Other Stock-based Compensation. In June, 2008, the Company issued warrants to purchase 45,000 shares of the Company’s common stock to certain employees as a result of them completing an employment period. The warrants are at an exercise price of $3.00 per share and with an exercise period of 5 years. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of the warrants issued. A fair value of approximately $67,000 was determined and expensed. Xxxxx Energy Systems, Inc. and Subsidiary Notes to Unaudited Consolidated Financial Statements November 30, 2008 and May 31, 2008 In June, 2008, the Company issued a warrant to purchase 1,000,000 shares of the Company’s common stock as part of an employment agreement. The warrants are at an exercise price of $2.00 per share and with an exercise period of 5 years. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of the warrants issued. A fair value of $1,600,000 was determined and expensed. In June, 2008, the Company issued a warrant to purchase 200,000 shares of the Company’s common stock to its legal counsel. The warrants are at an exercise price of $2.00 per share and with an exercise period of 5 years. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of the warrants issued. A fair value of $308,000 was determined and expensed. In November, 2008, the Company signed an agreement with Energy Power Group under which Energy Power Group will pursue gas and carbon sales contracts for the products from the Company’s carbon conversion technology. As part of the agreement, Energy Power Group received a warrant to purchase 500,000 common shares of its common stock exercisable at $2.00 per share for 5 years. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of the warrants issued. A fair value of $1,470,000 was determined and expensed. In November, 2008, the Company issued a warrant to purchase 100,000 shares of the Company’s common stock as part of a settlement of amounts owed. The warrants are at an exercise price of $2.00 per share and with an exercise period of 5 years. The Company utilizes the Black-Scholes option-pricing model to calculate the fair value of the warrants issued. A fair value of approximately $294,000 was determined and expensed.
Other Stock-based Compensation. Effective as of the Effective Time, AEP agrees to assume the Company's 1992 Long-Term Incentive Plan and Director's Compensation Plan with respect to any stock-based compensation (other than the Outstanding Options) payable in the form of Company Common Stock as a result of the Merger ("Other Compensation"), and to substitute shares of AEP Common Stock with respect to such assumed Other Compensation. The number of shares of AEP Common Stock issuable with respect to such Other Compensation shall be equal to the number of whole shares of AEP Common Stock that the holder of Other Compensation being assumed would have received upon consummation of the Merger had such Other Compensation been paid in full prior to the Merger. On or prior to the Effective Time, the Company shall take or cause to be taken all such actions, reasonably satisfactory to AEP, as may be necessary or desirable in order to authorize the transactions contemplated by subsections (i) and (ii) above. Further, AEP shall take all corporate actions necessary to reserve for issuance a sufficient number of shares of AEP Common Stock for delivery upon exercise of the Company Outstanding Options or issuance of the Company Other Compensation assumed by AEP pursuant to subsections (i) and (ii) above. Prior to the Effective Time, AEP shall file one or more registration statements on Form S-8 (or any successor or other appropriate forms) with respect to the shares of AEP Common Stock issuable in respect to the Assumed Options or Other Compensation and AEP Common Stock issuable in respect of the Assumed Options or Other Compensation and AEP shall use its commercially reasonable efforts to cause such registration statement to become effective promptly after the Effective Time and to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained herein) for so long as any Assumed Options remain outstanding and to comply with applicable state securities and blue sky laws. So long as any holder of an Assumed Options shall be subject to the reporting requirements under Section 16(a) of the Exchange Act, AEP shall have the Company's 1992 Long-Term Incentive Plan and Directors' Compensation Plan to be administered in a manner that complies with Rule 16b-3 promulgated under the Exchange Act. (b)
