EXHIBIT 4.14
STOCK RIGHTS AGREEMENT
BETWEEN
ADVANTAGE MARKETING SYSTEMS, INC.
AND
U.S. STOCK TRANSFER CORP.
DATED AS OF , 1997
THIS STOCK RIGHTS AGREEMENT, dated as of , 1997, is between
Advantage Marketing Systems, Inc., an Oklahoma corporation (the "Company"),
and U.S. Stock Transfer Corp. (the "Subscription Agent").
WHEREAS, the Company, at or about the time that it is entering into this
Agreement, proposes to (i) offer, issue and distribute to its shareholders (the
"Rights Offering") up to 2,148,191 non-transferable rights (the "Rights"), each
exercisable to purchase one unit (each referred to herein as the "Unit" and
collectively as the "Units") consisting of one share of Common Stock, $.0001 par
value (the "Common Stock") and one 1997-A Warrant (each referred to herein as
the "Warrant" or collectively as the "Warrants") and (ii) offer, issue and sell
up to an additional 1,050,470 Units to the holders of Class A Common Stock
Purchase Warrants and Class B Common Stock Purchase Warrants pursuant to a
warrant modification offer for $6.00 per Unit (the "Warrant Modification
Offering"). The Rights Offering and the Warrant Modification Offering are
collectively referred to herein as the "Offering." Each Right represents the
right to purchase one Unit for $6.80 per share, upon the terms and conditions
and subject to adjustment in certain circumstances (the "Subscription Price"),
all as set forth in this Agreement;
WHEREAS, the Company desires to retain the Subscription Agent to act on
behalf of the Company, and the Subscription Agent is willing so to act, in
connection with the issuance, exchange and replacement of the certificates
evidencing the Rights to be issued under this Agreement (the "Rights
Certificates") and the exercise of the Rights; and
WHEREAS, the Company desires to enter into this Agreement to set forth
the terms and conditions of the Rights and the rights of the holders thereof and
to set forth the respective rights and obligations of the Company and the
Subscription Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF SUBSCRIPTION AGENT. The Company appoints the
Subscription Agent to act as agent for the Company in accordance with the
instructions in this Agreement, and the Subscription Agent accepts such
appointment.
SECTION 2. DATE, DENOMINATION AND EXECUTION OF RIGHTS CERTIFICATES. The
Rights Certificates (and the Subscription Form to be printed on the reverse
thereof) shall be in registered form only and shall be substantially of the
tenor and purport recited in Exhibit A hereto, and may have such letters,
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law, or with any rule
or regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the Common Stock or Warrants may be listed, or to conform to
usage. Each Rights Certificate shall entitle the registered holder thereof,
subject to the provisions of this Agreement and of the Rights Certificate, to
purchase, on or before the close of business on , 1997 (the
"Expiration Date"), one fully paid and non-assessable share of Common Stock for
each Right evidenced by such Rights Certificate, at a price per
share described in Section 6 hereof (the "Subscription Price"). At any time on
or before expiration of the Expiration Date, the previously established
Expiration Date may be extended but not beyond , 1997,
without limitation and as many times as the Company shall determine in its sole
and absolute discretion. In the event the Expiration Date is extended, the
Company shall promptly provide written notice to the holders of the Rights of
the extended Expiration Date. Each Rights Certificate issued as a part of the
Rights Offering shall be dated the date of the Final Prospectus which forms a
part of the Registration Statement on Form SB-2 pursuant to which the Units are
registered under the Securities Act of 1933, as amended; each other Rights
Certificate shall be dated the date on which the Subscription Agent receives
valid issuance instructions from the Company or, if such instructions specify
another date, such other date.
For purposes of this Agreement, the term "close of business" on any given
date shall mean 5:00 p.m., Central Standard time, on such date; provided,
however, that if such date is not a business day, it shall mean 5:00 p.m.,
Central Standard time, on the next succeeding business day. For purposes of this
Agreement, the term "business day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York City, New York, are
authorized or obligated by law to be closed.
Each Rights Certificate shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President or a Vice
President, either manually or by facsimile signature printed thereon, and shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. Each Rights Certificate shall be manually
countersigned by the Subscription Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any Rights Certificate shall cease to be such officer of the Company
before countersignature by the Subscription Agent and issue and delivery thereof
by the Company, such Rights Certificate, nevertheless, may be countersigned by
the Subscription Agent, issued and delivered with the same force and effect as
though the person who signed such Rights Certificate had not ceased to be such
officer of the Company.
