may be exercised from time to time, in
whole or in part, from the Commencement Date until the Expiration Date, provided
that in no event may any fractional share of the Common Stock be issued. In the
event that a fractional share would otherwise be issued as a result of any
adjustment made pursuant to Section 3 hereof or otherwise, payment for such
fractional share shall be made on the basis of the Market Price on
<PAGE> 2
the date of exercise. For the purpose of this Section 1, the term "Market Price"
shall mean (a) if the Common Stock is traded on a national securities exchange
or on the National Association of Securities Dealers Automated Quotation
("NASDAQ") System, the closing sales price (or, if no sales on that day, the
high bid price) or (b) if the Common Stock is not traded as provided in
subsection (a), the closing bid price as reported in the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD") or in the pink
sheets by the National Quotation Bureau, Inc.
Upon any exercise of the Warrant evidenced hereby, the form of election
to purchase set forth as Exhibit A hereto shall be properly completed, executed
and delivered to the Company, together with full payment to the Company of the
Purchase Price for the shares as to which the Warrant is exercised by certified
check or bank draft. In the event that there is only a partial exercise of the
Warrant evidenced hereby, there shall be issued to the Warrant Holder a new
Warrant Certificate, in all respects similar to this Warrant Certificate,
evidencing the number of shares of the Common Stock still available for
exercise.
Upon receipt of full payment and properly completed documentation, the
Company shall then cause the Transfer Agent for the Common Stock to issue fully
paid and nonassessable shares of the Common Stock as are represented by the
exercise.
If this Warrant shall be surrendered upon exercise within any period
during which the transfer books for the Common Stock are closed for any purpose,
the Company shall not be required to make delivery of certificates for shares of
the Common Stock until the date of the reopening of said transfer books.
2. Expiration Date
The Warrant evidenced hereby may not be exercised before the
Commencement Date or after the Expiration Date with respect to the shares of the
Common Stock as to which the Warrant may be exercised and, to the extent not
exercised by the Expiration Date, the Warrant evidenced hereby shall become
void.
3. Adjustments
Subject to the provisions of this Section 3, the Purchase Price and the
shares of the Common Stock as to which the Warrant may be exercised shall be
subject to adjustment from time to time as hereinafter set forth:
(a) If at any time, or from time to time, the Company shall,
by subdivision, consolidation, or reclassification of shares, or otherwise,
change as a whole the outstanding shares of the Common Stock into a different
number or class of shares, the
2
<PAGE> 3
number and class of shares so changed shall replace the shares outstanding
immediately prior to such change and the Purchase Price and the number of shares
purchasable under the Warrant immediately prior to the date on which such change
shall become effective shall be proportionately adjusted.
(b) Irrespective of any adjustments or change in the Purchase
Price or the number of securities actually purchasable under the Warrant, the
Warrant theretofore and thereafter issued may continue to express the exercise
price and the number of securities purchasable thereunder as the Purchase Price
and the number of securities purchasable were expressed in the Warrant when
initially issued.
(c) If at any time while the Warrant is outstanding, the
Company shall consolidate with, or merge into, another corporation, firm or
entity, or otherwise enter into a form of business combination, the holder of
the Warrant shall thereafter be entitled upon exercise thereof to purchase, with
respect to each security purchasable thereunder immediately prior to the date on
which such consolidation or merger or other form of business combination shall
become effective, the securities or property to which a holder of one such
security would have been entitled upon such consolidation or merger or other
form of business combination, without any change in, or payment in addition to,
the Purchase Price in effect immediately prior to such consolidation or merger
or other form of business combination, and the Company shall take such steps in
connection with such consolidation or merger or other form of business
combination as may be necessary to assure that all the provisions of the Warrant
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any securities or property thereafter deliverable upon the exercise of the
Warrant.
(d) The Board of Directors of the Company, in its discretion,
may, at any time during the exercise period of the Warrant, extend the exercise
period or reduce the Purchase Price for all warrants then outstanding.
