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EXHIBIT 10(c)
ALASKA APOLLO RESOURCES, INC.
AND
JAYHEAD INVESTMENTS, LTD.
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement") dated as of March 7, 1997 between
Alaska Apollo Resources, Inc., a Province of British Columbia corporation (the
"Company") and Jayhead Investments, Ltd., ("Jayhead") (hereinafter referred to
as "Holders" or as a "Holder").
WITNESSTH:
WHEREAS, the Holders have previously contributed capital to the Company
and have been instrumental in supporting its development; and
WHEREAS, the Company has agreed to issue warrants ("Warrants") to the
Holders to purchase up to an aggregate of five hundred thousand (500,000) shares
of Common Stock (the "Shares") of the Company; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued as of the date the Board of Directors of the Company approved such
issuance;
NOW, THEREFORE, in consideration of the premises, the forgiveness the
Holder of $75,000 owed by the Company to Holder, the agreements herein set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. GRANT. The Holders are hereby granted the right to purchase, from
the Company, at anytime commencing on the date of issuance up to an aggregate of
five hundred thousand (500,000) Shares (subject to adjustment as provided in
Section 8 hereof) at an initial exercise price (subject to adjustment as
provided in Section 11 hereof) of twelve and one-half cents ($0.125) per Share
(the "Exercise Price"). Each Warrant will entitle the registered holder thereof
to purchase one Share at the Exercise Price. The Warrants will be issued on this
Agreement and each Warrant shall become exercisable commencing on the date of
issuance.
2. WARRANT CERTIFICATES. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. REGISTRATION OF WARRANT. The Warrants shall be numbered and shall
be registered on the books of the Company when issued.
4. EXERCISE OF WARRANT - METHOD. The Warrants initially are exercisable
at the Exercise Price times the number of Shares (subject to adjustment as
provided in Section 11 hereof) set forth in Section 8 hereof payable by
certified or official bank check or wire transfer in New York Clearing House
funds or through the use of Appreciation Currency (as defined below), or any
combination thereof. The number of Shares underlying the Warrants exercised at
any one time times the Exercise Price shall sometimes hereinafter be
collectively referred to as the "Holders Securities Exercise Price". Upon
surrender of a Warrant Certificate with the annexed Form of Election to Purchase
duly executed, together with payment of the Holders Securities Exercise Price
for the Shares purchased at the Company's principal offices, presently located
at 131 Prosperous Place, Suite 17, Lexington, Kentucky 40509-1844, the
registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or other evidence of ownership for the Shares
so purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part. In the
case of the purchase of less than all the Shares purchasable under any
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
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surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
As used herein "Appreciation Currency" shall mean: the consideration
given by the surrender of Warrants for Shares. The number of Shares to which the
Holder shall be entitled in exchange for such Appreciation Currency shall be
determined by multiplying the number of Shares that would be received if the
Warrants were then exercised for cash, by the fraction, the numerator of which
shall be the difference between (i) the Current Market Price of one Share and
(ii) the Warrant Price (as defined below), and the denominator of which shall be
the Current Market Price of one Share. In the event the Warrants are adjusted so
as to become exercisable for securities other than Shares ("Other Securities"),
the definition of Appreciation Currency shall apply to the exercise of Warrants
for such Other Securities by substituting in the place of "Shares" each such
Other Security.
For purposes of determining Appreciation Currency, the "Current Market
Price" of a Share shall mean: (i) if the Shares are traded in the
over-the-counter market and not in The Nasdaq National Market nor on any
national securities exchange, the average of the per Share closing bid price on
the 30 consecutive trading days immediately preceding the date in question, as
reported by The Nasdaq SmallCap Market (or an equivalent generally accepted
reporting service if quotations are not reported on The Nasdaq SmallCap Market),
or (ii) if the Shares are traded in The Nasdaq National Market or on a national
securities exchange, the average for the 30 consecutive trading days immediately
preceding the date in question of the daily per share closing prices in The
Nasdaq National Market or on the principal stock exchange on which it is listed,
as the case may be. For purposes of clause (i) above, if trading in the Shares
is not reported by The Nasdaq SmallCap Market, the applicable bid price referred
to in said clause shall be the average bid price as reported in The Nasdaq
Electronic Bulletin Board or, if not reported thereon, as reported in the "pink
sheets" published by National Quotation Bureau, Incorporated. The closing price
referred to in clause (ii) above shall be the last reported sale price or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices, in either case in The Nasdaq National Market or on
the national securities exchange on which the Shares are then quoted or listed.
