EXHIBIT C - Form of Exchange Agent Agreement
Date: October 18, 2005
UMB Bank, N.A., as Exchange Agent
X.X. Xxx 000000
Xxxxxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx
RE: Stock Split by The American Education Corporation
Ladies and Gentlemen:
Pursuant to an Amendment to the Certificate of Incorporation of
the American Education Corporation (the "Company"), the Company will
effect (1) a 1-for-2,000 reverse split of its common stock whereby each
2,000 outstanding shares of common stock will be converted into one whole
share, and in lieu of the Company issuing fractional shares resulting from
the reverse split to Stockholders of less than 2,000 pre-reverse split
shares, the Company will pay cash equal to $1,000 multiplied by the
fractional share which would otherwise be held by such stockholder (the
"Reverse Split"), followed immediately by (2) a 100-for-1 forward split
for those stockholders who hold at least one whole share of Company common
stock after the Reverse Split (The "Forward Split"), with stockholders who
would be entitled to receive a fractional share of our common stock in
connection with the Forward Split receiving in lieu of such fractional
share cash equal to $10.00 multiplied by such fractional share
(collectively, the "Transaction"). The Transaction contemplates the use
of an Exchange Agent (a) to notify the shareholders of the Company that
they may proceed to surrender their shares and as to the process for such
surrender, (b) to accept the surrender of such shares, and (c) to issue
new share certificates representing the shares owned after the Transaction
and checks for payments made in lieu of any fractional shares on behalf of
the Company.
The effective date of the Transaction is the date the
Certificate of Change to amend the Certificate of Incorporation is filed
with the Secretary of State of the State of Nevada (the "Effective Date").
In connection with your appointment as Exchange Agent, you are
authorized and instructed as follows:
1. As soon as reasonably practicable after the Effective Date, the
Exchange Agent shall mail to each owner of shares of record at the close
of business on the business day immediately preceding the Effective Date a
Letter of Transmittal in the form attached hereto as Exhibit A. For the
purpose of such mailing, the identities and addresses of such owners of
shares shall be established by a shareholders list and address labels to
be acquired from UMB Bank, N.A., as the transfer agent. UMB Bank, N.A.
shall cause such shareholders list and address labels to be provided to
Exchange Agent for use in the mailing.
2. Upon receipt by Exchange Agent of a certificate(s) representing
shares, together with a Letter of Transmittal, which in a sole judgement
of Exchange Agent (subject to the right of the Company to waive defects or
irregularities) has been properly completed, and other required documents,
Exchange Agent will cause to be issued a certificate representing the
shares owned after the Transaction and a check for any fractional shares
payable upon either the Reverse Split or the Forward Split (to be paid
only to the extent of immediately available funds provided by the
Company), to the surrendering stockholder at the rates set forth in the
first paragraph above, subject to the terms presented in this letter and
in the Letter of Transmittal. For the purpose of making any such payment,
the Company shall deposit with Exchange Agent, from time to time as
necessary, in advance, sufficient monies to permit all payments
anticipated by this Paragraph 2 to be made. These monies will be held by
the Exchange Agent in a segregated trust account, the principal of which
is held for the benefit of holders of common stock of the Company who are
entitled to cash payments in lieu of fractional shares. UMB shall be
entitled to keep all sweep fees, shareholder servicing fees or similar
fees charged by UMB on this account or received by mutual funds into which
the funds are invested. To the extent that Exchange Agent does not have
sufficient funds available to make payments for fractional shares on any
business day, Exchange Agent shall fax a notice of deficiency to Company.
Company shall wire to Exchange Agent sufficient funds to cover all such
checks by no later than 12:00 p.m. Central Time on the second business day
following notification of deficiency by Exchange Agent. In the event
Company fails to wire sufficient funds to Exchange Agent by 12:00 p.m.
Central Time on the second business day following notice of deficiency,
Exchange Agent shall have the right to immediately terminate this
agreement upon written notice to Company.
3. Exchange Agent will keep such records as are reasonably
necessary to document the receipt and processing of shares and Letters of
Transmittal surrendered to the Exchange Agent.
4. Exchange Agent shall retain shares, Letter of Transmittal, and
related documents, properly surrendered to it until the Termination Date,
as hereinafter defined, and following said Termination Date shall deliver
such shares, Letters of Transmittal and other items to the Company.