(e) Upon the happening of any event requiring the adjustment
of the exercise price hereunder, the Company shall forthwith give written notice
thereof to the registered holder of the Warrant stating the adjusted Purchase
Price and the adjusted number of securities purchasable upon the exercise
thereof resulting from such event and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
certificate of the Company's independent public accountants shall be conclusive
evidence of the correctness of any computation made hereunder.
3
<PAGE> 4
4. Notice to Warrant Holder
Nothing contained herein shall be construed as conferring upon the
Warrant Holder the right to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders for the election of
directors of the Company or any other matter, or any other rights whatsoever as
a shareholder of the Company; provided, however, that in the event that:
(a) the Company shall take action to make any distribution
(other than cash dividends payable out of earnings or earned surplus) on the
Common Stock;
(b) the Company shall take action to offer for subscription
pro rata to the holders of the Common Stock any additional shares of stock of
any class or other rights or securities convertible into the Common Stock;
(c) the Company shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the Company (other
than a change in par value, or a change from par value to no par value, or a
change from no par value to par value, or a subdivision or combination of the
Common Stock), or a consolidation or merger of the Company into, or a sale of
all or substantially all of its assets to, another corporation; or
(d) the Company shall take action looking to a voluntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall, (x) at least 10 days
prior to the date on which the books of the Company shall close or a record date
shall be taken for such distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, cause
notice thereof to be sent to the Warrant Holder at the address appearing on the
Warrant register of the Company and, (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, cause at least 10 days' prior written notice of the date when the
same shall take place to be given to the Warrant Holder in the same manner. Such
notice in accordance with the foregoing clause (x) shall also specify, in the
case of any such distribution or subscription rights, the date on which the
holders of the Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (y) shall also specify the date on which
the holders of the Common Stock shall be entitled to exchange their shares of
the Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Failure to give such notice or
any defect therein shall not affect the legality or
4
<PAGE> 5
validity of any of the matters set forth in this Section 5 inclusive.
5. Investment Representation
The Warrant Holder, by his, her or its acceptance of this Warrant,
acknowledges that neither the Warrant nor the shares of the Common Stock
issuable upon exercise thereof have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, represents and
warrants to the Company that he, she or it is acquiring the Warrant for
investment and not with a view to, or in connection with, any distribution
thereof. The holder further represents and warrants that, if a registration
statement under the Securities Act is not effective with respect to the
underlying shares at the time of exercise, the Warrant Holder will acquire the
shares of the Common Stock for investment and not with a view to, or in
connection with, any distribution thereof.
6. Additional Limits on Transferability
This Warrant shall not be transferable by the Warrant Holder, directly
or indirectly, (including by way of merger or corporate reorganization). Any
attempt to transfer this Warrant in contravention of this Paragraph 6 shall be
void ab initio. This Warrant shall not be subject to execution, attachment or
other process.
7. Payment of Taxes
The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Common Stock issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for the Common Stock in a name other than that of
the registered holder of the Warrant in respect of which such shares are issued,
and in such case the Company shall not be required to issue or deliver any
certificates for the Common Stock or any Warrant for remaining shares until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company's satisfaction that such tax has been paid.
8. Mutilated or Missing Warrant
In case the Warrant shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and deliver in exchange and substitution
for, and upon cancellation of, the mutilated Warrant, or in lieu of, and in
substitution for, the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or
5
<PAGE> 6
destruction of such Warrant. Applicants for such substitute Warrant shall also
comply with such other reasonable regulations and pay such reasonable charges as
the Company may prescribe.
9. Reserve
The Company covenants and agrees that, from time to time, there will be
authorized and available for delivery a sufficient number of its shares of the
Common Stock or other securities into which the Warrant is then exercisable to
permit the exercise of the Warrant at the time outstanding as and when the
certificates shall, from time to time, be deliverable in accordance with Section
1 hereof. In the event that there are insufficient shares or other securities
for such purpose, the Company shall use its best efforts to seek shareholder
approval for an Amendment to the Company's Certificate of Incorporation and/or
to take such other action as is necessary or appropriate to cause such shares or
other securities to be authorized.