If the Shares are not traded in the over-the-counter market or The Nasdaq
National Market, or on a national securities exchange, the Shares will be
treated as nonmarketable securities and will be valued at a valuation based on
contemporaneous transactions in the private market (including any foreign
market, whether public or private ("Foreign Market")), and if there are no
contemporaneous transactions in the private market or the Foreign Market, then
based on the most recent transactions in the private market or Foreign Market.
In the absence of any transactions in the private market or Foreign Market, the
Shares will be valued at cost, unless there are objective criteria for revaluing
such securities, which objective criteria are agreed upon by the Company and the
Placement Agent. Objective criteria may include recent valuations, depending
upon the purpose of such valuations. For purposes of determining Appreciation
Currency, "Warrant Price" shall mean the Exercise Price defined in Section 1
hereof, as adjusted and readjusted as set forth in Section 11 hereof. In the
event the Warrants are adjusted so as to become exercisable for Other
Securities, the method for determining the Current Market Value for such
securities shall be the same as set forth above.
5. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, the
issuance of certificates for Shares or other securities, properties or rights
underlying such Warrants shall be made forthwith (and in any event within five
(5) business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Sections 7
and 9 hereof) be issued in the name of, or in such names as may be directed by,
the Holder thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificates in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
or other securities, property or rights issued upon exercise of the Warrants
shall be executed on behalf of the Company by the manual or facsimile signature
of the then present President or Chief Executive Officer of the Company under
its corporate seal reproduced thereon, and attested to by the manual or
facsimile signature of the then present Secretary or any assistant Secretary of
the Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
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6. TRANSFER OF WARRANT. The Warrants shall be transferable only on the
books of the Company maintained at its principal office, where its principal
office may then be located, upon delivery thereof duly endorsed by the Holder or
by its duly authorized attorney or representative accompanied by proper evidence
of succession, assignment or authority to transfer. Upon any registration
transfer, the Company shall execute and deliver new Warrants to the person
entitled thereto.
7. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof, and that the Warrants may not be sold, transferred, assigned,
hypothecated or otherwise disposed of (a "Transfer"), in whole or in part,
except by will or operation of law, pursuant to an effective registration
statement under the Securities Act of 1933 (the "Act") or pursuant to an
exemption from registration under the Act.
8. EXERCISE PRICE AND NUMBER OF SECURITIES. Except as otherwise
provided in Section 10 hereof, each of the Warrants is exercisable to purchase
one Share at an initial exercise price equal to the Exercise Price. The Exercise
Price and the number of Shares for which the Warrant may be exercised shall be
the price and the number of Shares, which shall result from time to time from
any and all adjustments in accordance with the provisions of Section 11 hereof.
9. REGISTRATION RIGHTS.
9.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. Each
Warrant Certificate and each certificate representing the Shares and any of the
other securities issuable upon exercise of the Warrants and the securities
underlying the securities issuable upon exercise of the Warrants (collectively,
the "Warrant Securities") shall bear the following legend, unless (i) such
Warrants or Warrant Securities are distributed to the public or sold to the
Holders for distribution to the public pursuant to this Section 9 or otherwise
pursuant to a registration statement filed under the Act, (ii) such Warrants or
Warrant Securities are subject to a currently effective registration statement
under the Act, or (iii) the Company has received an opinion of counsel, in form
and substance reasonably satisfactory to counsel for the Company, that such
legend is unnecessary for any such certificate or other evidence of ownership:
THESE WARRANTS HAVE BEEN ISSUED PURSUANT TO THE TERMS OF A WARRANT
AGREEMENT BY AND AMONG ALASKA APOLLO RESOURCES, INC. AND TRIO GROWTH
TRUST, EXERGON CAPITAL S.A. AND JAYHEAD INVESTMENTS, LTD. THE WARRANTS
REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON
EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (II)
TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT IS AVAILABLE, OR (IV) BY WILL OR OPERATION OF LAW.