SECTION 3. SUBSEQUENT ISSUE OF RIGHTS CERTIFICATES. Subsequent to their
original issuance, no Rights Certificates shall be reissued except (i) Rights
Certificates issued upon transfer thereof in accordance with Section 4 hereof,
(ii) Rights Certificates issued upon any combination, split-up, or exchange of
Rights Certificates pursuant to Section 4 hereof, (iii) Rights Certificates
issued in replacement of mutilated, destroyed, lost or stolen Rights
Certificates pursuant to Section 5 hereof, (iv) Rights Certificates issued upon
the partial exercise of Rights Certificates pursuant to Section 7 hereof, and
(v) Rights Certificates issued pursuant to Section 22 hereof to reflect any
adjustment or change in the Subscription Price or the number or kind of shares
purchasable thereunder. The Subscription Agent is hereby irrevocably authorized
to countersign and deliver, in accordance with the provisions of Sections 4, 5,
7 and 22, the new Rights Certificates required for purposes thereof, and the
Company, whenever required by the Subscription Agent, will supply the
Subscription Agent with Rights Certificates duly executed on behalf of the
Company for such purposes.
SECTION 4. TRANSFERS AND EXCHANGES OF RIGHTS CERTIFICATES. The
Subscription Agent shall keep or cause to be kept books for registration of
ownership and transfer of the Rights Certificates issued in accordance with this
Agreement. Such registers shall show the names and addresses of the respective
holders of the Rights Certificates and the number of Rights evidenced by each
such Rights Certificate. Any Rights Certificate or Certificates shall be non-
transferrable, except by death or other operation of law.
The Subscription Agent shall, from time to time, register the transfer of
any outstanding Rights upon the books to be maintained by the Subscription Agent
for that purpose, upon surrender of the Rights Certificate evidencing such
Rights, with the Form of Assignment duly filled in and executed and accompanied
by evidence of the transfer by operation of law (i.e., court order, etc.), to
the Subscription Agent at its stock transfer office in Glendale, California, at
any time on or before the Expiration Date, and upon payment to the Subscription
Agent for the account of the Company of an amount equal to any applicable
transfer tax. Payment of the amount of such tax may be made
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in cash, or by check, payable in lawful money of the United States of America to
the order of the Company.
Upon receipt of a Rights Certificate, with the Form of Assignment duly
filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Subscription Agent shall promptly cancel the
surrendered Rights Certificate and countersign and deliver to the transferee a
new Rights Certificate for the number of full Rights transferred to such
transferee; provided, however, that in case the registered holder of any Rights
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Certificate shall be required by operation of law to transfer fewer than all of
the Rights evidenced by such Rights Certificate, the Subscription Agent in
addition shall promptly countersign and deliver to such registered holder a new
Rights Certificate or Certificates for the number of full Rights not so
transferred.
Any Rights Certificate or Certificates may be exchanged at the option of
the holder thereof for another Rights Certificate or Certificates of different
denominations, of like tenor and representing in the aggregate the same number
of Rights, upon surrender of such Rights Certificate or Certificates, with the
Form of Assignment duly filled in and executed, to the Subscription Agent, at
any time or from time to time after the close of business on the date hereof and
prior to the close of business on the Expiration Date. The Subscription Agent
shall promptly cancel the surrendered Rights Certificate and deliver the new
Rights Certificate pursuant to the provisions of this Section.
SECTION 5. MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. Upon
receipt by the Company and the Subscription Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of any Rights
Certificate, and in the case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and in the case of mutilation, upon
surrender and cancellation of the Rights Certificate, the Subscription Agent
shall countersign and deliver a new Rights Certificate of like tenor for the
same number of Rights.
