EXHIBIT 10.1 - WARRANT AGREEMENT
WARRANT AGREEMENT
AGREEMENT, dated this 12th day of June 2003 by and between ACTION
PRODUCTS INTERNATIONAL, INC., a Florida corporation (the "Company"), and
REGISTRAR AND TRANSFER COMPANY, as Warrant Agent (the "Warrant Agent").
WHEREAS, each record holder of the Company's common stock, $0.001
par value (the "Common Stock"), on the record date of June 12, 2003 (the "Record
Date"), will receive one (1) warrant (a "Warrant") to purchase an additional
share of the Company's Common Stock for each one (1) share of Common Stock held
on the Record Date at an exercise price as determined herein; and
WHEREAS, the Warrants shall be exercisable for a one (1) year period
from the date hereof (the "Effective Date") unless earlier redeemed as provided
herein; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of certificates representing the
Warrants and the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
shall have the following meanings, unless the context shall otherwise require:
"Corporate Office" shall mean the office of the Warrant Agent (or
its successor) at which at any particular time its principal business shall be
administered, which office is located on the date hereof at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
"Exercise Date" shall mean as to any Warrant, the date on which
the Warrant Agent shall have received both (a) the Warrant Certificate
representing such Warrant, with the Exercise Form thereon duly executed by the
Registered Holder hereof with such Registered Holder's signature guaranteed, and
(b) payment in cash or by bank or cashier's check made payable to the Warrant
Agent for the account of the Company, of the amount in lawful money of the
United States of America equal to the applicable Exercise Price.
"Exercise Price" shall mean $2.00 per share of Common Stock, if
the Exercise Date is after the Effective Date but on or before June 11, 2004
subject to modification and adjustment as provided in Section 8.
"Expiration Date" shall mean, unless the Warrants are redeemed as
provided in Section 9 hereof prior to such date, 5:00 p.m. (Eastern time) on
June 11, 2004.
"Registered Holder" shall mean the person in whose name any
certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
"Warrant Certificate" shall mean a certificate representing each
of the Warrants substantially in the form annexed hereto as Exhibit A.
2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) Each Warrant shall entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase at the Exercise Price
therefor from the Effective Date until the Expiration Date one (1) share of
Common Stock upon the exercise thereof, subject to modification and adjustment
as provided in Section 8.
(b) From time to time, up to the Expiration Date, the Warrant
Agent shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the person entitled
thereto in connection with any transfer or exchange permitted under this
Agreement. No Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) those issued on or after the
Effective Date, upon the exercise of fewer than all Warrants represented by any
Warrant Certificate, to evidence any unexercised Warrants held by the exercising
Registered Holder, (iii) Warrant Certificates issued upon any transfer or
exchange of Warrants, (iv) Warrant Certificates issued in replacement of lost,
stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7, and
(v) at the option of the Company, Warrant Certificates in such form as may be
approved by its Board of Directors, to reflect any adjustment or change in the
Exercise Price, the number of shares of Common Stock purchasable upon exercise
of the Warrants or the redemption price therefor made pursuant to Section 9
hereof.
3. FORM AND EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be substantially in the form annexed hereto as Exhibit A and may have such
letters, numbers or other marks of identification or designation and such
legends, summaries or endorsements printed, lithographed or engraved thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any stock
exchange or market on which the Warrants may be listed, or to conform to usage.
The Warrant Certificates shall be dated the date of issuance thereof (whether
upon initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen
or destroyed Warrant Certificates). Warrant Certificates shall be executed on
behalf of the Company by its Chairman of the Board, President or any Vice
President and by its Treasurer or an Assistant Treasurer or its Secretary or an
Assistant Secretary, by manual signatures or by facsimile signatures printed
thereon, and shall have imprinted thereon a facsimile of the Company's seal.
Warrant Certificates shall be manually countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Warrant Certificates shall cease
to be such officer of the Company before the date of issuance of the Warrant
Certificates or before countersignature by the Warrant Agent and issue and
delivery thereof, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be such
officer of the Company.