THE TRANSFER OR EXCHANGE OF THE WARRANTS OR OTHER SECURITIES
REPRESENTED BY THE CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
WARRANT AGREEMENT REFERRED TO HEREIN.
9.2 PIGGYBACK REGISTRATION. If, at any time, the Company
proposes to register any of its securities under the Act (other than in
connection with a merger or pursuant to Form S-4 or Form S-8) it will give
written notice by registered mail, at least thirty (30) days prior to the filing
of each such registration statement, to the Holders of the Warrants and/or the
Warrant Securities of its intention to do so. If any of the Holders of the
Warrants and/or Warrant Securities notify the Company within twenty (20) days
after mailing of any such notice of its or their desire to include any such
securities in such proposed registration statement, the Company shall afford
such Holders of the Warrants and/or Warrant Securities the opportunity to have
any such Warrant Securities registered under such registration statement. In the
event that the managing underwriter for said offering advises the Company in
writing that in the underwriter's opinion the number of securities requested to
be included in such registration exceeds the
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number which can be sold in such offering without causing a diminution in the
offering price or otherwise adversely affecting the offering, the Company will
include in such registration (a) first, the securities the Company proposes to
sell, (b) second, the securities held by the entities that made the demand for
registration, (c) third, the Warrants and/or Warrant Securities requested to be
included in such registration which in the opinion of such underwriter can be
sold, pro rata among the Holders of Warrants and/or Warrant Shares on the basis
of the number of Warrants and/or Warrant Shares requested to be registered by
such Holders, and (d) fourth, other securities requested to be included in such
registration.
Notwithstanding the provisions of this Section 9.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 9.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective date thereof.
9.3 DEMAND REGISTRATION.
(a) At any time, after the effective date of the
registration statement for the initial public offering of the Company, the
Holders of the Warrants and/or Warrant Securities representing a "Majority" (as
hereinafter defined) of the Warrants and/or Warrant Securities shall have the
right on one occasion (which right is in addition to the registration rights
under Section 9.2 hereof), exercisable by written notice to the Company, to
have the Company prepare and file with the Securities and Exchange Commission
(the "Commission"), a registration statement on Form S-3 or similar form and
such other documents, including a prospectus, as may be necessary in the
opinion of both counsel for the Company and counsel for the Holders, in order
to comply with the provisions of the Act, so as to permit a public offering and
sale by such Holders and any other Holders of the Warrants and/or Warrant
Securities who notify the Company within fifteen (15) days after the Company
mails notice of such request pursuant to Section 9.3(b) hereof (collectively,
the "Requesting Holders") of their respective Warrant Securities so as to allow
the unrestricted sale of the Warrant Securities to the public from time to time
until all of the Warrant Shares requested to be registered by the Requesting
Holders have been sold (the "Registration Period").
(b) The Company covenants and agrees to give written
notice of any registration request under this Section 9.3 by any Holder or
Holders representing a Majority of the Warrants and/or Warrant Securities to all
other registered Holders of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under
Section 9.2 and subsection (a) of this Section 9.3, at any time commencing one
year after the effective date of the registration statement for the initial
public offering of the Company, the Holders of Warrants and/or Warrant
Securities representing a "Majority" (as hereinafter defined) shall have the
right on one occasion, exercisable by written request to the Company, to have
the Company prepare and file with the Commission a registration statement so as
to permit a public offering and sale by such Holders of their respective Warrant
Securities from time to time during the Registration Period; provided, however,
that the provisions of Section 9.4(b) hereof shall not apply to any such
registration request and registration and all costs incident thereto shall be at
the expense of the Holder or Holders making such request.
9.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION.