SECTION 6. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE. The
number and kind of securities or other property purchasable upon exercise of a
Right shall be subject to adjustment from time to time upon the occurrence,
after the date hereof, of the following events:
6.1 In case the Company shall (i) pay a dividend in, or make a
distribution of, shares of Common Stock or of capital stock convertible into
Common Stock on its outstanding Common Stock ("Stock Dividend"), (ii) subdivide
its outstanding shares of Common Stock into a greater number of such shares
("Forward Split") or (iii) combine its outstanding shares of Common Stock into a
smaller number of such shares ("Reverse Split"), the total number of shares of
Common Stock and the number of shares of capital stock convertible into Common
Stock purchasable upon the exercise of each Right outstanding immediately prior
thereto shall be adjusted so that the holder of any Rights Certificate
thereafter surrendered for exercise shall be entitled to receive at the same
aggregate Subscription Price the number of shares of Common Stock and the number
of shares of capital stock convertible into Common Stock which such holder would
have owned or have been entitled to receive immediately following the happening
of any of the events described above had such Right been exercised in full
immediately prior to the happening of such event. Any adjustment made pursuant
to this Subsection shall, in the case of a Stock Dividend, become effective as
of the record date therefor and, in the case of a Forward Split or Reverse
Split, be made as of the effective date thereof. If, as a result of an
adjustment made pursuant to this Subsection, the holder of any Right thereafter
surrendered for exercise shall become-entitled to receive shares of two or more
classes of capital stock of the Company, the Board of Directors of the Company
(whose determination shall be conclusive and shall be evidenced by a Board
resolution filed with the Subscription Agent) shall determine the allocation of
the adjusted Subscription Price between or among shares of such classes of
capital stock.
6.2 In the event of any adjustment of the total number of shares of
Common Stock purchasable upon the exercise of Rights pursuant to Subsection 6.1,
the Subscription Price of each such Right shall remain unchanged, but the number
of shares of capital stock obtainable on exercise of each such Right shall be
adjusted as provided in Subsection 6.1.
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6.3 In the event of a capital reorganization or a reclassification of the
Common Stock (except as provided in Subsection 6.1 or Subsection 6.5), any
holder of Rights, upon exercise thereof, shall be entitled to receive, in lieu
of the Common Stock to which he would have become entitled upon exercise
immediately prior to such reorganization or reclassification, the shares (of any
class or classes) or other securities or property of the Company (or cash) that
he would have been entitled to receive at the same aggregate Subscription Price
upon such reorganization or reclassification if the Rights held had been
exercised immediately prior thereto; and in any such case, appropriate provision
(as determined by the Board of Directors of the Company, whose determination
shall be conclusive and shall be evidenced by a Board resolution filed with the
Subscription Agent) shall be made for the application of this Section 6 with
respect to the rights and interests thereafter of the holders of Rights
(including, but not limited to, the allocation of the Subscription Price between
or among shares of classes of capital stock), to the end that this Section 6
(including the adjustments of the number of shares of Common Stock or other
securities purchasable) shall thereafter be reflected, as nearly as reasonably
practicable, in all subsequent exercises of the Rights for any shares or
securities or other property (or cash) thereafter deliverable upon the exercise
of the Rights.
6.4 Whenever the number of Units or other securities purchasable upon
exercise of a Right is adjusted as provided in this Section 6, the Company will
promptly file with the Subscription Agent a certificate signed by the Chairman
of the Board, Chief Executive Officer or the President, or a Vice President of
the Company and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary of the Company setting forth (i) the number and kind of
shares purchasable, as so adjusted, (ii) stating that such adjustments in the
number or kind of shares or other securities conform to the requirements of this
Section 6, and (iii) setting forth a brief statement of the facts accounting for
such adjustments. Such certificates shall be conclusive evidence of the
correctness of such adjustments. Promptly after receipt of such certificate, the
Company, or the Subscription Agent at the Company's request, will deliver, by
first-class, postage prepaid mail, a brief summary thereof (to be supplied by
the Company) to the registered holders of the outstanding Rights Certificates;
provided, however, that failure to file or to give any notice required under
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this Subsection, or any defect therein, shall not affect the legality or
validity of any such adjustments under this Section 6; and provided further,
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that, where appropriate, such notice may be given in advance and included as
part of the notice required to be given pursuant to Section 12 hereof.
6.5 In case of any consolidation of the Company with, or merger of the
Company with, or merger of the Company into, another corporation (other than a
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock), or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the corporation formed by such consolidation or
merger or the corporation which shall have acquired such assets, as the case may
be, shall execute and deliver to the Subscription Agent a supplemental rights
agreement providing that the holder of each Right then outstanding shall have
the right thereafter (until the expiration of such Right) to receive, upon
exercise of such Right, solely the kind and amount of shares of stock and other
securities and property (or cash) receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock of the
Company for which such Right might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental rights agreement
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this Section 6. The above provision
of this Subsection 6.5 shall similarly apply to successive consolidations,
mergers, sales or transfers.
