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NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT OR LAWS, THE RULES AND
REGULATIONS THEREUNDER AND THE PROVISIONS
OF THIS WARRANT.
WARRANT TO PURCHASE 1,500,000 SHARES
OF COMMON STOCK OF
CREATIVE LEARNING PRODUCTS, INC.
ISSUED TO
▇▇▇▇▇ ▇. ▇▇▇▇▇
DATED: AUGUST 7, 1996
WARRANT NO. ____
(INCORPORATED UNDER THE LAWS OF THE STATE OF NEW JERSEY)
THIS CERTIFIES THAT ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Warrant Holder") is the owner
of a Warrant, subject to adjustment as provided in Section 3 hereof, which
entitles the owner thereof to purchase, in whole or in part at any time, and
from time to time, during the period commencing on February 7, 1997 (the
"Commencement Date") and terminating at 5:00 P.M., New York Time, on August 6,
1999 (the "Expiration Date"), 1,500,000 fully paid and nonassessable shares of
the Common Stock, no par value (the "Common Stock"), of Creative Learning
Products, Inc., a New Jersey corporation (hereinafter called the "Company"), at
the purchase price per share of $0.75 (the "Purchase Price"), subject to
adjustment as provided in Section 3 hereof, payable in lawful money of the
United States of America upon surrender of this Warrant and payment of the
Purchase Price in lawful money of the United States of America at the principal
office of the Company (currently ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇) or at such other place as the Company may designate by written notice to
the Warrant Holder.
1. Exercise
The Warrant evidenced hereby may be exercised from time to time, in
whole or in part, from the Commencement Date until the Expiration Date, provided
that in no event may any fractional share of the Common Stock be issued. In the
event that a fractional share would otherwise be issued as a result of any
adjustment made pursuant to Section 3 hereof or otherwise, payment for such
fractional share shall be made on the basis of the Market Price on
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the date of exercise. For the purpose of this Section 1, the term "Market Price"
shall mean (a) if the Common Stock is traded on a national securities exchange
or on the National Association of Securities Dealers Automated Quotation
("NASDAQ") System, the closing sales price (or, if no sales on that day, the
high bid price) or (b) if the Common Stock is not traded as provided in
subsection (a), the closing bid price as reported in the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD") or in the pink
sheets by the National Quotation Bureau, Inc.
Upon any exercise of the Warrant evidenced hereby, the form of election
to purchase set forth as Exhibit A hereto shall be properly completed, executed
and delivered to the Company, together with full payment to the Company of the
Purchase Price for the shares as to which the Warrant is exercised by certified
check or bank draft. In the event that there is only a partial exercise of the
Warrant evidenced hereby, there shall be issued to the Warrant Holder a new
Warrant Certificate, in all respects similar to this Warrant Certificate,
evidencing the number of shares of the Common Stock still available for
exercise.
Upon receipt of full payment and properly completed documentation, the
Company shall then cause the Transfer Agent for the Common Stock to issue fully
paid and nonassessable shares of the Common Stock as are represented by the
exercise.
If this Warrant shall be surrendered upon exercise within any period
during which the transfer books for the Common Stock are closed for any purpose,
the Company shall not be required to make delivery of certificates for shares of
the Common Stock until the date of the reopening of said transfer books.
2. Expiration Date
The Warrant evidenced hereby may not be exercised before the
Commencement Date or after the Expiration Date with respect to the shares of the
Common Stock as to which the Warrant may be exercised and, to the extent not
exercised by the Expiration Date, the Warrant evidenced hereby shall become
void.
3. Adjustments
Subject to the provisions of this Section 3, the Purchase Price and the
shares of the Common Stock as to which the Warrant may be exercised shall be
subject to adjustment from time to time as hereinafter set forth:
(a) If at any time, or from time to time, the Company shall,
by subdivision, consolidation, or reclassification of shares, or otherwise,
change as a whole the outstanding shares of the Common Stock into a different
number or class of shares, the
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number and class of shares so changed shall replace the shares outstanding
immediately prior to such change and the Purchase Price and the number of shares
purchasable under the Warrant immediately prior to the date on which such change
shall become effective shall be proportionately adjusted.