4. EXERCISE.
(a) Warrants may be exercised commencing at any time on or after
the Effective Date, but not after the Expiration Date, upon the terms and
subject to the conditions set forth herein and in the applicable Warrant
Certificate. A Warrant shall be deemed to have been exercised immediately prior
to the close of business on the Exercise Date, provided that the Warrant
Certificate representing such Warrant, with the Exercise Form thereon duly
executed by the Registered Holder thereof with such Registered Holder's
signature guaranteed, together with payment in cash or by bank or cashier's
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check made payable to the order of the Company, of an amount in lawful money, of
the United States of America equal to the applicable Exercise Price, has been
received in good funds by the Warrant Agent or the Company. If received by the
Company, the Company shall deliver the original Warrant Certificate and Exercise
Form to the Warrant Agent as soon as practicable. The person entitled to receive
the securities deliverable upon such exercise shall be treated for all purposes
as the holder of such securities as of the close of business on the Exercise
Date. As soon as practicable on or after the Exercise Date and in any event
within five business days after such date, the Warrant Agent on behalf of the
Company shall cause to be issued to the person or persons entitled to receive
the same a Common Stock certificate or certificates for the shares of Common
Stock deliverable upon such exercise, and the Warrant Agent shall deliver the
same to the person or persons entitled thereto. Upon the exercise of Warrants,
the Warrant Agent shall promptly notify the Company in writing of such fact and
of the number of securities delivered upon such exercise and shall cause all
payments of an amount in cash or by check made payable to the order of the
Company, equal to the Exercise Price, to be deposited promptly in the Company's
bank account.
(b) If any Warrants are exercised which exercise was solicited by
a broker-dealer with whom the Company agreed in writing to pay a solicitation
fee for exercise of the Warrant (a "Broker-Dealer"), then the soliciting
Broker-Dealer shall be entitled to receive from the Company upon exercise of
each of the Warrants so exercised, a fee of not less than six percent (6%) and
not greater than ten percent (10%), the exact percentage to be determined by a
separate agreement between the Company and the Broker-Dealer, of the aggregate
price of the Warrants so exercised (the "Exercise Fee"); provided, that, at the
time of exercise, (i) the market price of the Company's Common Stock is equal to
or greater than the Exercise Price, (ii) the Broker-Dealer is a member of the
National Association of Securities Dealers, Inc., (iii) the Warrant is not held
in a discretionary account, unless prior specific written approval for exercise
has been received by the Broker-Dealer from its customer, (iv) disclosure of the
compensation arrangement is made in documents provided to the holders of the
Warrants, and (v) the solicitation of the Warrant is not in violation of
Regulation M promulgated under the Securities Exchange Act of 1934, as amended.
Within five (5) days after the end of each month, the Warrant Agent will notify
the Company of each Warrant Certificate which has been properly completed for
exercise by holders of Warrants during the last month. The Warrant Agent will
provide the Company with such information, in connection with the exercise of
each Warrant, as the Company shall reasonably request. In the event that an
Exercise Fee is paid to a Broker-Dealer with respect to a Warrant which was not
properly completed for exercise or in respect of which such Broker-Dealer is not
entitled to an Exercise Fee, such Broker-Dealer will return such Exercise Fee to
the Company.
(c) The Company shall not be obligated to issue any fractional
share interests or fractional warrant interests upon the exercise of any Warrant
or Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of
fractional interests. Any fractional interest shall be rounded up to the nearest
whole figure.
(d) Anything in this Section 4 notwithstanding, no Warrant will
be exercisable unless at the time of exercise the Company has filed with the
Securities and Exchange Commission, and there shall be then effective, a
registration statement under the Securities Act of 1933, as amended (the "Act")
covering the offer and sale of the shares of Common Stock issuable upon exercise
of such Warrant and such offer and sale of the shares have been so registered or
qualified or deemed to be exempt under the securities laws of the state of
residence of the holder of such Warrant.
(e) In addition, if it is required by law and upon instruction by
the Company, the Warrant Agent will deliver to each Registered Holder a
prospectus that complies with the provisions of Section 5 of the Securities Act,
as amended, and the Company agrees to supply the Warrant Agent with a sufficient
number of prospectuses to effectuate that purpose.
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5. RESERVATION OF SHARES; PAYMENT OF TAXES.