In connection with any registration under Section 9.2 or 9.3 hereof, the
Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within ninety (90) days of receipt of any demand
therefor, and to have any registration statements declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell Warrant
Securities such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees
and expenses of Holder(s)' counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed pursuant
to Sections 9.2 and 9.3(a) hereof including, without limitation, the Company's
legal and accounting fees,
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printing expenses, blue sky fees and expenses. The Holder(s) will pay all costs,
fees and expenses in connection with the registration statement filed pursuant
to Section 9.3(c).
(c) The Company will take all necessary action which
may be required in qualifying or registering the Warrant Securities included in
a registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the
Warrant Securities to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or other federal or state law or regulation, at
common law or otherwise, arising from or relating to such registration statement
but only to the same extent and with the same effect as the provisions pursuant
to which the Company has agreed to indemnify each of the underwriters contained
in the underwriting agreement entered into by the Company with such underwriters
in connection with its initial public offering (the "Underwriting Agreement"),
including provisions regarding notice of claims and the right to defend claims
by a party obligated under any indemnity agreement.
(e) In order to provide for just and equitable
contribution under the Act in any case in which (i) any holder of the Warrant
Securities or controlling person thereof makes a claim for indemnification but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 9.4(d) hereof provide for indemnification in such case or (ii)
contribution under the Act may be required on the part of any holder of the
Warrant Securities, or controlling person thereof, then the Company, any such
holder of the Warrant Securities, or controlling person thereof shall contribute
to the aggregate losses, claims, damages or liabilities to which they may be
subject (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys fees), in
either such case (after contribution from others) on the basis of relative fault
as well as any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or a holder of Warrant Securities, or controlling person thereof on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
such holders of such securities and such controlling persons agree that it would
not be just and equitable if contribution pursuant to this Section 9.4(e) were
determined by pro rata allocation or by any other method which does not take
account of the equitable considerations referred to in this Section 9.4(e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 9.4(e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (with the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) The Holder(s) of the Warrant Securities to be
sold pursuant to a registration statement, and their successors and assigns,
shall severally, and not jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against any loss,
claim, damage or expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
to which they may become subject under the Act, the Exchange Act or other
federal or state law or regulation, at common law or otherwise, to the extent
that such law, claim, damage or liability (or proceeding with respect thereof)
arises out of or is based on any untrue statement or alleged untrue statement of
a material fact contained in any registration statement under which the Warrant
Securities were registered under the Act, in any preliminary prospectus or final
prospectus contained therein or in any amendment or supplement thereto, or
arises out of or is based on the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make such statements
therein not misleading, which,
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in each case, has been made in or omitted from such registration statement, said
preliminary or final prospectus or said amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Holder for specific inclusion in such registration statement, to the same extent
and with the same effect as the indemnification provisions contained in the
Underwriting Agreement pursuant to which the underwriters of the Company's
initial public offering have agreed to indemnify the Company, including
provisions regarding notice of claims and the right to defend claims by a party
obligated under any indemnity agreement.
(g) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(h) The Company shall not permit the inclusion of any
securities other than the Warrant Securities to be included in any registration
statement filed pursuant to Section 9.3 hereof, or permit any other registration
statement (other than a registration statement on Form S-4 or S-8) to be or
remain effective during a one hundred and eighty (180) day period following the
effective date of a registration statement filed pursuant to Section 9.3 hereof,
without the prior written consent of the Holders of the Warrants and Warrant
Securities representing a Majority of such securities or as otherwise required
by the terms of any existing registration rights granted prior to the date of
this Agreement by the Company to the holders of any of the Company's securities.