(b) Irrespective of any adjustments or change in the Purchase
Price or the number of securities actually purchasable under the Warrant, the
Warrant theretofore and thereafter issued may continue to express the exercise
price and the number of securities purchasable thereunder as the Purchase Price
and the number of securities purchasable were expressed in the Warrant when
initially issued.
(c) If at any time while the Warrant is outstanding, the
Company shall consolidate with, or merge into, another corporation, firm or
entity, or otherwise enter into a form of business combination, the holder of
the Warrant shall thereafter be entitled upon exercise thereof to purchase, with
respect to each security purchasable thereunder immediately prior to the date on
which such consolidation or merger or other form of business combination shall
become effective, the securities or property to which a holder of one such
security would have been entitled upon such consolidation or merger or other
form of business combination, without any change in, or payment in addition to,
the Purchase Price in effect immediately prior to such consolidation or merger
or other form of business combination, and the Company shall take such steps in
connection with such consolidation or merger or other form of business
combination as may be necessary to assure that all the provisions of the Warrant
shall thereafter be applicable, as nearly as reasonably may be, in relation to
any securities or property thereafter deliverable upon the exercise of the
Warrant.
(d) The Board of Directors of the Company, in its discretion,
may, at any time during the exercise period of the Warrant, extend the exercise
period or reduce the Purchase Price for all warrants then outstanding.
(e) Upon the happening of any event requiring the adjustment
of the exercise price hereunder, the Company shall forthwith give written notice
thereof to the registered holder of the Warrant stating the adjusted Purchase
Price and the adjusted number of securities purchasable upon the exercise
thereof resulting from such event and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
certificate of the Company's independent public accountants shall be conclusive
evidence of the correctness of any computation made hereunder.
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4. Notice to Warrant Holder
Nothing contained herein shall be construed as conferring upon the
Warrant Holder the right to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders for the election of
directors of the Company or any other matter, or any other rights whatsoever as
a shareholder of the Company; provided, however, that in the event that:
(a) the Company shall take action to make any distribution
(other than cash dividends payable out of earnings or earned surplus) on the
Common Stock;
(b) the Company shall take action to offer for subscription
pro rata to the holders of the Common Stock any additional shares of stock of
any class or other rights or securities convertible into the Common Stock;
(c) the Company shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the Company (other
than a change in par value, or a change from par value to no par value, or a
change from no par value to par value, or a subdivision or combination of the
Common Stock), or a consolidation or merger of the Company into, or a sale of
all or substantially all of its assets to, another corporation; or
(d) the Company shall take action looking to a voluntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall, (x) at least 10 days
prior to the date on which the books of the Company shall close or a record date
shall be taken for such distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, cause
notice thereof to be sent to the Warrant Holder at the address appearing on the
Warrant register of the Company and, (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, cause at least 10 days' prior written notice of the date when the
same shall take place to be given to the Warrant Holder in the same manner. Such
notice in accordance with the foregoing clause (x) shall also specify, in the
case of any such distribution or subscription rights, the date on which the
holders of the Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (y) shall also specify the date on which
the holders of the Common Stock shall be entitled to exchange their shares of
the Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Failure to give such notice or
any defect therein shall not affect the legality or
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validity of any of the matters set forth in this Section 5 inclusive.
5. Investment Representation
The Warrant Holder, by his, her or its acceptance of this Warrant,
acknowledges that neither the Warrant nor the shares of the Common Stock
issuable upon exercise thereof have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, represents and
warrants to the Company that he, she or it is acquiring the Warrant for
investment and not with a view to, or in connection with, any distribution
thereof. The holder further represents and warrants that, if a registration
statement under the Securities Act is not effective with respect to the
underlying shares at the time of exercise, the Warrant Holder will acquire the
shares of the Common Stock for investment and not with a view to, or in
connection with, any distribution thereof.