(a) The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of warrants, such number of shares of Common Stock as
shall then be issuable upon the exercise of all outstanding Warrants. The
Company covenants that all shares of Common Stock which shall be issuable upon
exercise of the Warrants shall, at the time of delivery thereof, be duly and
validly issued and fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens and charges with respect to the issuance thereof.
(b) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, and, upon
satisfaction of the terms and conditions hereof, the Company shall execute and
the Warrant Agent shall countersign, issue and deliver in exchange therefor the
Warrant Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
(b) The Warrant Agent shall keep, at its Corporate Office, books
in which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant Certificate at such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the Exercise Form or
Assignment Form, as the case may be, on the reverse thereof shall be duly
endorsed or be accompanied by a written instrument or instruments of transfer
and subscription, in form satisfactory to the Company and the Warrant Agent,
duly executed by the Registered Holder thereof with such Registered Holder's
signature guaranteed.
(d) A service charge may be imposed by the Warrant Agent for any
exchange, registration or transfer of Warrant Certificates.
(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly canceled by the Warrant Agent.
(f) Prior to due presentment for registration or transfer
thereof, the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.
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7. LOSS OR MUTILATION. Upon receipt by the Company and the Warrant
Agent of evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable requests and pay such other reasonable costs and expenses as
the Warrant Agent may impose.
8. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE
PRICE. The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
occurrence, after the date hereof, of any of the following events:
(a) In case the Company shall (i) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of such
shares or (iii) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been entitled to receive immediately following the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the record date with respect to such event. Any
adjustment made pursuant to this subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date therefor and,
in the case of a subdivision or combination, be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this subsection, the
holder of any Warrant Certificate thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Warrant
Agent) shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.
(b) In the event of a capital reorganization or a
reclassification of the Common Stock (except as provided in subsection a. above
or subsection b. below), any Registered Holder, upon exercise of Warrants, shall
be entitled to receive, in substitution for the Common Stock to which they would
have become entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such reorganization or reclassification
if such Warrants had been exercised immediately prior to the record date with
respect to such event; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and shall be evidenced by a certified Board resolution filed with
the Warrant Agent) shall be made for the application of this subsection with
respect to the rights and interests thereafter of the Registered Holders
(including but not limited to the allocation of the Exercise Price between or
among shares of classes of capital stock), to the end that this subsection
(including the adjustments of the number of shares of Common Stock or other
securities purchasable and the Exercise Price thereof) shall thereafter be
reflected, as nearly as reasonably practicable, in all subsequent exercises of
the Warrants for any shares or securities or other property (or cash) thereafter
deliverable upon the exercise of the Warrants.
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(c) Whenever the number of shares of Common Stock or other
securities purchasable upon exercise of a Warrant is adjusted as provided in
this Section, the Company will promptly file with the Warrant Agent a
certificate signed by a Chairman or co-Chairman of the Board or the President or
a Vice President of the Company and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the Company setting forth the
number and kind of securities or other property purchasable upon exercise of a
Warrant, as so adjusted, stating that such adjustments in the number or kind of
shares or other securities or property conform to the requirements of this
Section, and setting forth a brief statement of the facts accounting for such
adjustments. Promptly after receipt of such certificate, the Company, or the
Warrant Agent at the Company's request, will deliver, by first-class, postage
prepaid mail, a brief summary thereof (to be supplied by the Company) to the
registered holders of the outstanding Warrant Certificates; provided, however,
that failure to file or to give any notice required under this subsection, or
any defect therein, shall not affect the legality or validity of any such
adjustments under this Section.
(d) In case of any consolidation of the Company with, or merger
of the Company into, another corporation or entity (other than a consolidation
or merger which does not result in any reclassification or change of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation or entity of the property of the Company as an entirety or
substantially as an entirety, the corporation or entity formed by such
consolidation or merger or the corporation or entity which shall have acquired
such assets, as the case may be, shall execute and deliver to the Warrant Agent
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, solely the kind and amount
of shares of stock and other securities and property (or cash) receivable upon
such consolidation, merger, sale or transfer by a holder of the number of shares
of Common Stock of the Company for which such Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in this
Section. The above provision of this subsection shall similarly apply to
successive consolidations, mergers, sales or transfers. The Warrant Agent shall
not be under any responsibility to determine the correctness of any provision
contained in any such supplemental warrant agreement relating to either the kind
or amount of shares of stock or securities or property (or cash) purchasable by
holders of Warrant Certificates upon the exercise of their Warrants after any
such consolidation, merger, sale or transfer or of any adjustment to be made
with respect thereto, but may accept as conclusive evidence of the correctness
of any such provisions, and shall be protected in relying upon, a certificate of
a firm of independent certified public accountants (who may be the accountants
regularly employed by the Company) with respect thereto.