10. Governing Law
The Warrant evidenced hereby shall be construed and enforced in
accordance with the laws of the State of New Jersey applicable to contracts made
and to be performed in that State, without giving effect to any principles of
conflicts of laws.
IN WITNESS WHEREOF, Creative Learning Products, Inc. has caused this
Warrant to be signed manually by a duly authorized officer.
Dated: August 7, 1996 CREATIVE LEARNING PRODUCTS, INC.
By:_________________________________
Peter J. Jegou, President
6
<PAGE> 7
EXHIBIT A
ELECTION TO PURCHASE
To Creative Learning Products, Inc.
c/o___________________________________
___________________________________
___________________________________
The undersigned hereby irrevocably elects to exercise the Warrant
represented by the within Warrant Certificate to purchase
shares of the Common Stock issuable upon the exercise of the Warrant
and requests that certificates for such shares shall be issued in the name of
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Taxpayer number)
and be delivered to_____________________________________________________________
________________________________________________________________________________
(Name)
at______________________________________________________________________________
(Address)
and, if said number of shares of the Common Stock shall not be all the shares of
the Common Stock evidenced by the within Warrant Certificate, that a new Warrant
Certificate for the balance remaining of such said shares be registered in the
name of
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Taxpayer number)
and delivered to the undersigned at the address below stated.
Dated:________________, 19__
7
<PAGE> 8
Name of holder of Warrant Certificate:
________________________________________________________________________________
(please print)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Signature)
Note: The above signature must correspond with the
name as written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatever.
8
<PAGE> 1
Exhibit 5
[GOLD & WACHTEL, LLP LETTERHEAD]
October 2, 1996
Creative Learning Products, Inc.
150 Morris Avenue
Suite 205
Springfield, New Jersey 07081
Dear Sirs:
We refer to the Registration Statement on Form S-8 (the "Registration
Statement") to be filed by Creative Learning Products, Inc. (the "Company")
under the Securities Act of 1933, as amended, relating to 3,000,000 shares of
the Common Stock, no par value per share (the "Common Stock"), of the Company
issuable upon the exercise of (1) a warrant expiring April 16, 1999 (the "April
Warrant") and (2) a warrant expiring August 6, 1999 (the "August Warrant"),
each granted pursuant to the terms of a written consulting agreement dated as
of August 7, 1996 by and between the Company and Lee S. Rosen (the
"Agreement").
As counsel to the Company, we have examined the Certificate of
Incorporation of the Company, its By-laws, its minutes, the April Warrant, the
August Warrant, the Agreement and other corporate proceedings relating to the
authorization and issuance of the aforesaid shares of the Common Stock and have
reviewed the Registration Statement in the form intended to be filed. In our
opinion, we have made such an investigation and examination as we have deemed
necessary for the purposes of expressing an informed opinion on the matters
hereafter discussed.
Based upon such examination, it is our opinion that:
1. The Company is duly organized and validly existing under the
laws of the State of New Jersey; and
E-22
<PAGE> 2
Creative Learning Products, Inc.
October 2, 1996
Page 2
2. The 2,000,000 shares of the Common Stock to be issued upon
exercise of the April Warrant and the 1,000,000 shares of the Common Stock to
be issued upon the exercise of the August Warrant will, upon issuance pursuant
to exercise of the respective Warrant in accordance with the terms of the
respective Warrant and the Agreement, be validly issued, fully paid and
non-assessable.
In addition, we hereby consent to the filing of this opinion as an
Exhibit to said Registration Statement and to the reference to our firm on page
7 of the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Gold & Wachtel, LLP
E-23
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Creative Learning Products, Inc.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated September 10, 1996, relating to the
consolidated financial statements of Creative Learning Products, Inc. and
Subsidiaries, appearing in the Company's Annual Report on Form 10-KSB for the
year ended May 31, 1996. We also consent to the reference to us under the
caption "Interests of Named Experts and Counsel".
/s/ BDO Seidman, LLP
BDO Seidman, LLP
New York, New York
October 2, 1996