(i) The Company shall furnish to each Holder
participating in the offering and to each underwriter participating in such
offering, if any, a signed counterpart, addressed to such Holder or underwriter,
of (i) an opinion of counsel to the Company, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, an opinion dated the date of the closing under the underwriting
agreement), and (ii) a "cold comfort" letter dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, a "cold comfort" letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(j) The Company shall as soon as practicable after
the effective date of the registration statement, and in any event within 15
months thereafter, make "generally available to its security holders" (within
the meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(k) The Company shall enter into an underwriting
agreement with the managing underwriter(s) selected for such underwriting by
Holders holding a Majority of the Warrant Securities requested to be included in
such underwriting. Such agreement shall be satisfactory in form and substance to
the Company, each Holder and such managing underwriter(s), and shall contain
such representations, warranties and covenants by the Company and such other
terms as are customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Securities and may, at their
option, require that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriters shall also be made to and
for the benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
(l) For purposes of this Agreement, the term
"Majority" in reference to the Warrants or Warrant Securities, shall mean in
excess of fifty percent (50%) of the then outstanding Warrants or Warrant
Securities that (i) are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction therewith
or (ii) have not been resold to the public pursuant to a registration statement
filed with the Commission under the Act or Rule 144 promulgated under the Act.
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10. OBLIGATIONS OF HOLDERS. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 9 hereof that
each of the selling Holders shall:
(a) Furnish to the Company such information regarding
themselves, the Warrant Securities held by them, the intended method of sale or
other disposition of such securities, the identity of and compensation to be
paid to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required to
effect the registration of their Warrant Securities.
(b) Notify the Company, at any time when a prospectus relating
to the Warrant Securities covered by a registration statement is required to be
delivered under the Act, of the happening of any event with respect to such
selling Holder as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
11. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES. The
Exercise Price in effect at any time and the number and kind of securities
purchasable upon the exercise of the Warrants or the securities underlying the
Warrants shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) SUBDIVISION AND COMBINATION. In case the Company shall (i)
declare a dividend or make a distribution on its outstanding Shares; (ii)
subdivide or reclassify its outstanding Shares into a greater number of Shares;
or (iii) combine or reclassify its outstanding Shares into a smaller number of
Shares, the Exercise Price in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price, by a fraction, the
denominator of which shall be the number of Shares outstanding after giving
effect to such action, and the numerator of which shall be the number of Shares
outstanding immediately prior to such action. Such adjustment shall be made
successively whenever any event listed above shall occur. In addition, if the
Company shall issue by reclassification of its Shares, other securities of the
Company, then the number of Shares purchasable upon the exercise of each Warrant
shall be adjusted so that the Holder shall be entitled to receive the kind and
number of Shares and other securities of the Company which such Holder would
have owned or would have been entitled to receive immediately after the
happening of such event or any record date with respect thereto.
(b) ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 11, the number
of Warrant Securities issuable upon the exercise at the adjusted Exercise Price,
of each Warrant, shall be adjusted up to the nearest whole number of Shares by
multiplying a number equal to the Exercise Price, in effect immediately prior to
such adjustment by the number of the applicable Warrant Securities issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(c) DEFINITION OF SHARES. For the purpose of this Agreement,
the term "Shares" shall mean the (i) class of stock of the Company designated as
Ordinary Shares in the Company's Articles of Association as of the date hereof,
and (ii) any other class of stock resulting from successive changes or
reclassifications of such Shares consisting solely of changes in par value, or
from par value or from no par value to par value.
(d) MERGER OR CONSOLIDATION; SALE OR CONVEYANCE. In case of
any consolidation 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 Shares, or a sale of all or
substantially all of the Company's property, assets or business as an entirety,
the corporation formed by such consolidation or merger, or the purchaser in such
sale or conveyance, shall execute and deliver to each Holder a supplemental
warrant agreement providing that the Holder of each Warrant then outstanding
shall have the right thereafter (until the expiration of such Warrant) to
receive, upon exercise of such Warrant, the kind and amount of membership
interests, shares of stock and other securities and property receivable upon
such consolidation or merger, sale or conveyance to which the Holder would have
been entitled if the Holder had exercised such Warrant immediately prior to such
consolidation or merger, or sale or conveyance. Such supplemental warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in this Section 11. The above provision of this subsection
shall similarly apply to successive consolidations and mergers, and sales and
conveyances.