(e) Irrespective of any adjustments in the number or kind of
shares issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Agreement.
(f) The Company may retain a firm of independent public
accountants of recognized standing, which may be the firm regularly retained by
the Company, selected by the Board of Directors of the Company or the Audit
Committee of said Board, and not disapproved by the Warrant Agent, to make any
computation required under this Section, and a certificate signed by such firm
shall, in the absence of fraud or gross negligence, be conclusive evidence of
the correctness of any computation made under this Section.
(g) For the purpose of this Section 8, the term "Common Stock"
shall mean (i) the Common Stock or (ii) any other class of stock resulting from
successive changes or reclassifications of
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such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value. In the event that at any
time as a result of an adjustment made pursuant to this Section, the holder of
any Warrant thereafter surrendered for exercise shall become entitled to receive
any shares of capital stock of the Company other than shares of Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in this Section, and all other provisions of this
Agreement, with respect to the Common Stock, shall apply on like terms to any
such other shares.
(h) Before taking any action that would cause an adjustment
pursuant to Section 8 hereof reducing the portion of the Exercise Price required
to purchase one share of capital stock below the then par value (if any) of a
share of such capital stock, the Company will use its best efforts to take any
corporate action which, in the opinion of its counsel, may be necessary in order
that the Company may validly and legally issue fully paid and non-assessable
shares of such capital stock.
9. REDEMPTION.
(a) Commencing on the Effective Date, the Company may, on
twenty-one (21) days' prior written notice redeem all the Warrants at $0.001 per
Warrant. All Warrants must be redeemed if any are redeemed.
(b) In the event the Company exercises its right to redeem all of
the Warrants, it shall give or cause to be given notice to the Registered
Holders of the Warrants, by mailing to such Registered Holders a notice of
redemption, first class, postage prepaid, not later than the twenty-first (21st)
day before the date fixed for redemption, at their last address as shall appear
on the records of the Warrant Agent. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the redemption
price, (ii) the date fixed for redemption, (iii) the place where the Warrant
Certificate shall be delivered and the redemption price shall be paid, and (iv)
that the right to exercise the Warrant shall terminate at 5:00 p.m. (New York
time) on the business day immediately preceding the date fixed for redemption.
The date fixed for the redemption of the Warrants shall be the Redemption Date.
No failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for such redemption except as to a
Registered Holder (i) to whom notice was not mailed or (ii) whose notice was
defective. An affidavit of the Warrant Agent or the Secretary or Assistant
Secretary of the Company that notice of redemption has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
(d) From and after the Redemption Date, all rights of the
Registered Holders (except the right to receive the redemption price) shall
terminate, but only if (i) no later than one day prior to the redemption date
the Company shall have irrevocably deposited with the Warrant Agent as paying
agent a sufficient amount to pay on the Redemption Date the redemption price for
all Warrants called for redemption and (ii) the notice of redemption shall have
stated the name and address of the Warrant Agent and the intention of the
Company to deposit such amount with the Warrant Agent no later than one day
prior to the Redemption Date.
(e) The Warrant Agent shall pay to the holders of record of
redeemed Warrants all monies received by the Warrant Agent for the redemption of
Warrants to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
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(f) Any amounts deposited with the Warrant Agent that are not
required for redemption of Warrants may be withdrawn by the Company. Any amounts
deposited with the Warrant Agent that shall be unclaimed after three (3) months
after the redemption date may be withdrawn by the Company, and thereafter the
holders of the Warrants called for redemption for which such funds were
deposited shall look solely to the Company for payment. The Company shall be
entitled to the interest, if any, on funds deposited with the Warrant Agent and
the holders of redeemed Warrants shall have no right to any such interest.
