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EXHIBIT 10(e)
ALASKA APOLLO RESOURCES, INC.
AND
EXERGON CAPITAL S.A.
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 Exergon Capital S.A., ("Exergon") (hereinafter referred to as
"Holders" or as a "Holder").
WITNESSTH:
WHEREAS, the Holder has previously contributed capital to the Company
and has been instrumental in supporting its development and has committed to
further financial support; 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; and
NOW, THEREFORE, in consideration of the premises, the payment by the
Holder to the Company of an aggregate of ten dollars ($10.00), 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 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, 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, commencing six (6) months 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, Ior 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_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
EXERGON CAPITAL S.A.
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 Exergon Capital S.A. (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____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, 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 Exergon Capital S.A. 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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