The Subscription Agent shall not be under any responsibility to determine
the correctness of any provision contained in any such supplemental rights
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Rights Certificates upon the
exercise of their Rights after any such consolidation, merger, sale or transfer
or of any adjustment to be made with respect thereto, and (subject to the
provisions of Section 20 hereof) may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants with respect
thereto.
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6.6 Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Rights, Rights Certificates theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in the similar Rights Certificates initially issuable pursuant to
this Right Agreement.
6.7 The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board to make any computation required under this Section, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section 6.
6.8 For the purpose of this Section, the term "Common Stock" shall mean
(i) the class of stock designated as Common Stock in the Certificate of
Incorporation of the Company, as amended, at the date of this Agreement, or (ii)
any other class of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value, or from no par
value to par value, or from par value to no par value. In the event that at any
time as a result of an adjustment made pursuant to this Section 6, the holder of
any Right thereafter surrendered for exercise shall become entitled to receive
any shares of capital stock of the Company other than shares of Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in this Section, and all other provisions of this Agreement,
with respect to the Common Stock, shall apply on like terms to any such other
shares.
6.9 The Subscription Price may be reduced by the Company at any time,
temporarily or during the remaining period of exercise of the Rights as
determined in the discretion of the Company, with respect to the Units or any
other securities purchasable upon exercise of the Rights. In the event the
Subscription Price is reduced in accordance with this Section 6.9, the Company
shall promptly provide written notice to the holders of the Rights of the
reduced Subscription Price, the period that the Rights will be exercisable at
the reduced Subscription Price, and the securities purchasable at the reduced
Subscription Price.
SECTION 7. EXERCISE OF RIGHTS. The registered holder of any Rights
Certificate may exercise the Rights evidenced thereby, in whole at any time or
in part from time to time at or prior to the close of business, on the
Expiration Date, subject to the provisions of Section 9, at which time the
Rights Certificates shall be and become wholly void and of no value. Rights may
be exercised by their holders or redeemed by the Company as follows:
7.1 Exercise of Rights shall be accomplished upon surrender of the
Rights Certificate evidencing such Rights, with the Subscription Form on the
reverse side thereof duly filled in and executed, to the Subscription Agent at
its stock transfer office in Glendale, California, together with payment to the
Company of the Subscription Price (as of the date of such surrender) of the
Rights then being exercised and an amount equal to any applicable transfer tax
and, if requested by the Company, any other taxes or governmental charges which
the Company may be required by law to collect in respect of such exercise.
Payment of the Subscription Price and other amounts may be made in cash or by
check, payable in lawful money of the United States of America to the order of
the Company. No adjustment shall be made for any cash dividends, whether paid or
declared, on any securities issuable upon exercise of a Right.
7.2 Upon receipt of a Rights Certificate, with the Subscription Form
duly filled in and executed, accompanied by payment of the Subscription Price of
the Rights being exercised (and of an amount equal to any applicable taxes or
government charges as aforesaid), the Subscription Agent shall promptly request
from the Transfer Agent with respect to the securities to be issued and deliver
to or upon the order of the registered holder of such Rights Certificate, in
such name or names as such registered holder may designate, a certificate or
certificates for the number of full shares of the securities to be purchased,
together with cash made available by the Company pursuant to Section 8 hereof in
respect of any fraction of a share of such securities otherwise issuable upon
such exercise. If the Right is then exercisable to purchase property other than
securities, the Subscription Agent shall take appropriate steps to cause such
property to be delivered to or upon the order of the registered holder of such
Rights Certificate. In addition, if
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it is required by law, the Subscription Agent will deliver to each rights holder
a prospectus which complies with the provisions of Section 9 of the Securities
Act of 1933, as amended, and the Company agrees to supply the Subscription Agent
with sufficient number of prospectuses for that purpose.
7.3 In case the registered holder of any Rights Certificate shall
exercise fewer than all of the Rights evidenced by such Rights Certificate, the
Subscription Agent shall promptly countersign and deliver to the registered
holder of such Rights Certificate, or to his duly authorized assigns, a new
Rights Certificate or Certificates evidencing the number of Rights that were not
so exercised.