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(e) NO ADJUSTMENT OF THE EXERCISE PRICE IN CERTAIN CASES. No
adjustment of the Exercise Price shall be made:
(i) Upon the issuance or sale of the Warrants or
the Warrant Securities;
(ii) Upon the issuance or sale of Shares (or any
other security convertible, exercisable, or exchangeable into Shares or
securities with similar rights and terms as the Shares) upon the direct or
indirect conversion, exercise, or exchange of any options, rights, warrants, or
other securities or indebtedness of the Company outstanding as of the date of
this Agreement or granted pursuant to any stock option plan of the Company in
existence or approved by the Board of Directors of the Company as of the date of
this Agreement, pursuant to the terms thereof or issued pursuant to stock
purchase plan in existence as of the date of this Agreement, pursuant to the
terms thereof; or
(iii) If the amount of said adjustment shall be
less than fifty cents ($0.50) per Share provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least fifty cents ($0.50) per Share.
12. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable, without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
13. FRACTIONAL INTERESTS. The Company shall not be required to issue
certificates or other evidence of ownership representing fractions of Shares or
Other Securities upon the exercise of the Warrants, nor shall it be required to
issue scrip or pay cash in lieu of such fractional interests, it being the
intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of Shares or other
securities, properties or rights.
14. RESERVATION AND LISTING OF SECURITIES. The Company shall at all
times reserve and solely for the purpose of issuance upon the exercise of the
Warrants, such number of Shares or other securities, properties or rights as
shall be issuable upon the exercise thereof and upon the exercise of any other
exercisable or convertible securities underlying the Warrants. Every transfer
agent and warrant agent (collectively "Transfer Agent") for the Shares and other
securities of the Company issuable upon the exercise of the Warrants will be
irrevocably authorized and directed at all times to reserve such number of
Shares and other securities as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with every Transfer Agent for the
Shares and other securities of the Company issuable upon the exercise of the
Warrants. The Company will supply every such Transfer Agent with duly executed
stock and other certificates or evidence of ownership, as appropriate, for such
purpose. The Company covenants and agrees that, upon each exercise of the
Warrants and payment of the Holders Securities Exercise Price, all Shares and
other securities issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive or similar rights
of any member of the Company. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all and other securities issuable
upon the exercise of the Warrants and the securities underlying the securities
issuable upon exercise of the Warrants to be listed and/or quoted (subject to
official notice of issuance) on all securities exchanges or securities
associations on which the Shares or other securities issued to the public in
connection with the Company's initial public offering may then be listed and/or
quoted.
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15. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement
shall be construed as conferring upon the Holders of the Warrants the right to
vote or to consent or to receive notice as a member in respect of any meetings
of members for the election of managers, officers or directors or any other
matter, or as having any rights whatsoever as a member of the Company. If,
however, at any time prior to the expiration of the Warrants and their exercise,
any of the following events shall occur:
(a) The Company shall take a record of its members or of the
holders of its for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) The Company shall offer to all the holders of its any
additional membership interests of any class or other securities issued or to be
issued by the Company, or securities convertible into or exchangeable for
membership interests of any class or other securities issued or to be issued by
the Company, or any option, right or warrant to subscribe therefor; or
(c) A dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale or
conveyance of all or substantially all of its property, assets and business as
an entirety shall be proposed; then in any one or more of said events, the
Company shall give written notice to the registered holders of the Warrants of
such event at least thirty (30) days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the members
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give such
notice or any defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
16. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or five (5) days after mailing by registered or certified
mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 4
hereof or to such other address as the Company may designate by notice to the
Holders.
17. SUPPLEMENTS; AMENDMENTS; ENTIRE AGREEMENT. This Agreement contains
the entire understanding between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing duly signed
by the party against whom enforcement of the modification or amendment is
sought. The Company and the Holders may from time to time supplement or amend
this Agreement without the approval of any holders of Warrant Certificates
(other than the Placement Agent) in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Holders may deem
necessary or desirable and which the Company and the Holders deem shall not
adversely affect the interests of the holders of Warrant Certificates.