5. Exchange Agent shall prepare and distribute any necessary 1099
information forms and shall perform any necessary backup withholding.
6. The Exchange Agent:
(a) shall have no obligation to make payment for any fractional
shares unless the Company shall have deposited with to the
Exchange Agent fully collected funds sufficient to pay in
full all amounts due and payable with respect thereto;
(b) shall have no duties or obligations other than those
specifically set forth in this letter, or as may be
subsequently agreed to by the Exchange Agent and the
Company;
(c) shall have no responsibility as to the validity,
sufficiency, value, enforceability or genuineness
of the Transaction, the shares or any certificates
therefor;
(d) may rely upon and shall be fully protected in relying and
acting upon any certificate, instrument, opinion, notice,
letter, facsimile transmission, telex, telegram,
stockholder list, mailing label or other instrument, or any
security delivered to Exchange Agent and reasonably
believed by Exchange Agent to be genuine and to have been
signed or initiated by the proper party or parties;
(e) may rely and shall be fully protected in relying and acting
upon written or oral instructions of the Company with
respect to any matter (including incomplete or defective
surrender of Letters of Transmittal or shares) relating to
service as Exchange Agent, which instruction may be issued
by Xxxxxxx X. Xxxxxx or Xxxx Xxxxxxx;
(f) may consult with and act upon an opinion of legal counsel
satisfactory to the Exchange Agent and shall not be
responsible for any action taken or omitted to be taken in
reliance upon such opinion; and
(g) shall be indemnified and held harmless by the Company from
and against any loss, fee, cost, expense, damage, liability
or other claim reasonably incurred by the Exchange Agent
and arising out of its service hereunder and not arising
from the gross negligence or willful misconduct of the
Exchange Agent.
7. The Company will pay the Exchange Agent compensation for
services as set forth on the fee schedule attached hereto as Exhibit B.
8. The exchange agency created hereby shall terminate on the
Termination Date, which shall be October 18, 2006. On or promptly after
the Termination Date, or upon termination as described in Paragraph 2,
Exchange Agent shall deliver to the Company any amounts held by it for
payment for fractional shares and such items as are specified by Paragraph
4 hereof. Thereupon, Exchange Agent shall have no further duty to accept
surrender of Letters of Transmittal or shares or to make payments with
respect thereto and Exchange Agent shall be released from any further
obligation hereunder.
Very truly yours,
By /s/ Xxxx X. Xxxxxxx
Title Chief Financial Officer
UMB Bank, N.A., hereby agrees to accept appointment as Exchange
Agent and to act in accordance with the foregoing letter.
UMB BANK, N.A.
By
Title
Date
Exhibit A
LETTER OF TRANSMITTAL
For Shares of Common Stock, $.025 par value
of
The American Education Corporation
This Letter of Transmittal should be completed, signed and submitted,
together with the certificate(s) representing your shares of
The American Education Corporation Common Stock, to:
UMB Bank, n.a.
By hand: UMB Bank, n.a. By courier: UMB Bank, n.a. By mail: UMB Bank, n.a.
Securities Transfer Division Securities Transfer Division Securities Transfer Division
000 Xxxxx Xxxx. 000 Xxxxx Xxxx. X.X. Xxx 000000
Xxxxxx Xxxx, XX 00000 Xxxxxx Xxxx, XX 00000 Xxxxxx Xxxx, XX 00000-0000
Ladies and Gentlemen:
Pursuant to (1) a reverse split of the American Education Corporation (the
"Company") common stock whereby each 2,000 outstanding shares of common stock
will be converted into one whole share, and in lieu of us issuing fractional
shares resulting from the combination, the Company will pay cash equal to $1,000
multiplied by the fractional share which would otherwise be held by a
stockholder who has less than 2,000 pre-reverse split shares (the "Reverse
Split"), followed immediately by (2) a 100-for-1 forward split for those
stockholders who hold at least one whole share of Company common stock after the
Reverse Split (the "Forward Split"), with stockholders who would be entitled to
receive a fractional share of our common stock in connection with the Forward
Split receiving in lieu of such fractional share cash equal to $10.00 multiplied
by such fractional share (collectively, the "Transaction"), the undersigned
hereby encloses herewith and surrenders to UMB Bank, n.a. the following
described certificate(s) (the "Certificate(s)") representing pre-Transaction
shares of the Company Common Stock (the "Old Shares").