7.4 Each person in whose name any certificate for securities is issued
upon the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the securities represented thereby as of, and such
certificate shall be dated, the date upon which the Rights Certificate was duly
surrendered in proper form and payment of the Subscription Price (and of any
applicable taxes or other governmental charges) was made; provided, however,
that if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares as of, and the certificate for such
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date), and the Subscription Agent shall be under no duty to deliver
the certificate for such shares until such date. The Company covenants and
agrees that it shall not cause its stock transfer books to be closed for a
period of more than 20 consecutive business days except upon consolidation,
merger, sale of all or substantially all of its assets, dissolution or
liquidation or as otherwise provided by law.
SECTION 8. FRACTIONAL INTERESTS. The Company shall not be required to
issue any Rights Certificate evidencing a fraction of a Right or to issue
fractions of shares of securities on the exercise of the Rights. If any fraction
of a Right would, except for the provisions of this Section, be issuable, the
fractional Right shall be deemed canceled and shall not be exercisable.
SECTION 9. RESERVATION OF SECURITIES AND PROPERTY; REGISTRATION OF
SECURITIES. The Company covenants that it will at all times, solely for the
purpose of issuance and delivery upon exercise of the Rights, reserve and keep
available, free from preemptive and other rights, out of its authorized and
unissued shares of Common Stock, Warrants, such number of shares of Common Stock
as shall then be issuable and all other securities and property as shall then be
deliverable upon the exercise of all outstanding Rights and the Warrants
comprising in part the Units. The Company covenants that all securities which
shall be so issuable shall, upon such issue, be duly authorized, validly issued,
fully paid and non-assessable.
The Company covenants that if any securities, required to be reserved for
the purpose of issue upon exercise of the Rights hereunder, require registration
with or approval of any governmental authority under any federal or state law
before such securities may be issued upon exercise of Rights, the Company will
in good faith and as expeditiously as possible endeavor to cause such securities
to be duly registered, or approved, as the case may be, and, to the extent
practicable, take all such action in anticipation of and prior to the exercise
of the Rights, including, without limitation, filing a Registration Statement on
the appropriate form and all post-effective amendments to such Registration
Statement necessary to permit a public offering of the securities underlying the
Rights at any and all times during the term of the Rights; provided, however,
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that in no event shall such securities be issued, and the Company is authorized
to refuse to honor the exercise of any Right, if such exercise would result in
the opinion of the Company's Board of Directors, upon advice of counsel, in the
violation of any law; and provided further that, in the case of a Right
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exercisable solely for securities listed on a securities exchange or for which
there are at least two independent market makers, in lieu of obtaining such
registration or approval, the Company may elect to redeem Rights submitted to
the Subscription Agent for exercise for a price equal to the difference between
the aggregate low asked price, or closing price, as the case may be, of the
securities for which such Right is exercisable on the date of such submission
and the Subscription Price of such Rights.
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SECTION 10. REDUCTION OF CONVERSION PRICE BELOW PAR VALUE. Before taking
any action that would cause an adjustment pursuant to Section 6 hereof reducing
the portion of the Subscription Price required to purchase one share of capital
stock below the then par value (if any) of a share of such capital stock, the
Company will use its best efforts to take any corporate action which, in the
opinion of its counsel, may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such capital stock.
SECTION 11. PAYMENT OF TAXES. The Company covenants and agrees that it
will pay when due and payable any and all federal and state documentary stamp
and other original issue taxes which may be payable in respect of the original
issuance of the Rights Certificates, or Units (or any shares of Common Stock,
Warrants or other securities) upon the exercise of Rights. The Company shall
not, however, be required (i) to pay any tax which may be payable in respect of
any transfer involved in the transfer and delivery of Rights Certificates or the
issuance or delivery of certificates for Common Stock, Warrants, or other
securities in a name other than that of the registered holder of the Rights
Certificate surrendered for purchase or (ii) to issue or deliver any certificate
for shares of Common Stock or other securities upon the exercise of any Rights
Certificate until any such tax shall have been paid, all such tax being payable
by the holder of such Rights Certificate at the time of surrender.
