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Exhibit
10.1
WARRANT SOLICITATION
AGREEMENT
THIS WARRANT SOLICITATION
AGREEMENT (“ Agreement ”) is dated as of
October 17, 2007, by and between A CTION P
RODUCTS I NTERNATIONAL , I
NC . (the “ Company ”) and
N ATIONAL S ECURITIES C
ORPORATION (“ Broker
”).
RECITALS
WHEREAS, the Company desires
to retain Broker to act as a nonexclusive Warrant Solicitation
Agent in connection with the solicitation of the exercise of the
Company’s publicly traded warrants; and
WHEREAS, as of
October 16, 2007, the Company had outstanding 5,197,185
redeemable common share purchase warrants (the “ Public
Warrants ”) issued pursuant to that Warrant Agreement by
and between the Company and Registrar and Transfer Company dated
June 16, 2006, as amended July 31, 2006 as amended
January 31, 2007 (the “ Warrant Agreement
”); and
WHEREAS, each Public Warrant
entitles the holder to purchase one share of the Company’s
Common Shares for $3.25 per share until January 31, 2008 and
for $3.75 per share until January 31, 2010; and
WHEREAS, the Company desires
Broker to act on behalf of the Company, and Broker is willing to do
so in connection with the exercise of the Public
Warrants;
NOW, THEREFORE, in
consideration of the premises and the mutual agreements herein set
forth, the parties hereto agree as follows:
1. Appointment of the Solicitation
Agent. The Company hereby appoints Broker to act as a
nonexclusive Solicitation Agent for the Company in connection with
the exercise of the Public Warrants and Broker hereby accepts such
appointment. Broker shall, consistent with its obligations under
applicable laws and the rules and regulations of the National
Association of Securities Dealers (“ NASD ”),
use its reasonable best efforts to maximize the number of Public
Warrants which are exercised, including appropriate communications
with the record owners and beneficial owners of the Public
Warrants, as well as with said owners’ brokers, agents or
other representatives.
2. Warrant Solicitation
Fee.
(a) Amount of Solicitation
Fee. The Company shall pay Broker a fee consisting of a cash
payment equal to ten percent (10%) of the total proceeds
received from the exercise of those Public Warrants for whom Broker
was properly designated as the soliciting broker on the Exercise
Form of the Warrant Certificate evidencing the Public Warrants
exercised (the “ Solicitation Fee ”).
(b) Conditions to Payment of
Solicitation Fee. The Company shall only be obligated to pay the
Solicitation Fee to Broker if all of the following conditions are
met: (i) the exercise of the Public Warrants are in accordance
with the Warrant Agreement, (ii) the actions of Broker in
soliciting the exercise of the Public Warrants have been consistent
with applicable federal and state securities laws, the guidelines
of the NASD and applicable SEC rules and regulations, including
Regulation M; and (iii) disclosure of the Company’s
compensation arrangement with Broker is made by Broker in documents
provided to the holders of the Public Warrants.
(c) Timing of Payment of
Solicitation Fee. Within fifteen (15) days after the end of
each month, the Company will deliver a notice to Broker setting
forth the number of Public Warrant certificates which have been
properly completed for exercise by holders of the Public Warrants
for which Broker has solicited in accordance with this Agreement
and the Warrant Agreement, together with payment of the
Solicitation Fee with respect to the Public Warrants so exercised
and any documentation requested by Broker.
(d) Entire Solicitation Fee.
The amounts to be paid to Broker under Section 2(a) above
represent the entire amount payable by the Company to Broker, its
agents, brokers or representatives in connection with the services
described under Section 1 of this Agreement and shall also
include any amounts which are adjudicated to be owed to any third
parties as a result of Broker’s commitments to such third
parties.
(e) Broker shall be
responsible for compliance with applicable state securities and
“blue sky” laws in connection with the solicitation of
the Public Warrants. Broker shall notify the Company of the states
of residence of holders of the Public Warrants in which Broker
intends to solicit the exercise of the Public Warrants.
3. Representations and Warranties of
the Company. The Company represents and warrants as
follows:
(a) The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida and has full corporate power
and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding agreement and obligation
of the Company, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting
creditors’ rights generally, including, without limitation
laws regarding fraudulent or preferential transfers, or by the
principles governing the availability of equitable
remedies.
(b) The Company’s
Registration Statement (“ Registration Statement
”) on Form S-3 (File No. 333-135078), registering the
sale of the Common Shares issuable upon exercise of the Public
Warrants (the “ Warrant Shares ”), was declared
effective by the Securities and Exchange Commission (the “
Commission ”) on July 20, 2006. The
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Commission has not issued any orders
preventing or suspending the use of the Prospectus contained in the
Registration Statement and the Prospectus (as modified or
supplemented by information incorporated by reference into such
Prospectus) as well as the Company’s other public filings
conforms, and during the effectiveness of this Agreement will
conform, in all material respects with the requirements of the
Securities Act of 1933, as amended (the “ Securities
Act ”) and the Securities Exchange Act of 1934, as
amended, (the “ Exchange Act ”) and do not, and
during the effectiveness of this Agreement will not, include any
untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(c) The Warrant Shares have
been duly authorized, have been duly reserved for issuance and upon
exercise of the Public Warrants and payment to the Company of the
exercise price therefor, the Warrant Shares will be validly issued,
fully paid and non-assessable.
(d) Neither the execution and
delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the Articles of
Incorporation or Bylaws of the Company, each as amended to date;
(ii) require any consent, approval, authorization or permit
from, or filing with or notification to, any United States or
foreign governmental or regulatory authority or other third party,
except for any such consents, approvals, authorizations, permits,
filings or notifications, the absence of which would not have a
material adverse effect on the Company or the Public Warrants;
(iii) result in a breach of the terms, conditions or
provisions of, constitute a default (or an event which, upon notice
or lapse of time or both, would constitute a default) under or
cause, permit or give rise to any right of termination,
cancellation or acceleration under any of the terms, conditions or
provisions of any material agreement or other material instrument
or obligation to which the Company is a party or by which the
Company is bound; or (iv) conflict with or result in a
violation of any provision of (A) any statute, rule,
regulation or ordinance which conflict or violation might have a
material adverse impact on the Company or the Public Warrants, or
(B) any material order, writ, injunction, judgment, award,
decree, permit or license applicable to the Company or any of the
Company’s properties or assets.
4. Representations and Warranties of
Broker. Broker represents and warrants as follows:
(a) Broker is a corporation
or other entity duly organized, validly existing and in good
standing under the laws of the state of its organization or
incorporation and has full power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. All proceedings on the part of Broker
necessary to authorize this Agreement and the transactions
contemplated hereby have been duly and validly taken. This
Agreement has been duly and validly authorized, executed and
delivered by Broker, constitutes the legal, valid and binding
agreement and obligation of Broker, enforceable against it in
accordance with its terms, except as enforceability may
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be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting creditors’ rights
generally, including, without limitation laws regarding fraudulent
or preferential transfers, or by the principles governing the
availability of equitable remedies.
(b) Neither the execution and
delivery of this Agreement by Broker nor the consummation of
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