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DESCRIPTION OF CERTIFICATE(S) SUBMITTED
(If the space provided below is inadequate, the Certificate
number(s) and number of Shares should be listed on a
separate schedule signed and affixed hereto.)
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Number of Shares
Certificate Represented by
Name and Address of Registered Holder Number Certificate
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Total Shares
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NOTE: If the name or address indicated on the label above is not correct, please
make any necessary changes.
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The undersigned hereby surrenders the Certificates representing the Old
Shares in exchange for (i) a certificate or certificates representing
post-Transaction shares (the "New Shares") of the Company Common Stock, and (ii)
a cash payment for any fractional shares (the "Fractional Share Payment"), each
calculated as set forth in the first paragraph above.
You are hereby authorized and instructed to prepare in the name of and
deliver to the address indicated above (unless otherwise instructed in the
following boxes) (i) a certificate or certificates representing New Shares, and
(ii) funds to which the undersigned is entitled as a result of the Transaction.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF) AND ALL OTHER
DOCUMENTS AND INSTRUMENTS REQUIRED HEREBY SHOULD BE MAILED OR DELIVERED TO UMB
BANK, N.A. AT ONE OF THE ADDRESSES SET FORTH ABOVE.
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SPECIAL REGISTRATION
AND PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
COMPLETE ONLY if the stock COMPLETE ONLY if delivery of the stock
certificate(s) evidencing the Company certificate(s) evidencing the Company
Common Stock is/are to be registered Common Stock or a Fractional Share
in a name, or the Fractional Share Payment is to be made OTHER than to
Payment check is to be made payable to the address(es) of the registered
a name, OTHER than the name(s) of the holder(s) appearing under "DESCRIPTION
registered holder(s) appearing under OF CERTIFICATES SUBMITTED" on page 1
"DESCRIPTION OF CERTIFICATES or, if the box immediately to the left
SUBMITTED" on page 1. of this box is filled in, OTHER than
to the address appearing therein.
Issue stock certificate to or make Mail stock certificate or Fractional
check payable to: Share Payment to:
(See instruction 4):
Name _________________________________
Name _________________________________ ______________________________________
______________________________________ Address: _____________________________
Address: _____________________________ ______________________________________
______________________________________ (Please Print)
(Please Print)
______________________________________
(Signature)
Signature(s) guaranteed by an Eligible
Guarantor Institution:
(See Instruction 4)
Authorized Signature _________________
Name of Firm _________________________
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Please provide your Taxpayer Identification Number (or the Taxpayer
Identification Number of the person named in the "SPECIAL REGISTRATION AND
PAYMENT INSTRUCTIONS" box above) in the Substitute Form W-9 below and certify
(or have the person named in the "SPECIAL REGISTRATION AND PAYMENT INSTRUCTIONS"
box above certify) by signing and dating below. For most individual taxpayers,
the Taxpayer Identification Number is such person's Social Security Number.
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SUBSTITUTE Part I-PLEASE PROVIDE YOUR TIN IN THE ___________________________
Form W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND Social Security Number
Department of the Treasury DATING BELOW:
Internal Revenue Service OR ________________________
Employer Identification
Payor's Request for Taxpayer Number
Identification Number ("TIN")
(If awaiting TIN write
"Applied For")
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Part II-For Payees NOT subject to backup withholding, see the enclosed
"Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" and complete as instructed therein.
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CERTIFICATION-Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because either (a) I am exempt from
backup withholding, (b)I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result of
a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
Certification Instructions-You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed guidelines.) The Internal Revenue Service does not require your
consent to any provision of this document other than the certificate required
to avoid backup withholding.
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Signature: ________________________________________________ Date:____________________________________
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The undersigned hereby warrants that the undersigned has full power and
authority to submit, sell, assign and transfer the Old Shares evidenced by the
Certificate(s) described above, and that the Old Shares are free and clear of
all liens, charges and encumbrances and not subject to any adverse claim. The
undersigned will, upon request, execute any additional documents necessary or
desirable to complete the transfer of the Old Shares evidenced by the
Certificate(s).