SECTION 12. NOTICE OF CERTAIN CORPORATE ACTION. In case the Company after
the date hereof shall propose other than in connection with the Offering (i) to
offer to the holders of Common Stock rights to subscribe to or purchase any
additional shares of any class of its capital stock, any evidences of its
indebtedness or assets, or any other rights or options or (ii) to effect any
reclassification of Common Stock (other than a reclassification involving merely
the subdivision or combination of outstanding shares of Common Stock) or any
capital reorganization, or any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is required, or
any sale, transfer or other disposition of its property and assets substantially
as an entirety, or the liquidation, voluntary or involuntary dissolution or
winding-up of the Company, then, in each such case, the Company shall file with
the Subscription Agent and the Company (or the Subscription Agent on its behalf)
shall mail (by first-class, postage prepaid mail) to all registered holders of
the Rights Certificates notice of such proposed action, which notice shall
specify the date on which the books of the Company shall close or a record be
taken for such offer of rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, voluntary or involuntary dissolution or winding-up
shall take place or commence, as the case may be, and which shall also specify
any record date for determination of holders of Common Stock entitled to vote
thereon or participate therein and shall set forth such facts with respect
thereto as shall be reasonably necessary to indicate any adjustments in the
number or kind of shares or other securities purchasable upon exercise of Rights
which will be required as a result of such action. Such notice shall be filed
and mailed in the case of any action covered by clause (i) above, at least 10
days prior to the record date for determining holders of the Common Stock for
purposes of such action or, if a record is not to be taken, the date as of which
the holders of shares of Common Stock of record are to be entitled to such
offering; and, in the case of any action covered by clause (ii) above, at least
20 days prior to the earlier of the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up is expected to
become effective and the date on which it is expected that holders of shares of
Common Stock of record on such date shall be entitled to exchange their shares
for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up.
Failure to give any such notice or any defect therein shall not affect
the legality or validity of any transaction listed in this Section 12.
SECTION 13. DISPOSITION OF PROCEEDS ON EXERCISE OF RIGHTS CERTIFICATES,
ETC. Upon the exercise, or conversion of any Right, the Subscription Agent shall
promptly deposit the payment into an escrow account established by mutual
agreement of the Company and the Subscription Agent at a federally insured
commercial bank. All funds deposited in the escrow account will be disbursed on
a weekly basis to the Company once they have been determined by the Subscription
Agent to be collected funds. Once the funds are determined to be collected, the
Subscription Agent shall cause the share certificate(s) representing the
exercised Rights to be issued.
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The Subscription Agent shall keep copies of this Agreement available for
inspection by holders of Rights during normal business hours at its stock
transfer office. Copies of this Agreement may be obtained upon written request
addressed to the Subscription Agent at its stock transfer office in Glendale,
California.
SECTION 14. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed the holder of Common Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby for any purpose whatever, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise), or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
12 hereof), or to receive dividend or subscription rights, or otherwise, until
such Rights Certificate shall have been exercised in accordance with the
provisions hereof and the receipt of the Subscription Price and any other
amounts payable upon such exercise by the Subscription Agent.
SECTION 15. RIGHT OF ACTION. All rights of action in respect to this
Agreement are vested in the respective registered holders of the Rights
Certificates; and any registered holder of any Rights Certificate, without the
consent of the Subscription Agent or of the holder of any Rights Certificate,
may, on his own behalf for his own benefit, enforce, and may institute and
maintain any suit, action or preceding against the Company suitable to enforce,
or otherwise in respect of, the holder's right to exercise the Rights evidenced
by such Rights Certificate, for the purchase of shares of the Common Stock and
any other securities and property of the Company in the manner provided in the
Rights Certificate and in this Agreement.
SECTION 16. AGREEMENT OF HOLDERS OF RIGHTS CERTIFICATES. Every holder of
a Rights Certificate, by accepting the same, consents and agrees with the
Company, the Subscription Agent and every other holder of a Rights Certificate
that:
16.1 The Rights Certificates are transferable on the registry books of
the Subscription Agent only upon the terms and conditions set forth in this
Agreement; and
16.2 The Company and the Subscription Agent may deem and treat the
person in whose name the Rights Certificate is registered as the absolute owner
of the Right (notwithstanding any notation of ownership or other writing thereon
made by anyone other than the Company or the Subscription Agent) for all
purposes whatsoever, and neither the Company nor the Subscription Agent shall be
affected by any notice to the contrary.