(g) Any right to exercise a warrant shall terminate at 5:00 p.m.
(New York time) on the business day immediately preceding the Redemption Date.
The redemption price payable to the Registered Holders shall be mailed to such
persons at their addresses of record.
10. CONCERNING THE WARRANT AGENT.
(a) The Warrant Agent acts hereunder as agent and in a
ministerial capacity for the Company, and its duties shall be determined solely
by the provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment to the Warrant provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same, it shall not (i) be liable for any
recital or statement of fact contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
gross negligence or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board of Directors, Vice-Chairman or Secretary (unless
other evidence in respect thereof is herein specifically prescribed). The
Warrant Agent shall not be liable for any action taken, suffered or omitted by
it in accordance with such notice, statement, instruction, request, direction,
order or demand.
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and save it harmless against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's gross
negligence or willful misconduct.
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(f) The Warrant Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Warrant Agent's own negligence or willful misconduct), after
giving 60 days prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant Agent shall cause
a copy of such notice of resignation to be mailed to the Registered Holder of
each Warrant Certificate at the Company's expense. Upon such resignation the
Company shall appoint in writing a new warrant agent. After acceptance in
writing of such appointment by the new warrant agent is received by the Company,
such new warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the warrant agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder of each
Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new warrant agent shall be a successor warrant agent under
this Agreement without any further act, provided that such corporation is
eligible for appointment as successor to the Warrant Agent under the provisions
of the preceding paragraph. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed to the Company and
to the Registered Holders of each Warrant Certificate.
11. RIGHTS OF REGISTERED HOLDERS. No Registered Holder, as such, shall
have any rights of a shareholder of the Company, either at law or equity, and
the rights of the Registered Holders, as such, are limited to those rights
expressly provided in this Agreement or in the Warrant Certificates. The Company
and the Warrant Agent may treat the registered Registered Holder in respect of
any Warrant Certificates as the absolute owner thereof for all purposes
notwithstanding any notice to the contrary.
12. MODIFICATION OF AGREEMENT. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement without
the approval of any holders of Warrants (i) that they shall deem appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; (ii) that they may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Warrant Certificates; or (iii) which may be required by law; provided, however,
that this Agreement shall not otherwise be modified, supplemented or altered
except with the consent in writing of the Registered Holders representing not
less than 50% of the Warrants then outstanding; provided, further, that no
change in the number of the securities purchasable upon the exercise of any
Warrant, or an increase in the Exercise Price therefor, shall be, made without
the consent in writing of the Registered Holder of the Warrant Certificate,
other than such changes as are specifically permitted or prescribed by this
Agreement as originally executed.
13. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or five days after mailed first-class postage prepaid, or upon receipt
when sent by facsimile, with confirmation received, if to the Registered Holder
of a Warrant Certificate, at the address of such holder as shown on the registry
books maintained by the Warrant Agent; if to the Company at:
9
Action Products International, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or at such other address as may have been furnished to the Warrant Agent in
writing by the Company, and if to the Warrant Agent, at its Corporate Office.
14. GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without giving
effect to conflicts of laws. In the event the Company, the Warrant Agent or any
Registered Holder commences any litigation, proceeding or other legal action in
connection with or relating to this Agreement or any matters described or
contemplated herein, the Company, the Warrant Agent and the Registered Holders
hereby (a) agree under all circumstances absolutely and irrevocably to institute
any litigation, proceeding or other legal action in a court of competent
jurisdiction located within the County of Orange, State of Florida, whether a
state or federal court; (b) agree that in the event of any such litigation,
proceeding or action, such parties will consent and submit to personal
jurisdiction in such court; and (c) agree to waive to the full extent permitted
by law any objection that they may now or hereafter have to the venue of any
such litigation, proceeding or action in any such court or that any such
litigation, proceeding or action was brought in an inconvenient forum.
15. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Company, the Warrant Agent and their respective successors
and assigns and the holders from time to time of Warrant Certificates or any of
them. Except as hereinafter stated, nothing in this Agreement is intended or
shall be construed to confer upon any other person any right, remedy or claim or
to impose upon any other person any duty, liability or obligation.