18. SUCCESSORS. All of the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements in any
schedule, exhibit or certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated by
this Agreement, shall be deemed to be representations and warranties hereunder.
Notwithstanding any investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties to
this Agreement or pursuant hereto shall survive.
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20. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Kentucky and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
21. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
22. CAPTIONS. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
23. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders and any other registered holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Holders and any other holder(s) of the Warrant Certificates or
Warrant Securities.
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS OF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
ALASKA APOLLO RESOURCES, INC.
By
----------------------------------
William S. Daugherty, President
JAYHEAD INVESTMENTS, LTD.
By
----------------------------------
_________________, President
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE OR (IV) BY WILL OR
OPERATION OF LAW.
THE TRANSFER OR EXCHANGE OF THE WARRANTS OR OTHER SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE AT ANY TIME AFTER
MARCH 7, 1997
Warrant No.
----------------
WARRANT CERTIFICATE
This Warrant Certificate certifies that , or
registered assigns, is the registered holder of Warrants to purchase initially,
at any time from after March 7, 1997, up to of fully
paid shares of common stock Shares (the "Shares") of Alaska Apollo Resources
Inc. a Province of British Columbia corporation (the "Company"), at the initial
exercise price, subject to adjustment in certain events of twelve and one-half
cents ($0.125) per Share (the "Exercise Price") upon surrender of this Warrant
Certificate and payment of the Exercise Price at the principal executive office
of the Company, but subject to the conditions set forth herein and in the
warrant agreement dated as of March 7, 1997, between the Company and Jayhead
Investments, Ltd. (the "Warrant Agreement"). Payment of the Exercise Price shall
be made by certified or official bank check or wire transfer in New York
Clearing House funds or through the use of Appreciation Currency (as defined in
the Warrant Agreement) or a combination thereof payable to the order of the
Company.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at the principal executive office of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
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Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
This Warrant Certificate does not entitle any Warrant holder to any of
the rights of a shareholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of March 7, 1997.
ALASKA APOLLO RESOURCES INC.
By
------------------------------------
William S. Daugherty, President
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 4.1 OF THE
WARRANT AGREEMENT]
The undersigned hereby irrevocably elects to exercise the right,
represented by Warrant Certificate No. ______ to purchase _____________ Shares
(as defined in the Warrant Agreement described below) and herewith tenders in
payment for such securities a certified or official bank check or wire transfer
payable in New York Clearing House Funds or through the use of Appreciation
Currency (as defined in the Warrant Agreement), or a combination thereof to the
order of Alaska Apollo Resources, Inc., a Province of British Columbia
corporation (the "Company") in the amount of $______________, all in accordance
with the terms of Section 4.1 of the Warrant Agreement dated as of March 7, 1997
between the Company and Jayhead Investments, Ltd. The undersigned requests that
a certificate for such securities be registered in the name of
________________________________________________, whose address is
____________________________________________________________ and that such
certificate be delivered to
______________________________________________________________________________,
whose address is ____________________________________________________________,
and if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant Certificate for the balance of the Shares purchasable under
the within Warrant Certificate be registered in the name of the undersigned
warrantholder or his assignee as below indicated and delivered to the address
stated below.
Dated:________________.
----------------------------------------
Signature (Signature must conform in all
respects to name of holder as specified
on the face of the Warrant Certificate.)
----------------------------------------
Address
----------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
Signature Guaranteed:
-----------------------------------------------------------
(Signature must be guaranteed by a bank, savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
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[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED __________________________________________ hereby
sells, assigns and transfers unto
_______________________________________________________ [NAME OF TRANSFEREE]
Warrant Certificate No. ___________, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________________________________________ Attorney, to transfer the
within Warrant Certificate on the books of the within-named Company, with full
power of substitution.
Dated:_____________________.
----------------------------------------
Signature (Signature must conform in all
respects to name of holder as specified
on the face of the Warrant Certificate.)
----------------------------------------
Address
----------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
Signature Guaranteed:
-----------------------------------------------------------
(Signature must be guaranteed by a bank, savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
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