SECTION 17. CANCELLATION OF RIGHTS CERTIFICATES. In the event that the
Company shall purchase or otherwise acquire any Rights Certificate or
Certificates after the issuance thereof, such Rights Certificate or Certificates
shall thereupon be delivered to the Subscription Agent and be canceled by it and
retired. The Subscription Agent shall also cancel any Rights Certificate
delivered to it for exercise, in whole or in part, or delivered to it for
transfer, split-up, combination or exchange. Rights Certificates so canceled
shall be delivered by the Subscription Agent to the Company from time to time,
or disposed of in accordance with the instructions of the Company.
SECTION 18. CONCERNING THE SUBSCRIPTION AGENT. The Company agrees to pay
to the Subscription Agent from time to time, on demand of the Subscription
Agent, reasonable compensation for all services rendered by it hereunder and
also its reasonable expenses and other reasonable disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Subscription
Agent for, and to hold it harmless against, any loss, liability or expense,
incurred without negligence, bad faith or willful misconduct on the part of the
Subscription Agent, arising out of or in connection with the acceptance and
administration of this Agreement.
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SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF SUBSCRIPTION
AGENT. Any corporation into which the Subscription Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Subscription Agent shall be a party, or any
corporation succeeding the corporate trust business of the Subscription Agent,
shall be the successor to the Subscription Agent hereunder without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Subscription Agent under the provisions of Section 21 hereof. In case
at the time such successor to the Subscription Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor to the Subscription Agent
may adopt the countersignature of the original Subscription Agent and deliver
such Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor to the
Subscription Agent may countersign such Rights Certificates either in the name
of the predecessor Subscription Agent or in the name of the successor
Subscription Agent; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Subscription Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Subscription Agent may adopt the countersignature under
its prior name and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned, the
Subscription Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF SUBSCRIPTION AGENT. The Subscription Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
20.1 The Subscription Agent may consult with counsel satisfactory to it
(who may be counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Subscription Agent as to
any action taken, suffered or omitted by it in good faith and in accordance with
such opinion; provided, however that the Subscription Agent shall have exercised
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reasonable care in the selection of such counsel.
20.2 Whenever in the performance of its duties under this Agreement, the
Subscription Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, Chief
Executive Officer or the President or a Vice President or the Secretary of the
Company and delivered to the Subscription Agent; and such certificate shall be
full authorization to the Subscription Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
20.3 The Subscription Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
20.4 The Subscription Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature on the Rights Certificates and
such statements or recitals as describe the Subscription Agent or action taken
or to be taken by it) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by the Company only.
20.5 The Subscription Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Subscription Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights
9
Certificate; nor shall it be responsible for any change in the number of
shares of Common Stock required under the provisions of Section 6 or responsible
for the manner, method or amount of any such change or the ascertaining of the
existence of facts that would require any such adjustment or change; nor shall
it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Common Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock will, when issued, be validly issued, fully paid and
nonassessable.
20.6 The Subscription Agent shall be under no obligation to institute
any action, suit or legal proceeding or take any other action likely to involve
expense unless the Company or one or more registered holders of Rights shall
furnish the Subscription Agent with reasonable security and indemnity, as
determined in the sole discretion of the Subscription Agent, for any costs and
expenses which may be incurred. All rights of action under this Agreement or
under any of the Rights may be enforced by the Subscription Agent without the
possession of any of the Rights or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding instituted
by the Subscription Agent shall be brought in its name as Subscription Agent,
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Rights, as their respective rights or interests may appear.
20.7 The Subscription Agent and any shareholder, director, officer or
employee of the Subscription Agent may buy, sell or deal in any of the
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Subscription Agent under
this Agreement. Nothing herein shall preclude the Subscription Agent from acting
in any other capacity for the Company or for any other legal entity.
20.8 The Subscription Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, Chief Executive Officer or President or a Vice President
or the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with the Subscription Agent's duties, and it shall
not be liable for any action taken or suffered or omitted by it in good faith in
accordance with instructions of any such officer.
20.9 The Subscription Agent will not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Rights Certificates to be complied with by the Company.
20.10 The Subscription Agent will not incur any liability or
responsibility to the Company or to any holder of any Rights Certificate for any
action taken, or any failure to take action, in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by the Subscription Agent to be genuine and to
have been signed, sent or presented by the proper party or parties.
20.11 The Subscription Agent will act hereunder solely as agent of the
Company in a ministerial capacity, and its duties will be determined solely by
the provisions hereof. The Subscription Agent will not be liable for anything
which it may do or refrain from doing in connection with this Agreement except
for its own negligence, bad faith or willful conduct.