16. TERMINATION. This Agreement shall terminate at the Expiration Time
or such earlier date upon which all Warrants have been exercised or surrendered,
except that the Warrant Agent shall account to the Corporation for cash held by
it and the provisions of Section 8 hereof shall survive such termination.
17. INTEGRATION. As of the date hereof, this Agreement contains the
entire and only agreement, understanding, representation, condition, warranty or
covenant between the parties hereto with respect to the matters herein,
supersedes any and all other agreements between the parties hereto relating to
such matters, and may be modified or amended only by a written agreement signed
by both parties hereto.
18. COUNTERPARTS. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
[remainder of page intentionally left blank]
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ACTION PRODUCTS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
REGISTRAR AND TRANSFER COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. Tatler
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Tatler
Title: Vice President
11
EXHIBIT A
No. _______ VOID AFTER 5:00 P M on June 11, 2004
_________ WARRANTS
REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE SHARES OF COMMON STOCK
ACTION PRODUCTS INTERNATIONAL, INC.
NO. _______ CUSIP:
THIS CERTIFIES THAT, FOR VALUE RECEIVED _____________________ or
registered assigns (the "Registered Holder") is the owner of the number of
Warrants (the "Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined), one fully
paid and non-assessable share of Common Stock, $0.001 par value, of Action
Products International, Inc., a Florida corporation (the "Company"), at any time
from June 12, 2003 and prior to the Expiration Date (as hereinafter defined)
upon the presentation and surrender of this Warrant Certificate with the
Exercise Form on the reverse hereof duly executed, at the corporate office of
Registrar and Transfer Company, as Warrant Agent, or its successor (the "Warrant
Agent"), or the Company, accompanied by the Exercise Price (as defined below),
in lawful-money of the United States of America in cash or by check made payable
to the Warrant Agent for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated June 12, 2003,
by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New York time) on June
11, 2004. If such date shall in the State of New York be a holiday or a day on
which the banks are authorized to close, then the Expiration Date shall mean
5:00 P.M. (New York time) the next following day which in the State of New York
is not a holiday or a day on which banks are authorized to close.
12
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $0.001 per
Warrant, at any time commencing after June 12, 2003. Notice of redemption shall
be given not later than the twenty-first (21st) day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect to
this Warrant except to receive the $0.001 per Warrant upon surrender of this
Certificate.
Prior to due presentment for registration or transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Florida without giving effect to
conflicts of laws.
This Warrant Certificate is not, valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized.
Dated:
ACTION PRODUCTS INTERNATIONAL, INC.
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary
COUNTERSIGNED:
REGISTRAR AND TRANSFER COMPANY
as Warrant Agent
By:
------------------------------
Authorized Officer
13
EXERCISE FORM
To Be Executed by the Registered Holder in Order to Exercise Warrant
The undersigned Registered Holder hereby irrevocably elects to exercise
______________ Warrants represented by this Warrant Certificate, and to purchase
the securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
---------------------------------------
---------------------------------------
---------------------------------------
(please print or type name and address)
and be delivered to:
---------------------------------------
---------------------------------------
---------------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
IMPORTANT: PLEASE CHECK WHICH IS APPLICABLE:
[ ] The exercise of this Warrant was solicited by:
(name of individual broker)
------------------------------------
(name of firm)
------------------------------------
[ ] The exercise of this Warrant was not solicited.
Dated: _____________, 200__
X
------------------------------------
Signature
------------------------------------
Name
X
------------------------------------
Signature Guaranteed
14
ASSIGNMENT FORM
---------------
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, ______________________________, hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
--------------------------------------
--------------------------------------
--------------------------------------
(please print or type name and address)
_______________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints ________________________ Attorney to transfer this Warrant Certificate
on the books of the Company, with full power of substitution in the premises.
Dated: ___________________, 200____
X
------------------------------------
Signature
X
------------------------------------
Signature Guaranteed
----------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE EXERCISE FORM MUST CORRESPOND TO THE NAME
AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE MEDALLION
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE,
MIDWEST STOCK EXCHANGE OR BOSTON STOCK EXCHANGE, WHO IS A MEMBER OF THE
MEDALLION PROGRAM.
15