6. Transfers and Exchanges
The Company shall transfer, from time to time, any outstanding Warrant
upon the books to be maintained by the Company for that purpose, upon surrender
thereof for transfer properly endorsed or accompanied by appropriate
instructions for transfer. Upon any such transfer, a new Warrant shall be issued
to the transferee and the surrendered Warrant shall be canceled by the Company.
The Warrant so canceled shall be delivered to the Company from time to time upon
request. Warrants may be exchanged at the option of the holder thereof, when
surrendered at the office of the Company, for another Warrant, or other Warrants
of different denominations, of like tenor and representing in the aggregate the
rights to purchase a like number of shares. Anything in this Section 6 to the
contrary notwithstanding, no transfer shall be made if such transfer would
violate Section 5 of the Securities Act.
7. Payment of Taxes
The Company will pay any documentary stamp taxes attributable to the
initial issuance of the Common Stock issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for the Common Stock in a name other than that of
the registered holder of the Warrant in respect of which such shares are issued,
and in such case the Company shall not be required to issue or deliver any
certificates for the Common Stock or any Warrant for remaining shares until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company's satisfaction that such tax has been paid.
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8. Mutilated or Missing Warrant
In case the Warrant shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and deliver in exchange and substitution
for, and upon cancellation of, the mutilated Warrant, or in lieu of, and in
substitution for, the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant. Applicants for such substitute Warrant shall also comply with such
other reasonable regulations and pay such reasonable charges as the Company may
prescribe.
9. Reserve
The Company covenants and agrees that, from time to time, there will be
authorized and available for delivery a sufficient number of its shares of the
Common Stock or other securities into which the Warrant is then exercisable to
permit the exercise of the Warrant at the time outstanding as and when the
certificates shall, from time to time, be deliverable in accordance with Section
1 hereof. In the event that there are insufficient shares or other securities
for such purpose, the Company shall use its best efforts to seek shareholder
approval for an Amendment to the Company's Certificate of Incorporation and/or
to take such other action as is necessary or appropriate to cause such shares or
other securities to be authorized.
10. Governing Law
The Warrant evidenced hereby shall be construed and enforced in
accordance with the laws of the State of New Jersey applicable to contracts made
and to be performed in that State, without giving effect to any principles of
conflicts of laws.
IN WITNESS WHEREOF, Creative Learning Products, Inc. has
caused this Warrant to be signed manually by a duly authorized
officer.
Dated: August 7, 1996 CREATIVE LEARNING PRODUCTS, INC.
By:
---------------------------
Chief Financial Officer
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EXHIBIT A
ELECTION TO PURCHASE
To Creative Learning Products, Inc.
c/o___________________________________
___________________________________
___________________________________
The undersigned hereby irrevocably elects to exercise the Warrant
represented by the within Warrant Certificate to purchase _______ shares of the
Common Stock issuable upon the exercise of the Warrant and requests that
certificates for such shares shall be issued in the name of
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Taxpayer number)
and be delivered to______________________________________________
(Name)
at_______________________________________________________________
(Address)
and, if said number of shares of the Common Stock shall not be all the shares of
the Common Stock evidenced by the within Warrant Certificate, that a new Warrant
Certificate for the balance remaining of such said shares be registered in the
name of
________________________________________________________________________________
(Name)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Taxpayer number)
and delivered to the undersigned at the address below stated.
Dated:________________, 19__
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Name of holder of Warrant Certificate:
________________________________________________________________________________
(please print)
________________________________________________________________________________
(Address)
________________________________________________________________________________
(Signature)
Note: The above signature must
correspond with the name as
written upon the face of
this Warrant Certificate in
every particular, without
alteration or enlargement
or any change whatever.
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