SECTION 21. CHANGE OF SUBSCRIPTION AGENT. The Subscription Agent may
resign and be discharged from its duties under this Agreement upon 30 days'
prior notice in writing mailed, by registered or certified mail, to the Company.
The Company may remove the Subscription Agent or any successor Subscription
Agent upon 30 days' prior notice in writing, mailed to the Subscription Agent or
successor Subscription Agent, as the case may be, by registered or certified
mail. If the Subscription Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Subscription Agent and shall, within 15 days following such appointment, give
notice thereof in writing to each registered holder of the Rights Certificates.
If the Company shall fail to make such appointment within a period of 15 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Subscription
Agent, then the Company agrees to perform the duties of the Subscription Agent
hereunder until a successor Subscription
10
Agent is appointed. After appointment the successor Subscription Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Subscription Agent without further act or deed; but the
former Subscription Agent shall deliver and transfer to the successor
Subscription Agent any property at the time held by it pursuant to this
Agreement, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Failure to give any notice provided for in this
Section, however, or any defect therein shall not affect the legality or
validity of the resignation or removal of the Subscription Agent or the
appointment of the successor Subscription Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or the Rights Certificates to the contrary, the
Company may, at its option, issue new Rights Certificates in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the
number or kind of shares purchasable under the several Rights Certificates made
in accordance with the provisions of this Agreement.
SECTION 23. NOTICES. Notice or demand pursuant to this Agreement to be
given or made on the Company by the Subscription Agent or by the registered
holder of any Rights Certificate shall be sufficiently given or made if sent by
first class or registered mail, postage prepaid, addressed (until another
address is filed in writing by the Company with the Subscription Agent) as
follows:
Advantage Marketing Systems, Inc.
0000 Xxxxxxxxx Xxxxxxxxxx, Xxxxx 0000X
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: President
Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Subscription Agent shall be sufficiently given or made
if sent by first class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Subscription Agent with the Company)
as follows:
U.S. Stock Transfer Corp.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Stock Transfer Department
Any notice or demand authorized to be given or made to the registered holder of
any Rights Certificate under this Agreement shall be sufficiently given or made
if sent by first class or registered mail, postage prepaid, to the last address
of such holder as it shall appear on the registers maintained by the
Subscription Agent.
SECTION 24. MODIFICATION OF AGREEMENT. The Subscription Agent may,
without the consent or concurrence of the holders of the Rights Certificates, by
supplemental agreement or otherwise, concur with the Company in making any
changes or corrections in this Agreement that the Subscription Agent shall have
been advised by counsel (who may be counsel for the Company) are necessary or
desirable to cure any ambiguity or to correct any defective or inconsistent
provision or clerical omission or mistake or manifest error herein contained, or
to make any other provisions in regard to matters or questions arising hereunder
and which shall not be inconsistent with the provisions of the Rights
Certificates and which shall not adversely affect the interests of the holders
of Rights Certificates. As of the date hereof, this Agreement contains the
entire and only agreement, understanding, representation, condition, warranty or
covenant between the parties hereto with respect to the matters herein,
supersedes any and all other agreements between the parties hereto relating to
such matters, and may be modified or amended only by a written agreement signed
by both parties hereto pursuant to the authority granted by the first sentence
of this Section.
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SECTION 25. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Subscription Agent shall bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 26. GOVERNING LAW. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Oklahoma and for all purposes shall be construed in accordance with the
laws of such state.
SECTION 27. TERMINATION. This Agreement shall terminate as of the close of
business on the Expiration Date, or such earlier date upon which all Rights
shall have been exercised or redeemed, except that the Subscription Agent shall
account to the Company pursuant to Section 4 as to all Rights outstanding and
all cash held by it as of the close of business on the Expiration Date.
SECTION 28. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement or in the
Rights Certificates shall be construed to give to any person or corporation
other than the Company, the Subscription Agent, and their respective successors
and assigns hereunder and the registered holders of the Rights Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Subscription Agent, their respective successors and assigns hereunder and the
registered holders of the Rights Certificates.
SECTION 29. DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 30. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
ADVANTAGE MARKETING SYSTEMS, INC.
By:
--------------------------------------------
Xxxxx X. Xxxxxxx, President
U.S. STOCK TRANSFER CORP.
By:
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Name:
------------------------------------------
Title:
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