All authority herein conferred shall survive the death or incapacity of the
undersigned, and all obligations of the undersigned hereunder shall be binding
upon the heirs, representatives, successors and assigns of the undersigned.
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SIGN HERE
Dated ___________________________
_________________________________ _________________________________________
City and State where signed
_________________________________________
_________________________________ Signature(s) of Stockholder(s) or Agent(s)
Telephone number (including (Exactly as reflected on the Certificate(s).
area code) If signature is by trustee, executor,
administrator, guardian, attorney-in-fact,
officer for a corporation acting in a
fiduciary or representative capacity, or
other person, please set forth title.)
(See Instruction 3.)
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INSTRUCTIONS:
A. DELIVERY OF LETTERS OF TRANSMITTAL AND CERTIFICATES; MAILING OF NEW
CERTIFICATE(S).
The method of delivery of this Letter of Transmittal and the Certificate(s)
to UMB Bank, n.a. is at your option and risk, but, if sent by mail, registered
mail is suggested.
The stock certificate(s) for the New Shares of the Company Common Stock and
any Fractional Share Payment will be mailed by UMB Bank, n.a. as soon as
practicable after the effective date of the reverse stock split and after
receipt of a properly executed Letter of Transmittal together with the
Certificate(s).
B. SIGNATURE(S); CERTIFICATE(S) IN DIFFERENT NAME(S).
1. The signature (or signatures, in the case of Certificate(s) owned by two
or more holders) on this Letter of Transmittal should correspond exactly with
the name(s) of the registered holder(s) as written on the face of the
Certificate(s) unless such Certificate(s) has been transferred by the registered
holder(s), in which event this Letter of Transmittal should be signed in exactly
the same form as the name of the last transferee indicated on the transfers
attached to or endorsed on the Certificate(s).
2. The Certificate(s) need not be endorsed or accompanied by any instrument
of assignment or transfer other than this Letter of Transmittal, if registered
in the name of the person(s) signing this Letter of Transmittal as long as the
new certificate(s) for the Company Common Stock is/are to be issued to such
person(s).
3. If this Letter of Transmittal is signed or if the endorsement on any
Certificate(s) is executed by a trustee, executor, administrator, guardian,
officer of a corporation, attorney-in-fact, or in any other representative or
fiduciary capacity, the person signing this Letter of Transmittal or executing
the endorsement must give such person's full title in such capacity and
appropriate evidence of authority to act in such capacity must be forwarded with
any Certificate(s).
4. If the new certificate is to be in the name(s) of a person or persons,
or the Fractional Share Payment is to be made payable to a person or persons,
other than the person(s) in whose name(s) the Old Shares are registered, the
signature(s) of the person(s) signing this Letter of Transmittal must be
guaranteed in the "Special Registration and Payment Instructions" box by an
Eligible Guarantor Institution (as defined by Rule 17Ad-15 under the Securities
Exchange Act of 1934 (12 CFR 240.17Ad-15)) in the space provided.
5. The person(s) in whose name(s) the certificate(s) evidencing New Shares
is/are to be issued must supply his, her or its Taxpayer Identification Number
and provide the certification contained in the "TAXPAYER IDENTIFICATION NUMBER"
box on page 3 of this Letter of Transmittal. Failure to furnish the Taxpayer
Identification Number and the certification will result in backup withholding on
payments due, if any, to the holder.
6. If you have any questions about the surrender of your Certificate(s) or
completion of this Letter of Transmittal, please contact UMB Bank, n.a. at (800)
884-4225.
7. If a holder wishes to receive multiple stock certificates for New Shares
(for example, to simplify substantiation of the tax basis of the New Shares)
such holder should attach to this Letter of Transmittal written instructions
indicating the number of Company stock certificates desired and the number of
shares of Company Common Stock to be represented by each Company stock
certificate. All reasonable requests, as determined by the Company in its
discretion, will be honored.
C. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES.
If a Certificate(s) has been mutilated, lost, stolen or destroyed, you should
contact UMB Bank, n.a. at (000) 000-0000 for further instructions as to
obtaining a surety bond that may be required before delivery of the
certificate(s) evidencing the Company Common Stock or any Fractional Share
Payment.
