EXHIBIT 10.2
$3.00 WARRANT AGREEMENT
=========================================================================
$3.00 WARRANT AGREEMENT
IPO Investors Network, Inc., a Delaware corporation ("Company"), and Grafton
State Bank, a Wisconsin banking corporation ("Warrant Agent"), hereby agree as
follows:
1. Offering of Warrants. The Company proposes to offer, offer for sale, sell
and issue warrants ("Warrants") to purchase up to an aggregate of 1,500,000
shares of its common stock, par value $0.0001 per share ("Common Stock"). Such
Warrants comprise a part of the investment units to be sold by the Company, each
unit ("Unit") consisting of two shares of Common Stock and Warrants (one $3.00
Warrant and one $4.00 Warrant) to purchase two additional shares of Common
Stock. Each $3.00 Warrant entitles the registered holder thereof ("Warrant
Holder") to purchase one share of Common Stock at the price of $3.00 per share.
A registration statement on Form SB-2 with respect to the Warrants, including
a form of prospectus, has been filed by the Company with the Securities and
Exchange Commission ("Commission") under the Securities Act of 1933, as amended
("Securities Act"). One or more amendments to or changes in such registration
statement have been or may be so filed, and a final form of prospectus will be
filed with the Commission upon the effectiveness of such registration statement.
Such registration statement (including all exhibits thereto), as amended at the
time it becomes effective and at the time each post-effective amendment thereto
becomes effective, and the final prospectus filed upon the effectiveness of such
registration statement or post-effective amendment (including any supplements to
such final prospectus filed following such effectiveness) are referred to
herein, respectively, as the "Registration Statement" and the "Prospectus."
2. Warrants. As described in the Registration Statement and the Prospectus,
each Warrant will entitle the Warrant Holder to purchase Common Stock directly
from the Company at the price of $3.00 per share ("Exercise Price"). Each
Warrant shall be exercisable as provided herein for a period of eighteen (18)
months, commencing six (6) months following the initial effective date of the
Registration Statement, provided that the Common Stock issuable upon the
exercise of such Warrant is, at the time of exercise, registered or otherwise
qualified for sale under the Securities Act and the securities or "blue sky"
laws of the jurisdiction in which the exercise of such Warrant is proposed to be
effected ("Warrant Exercise Period"). Upon the expiration of its Warrant
Exercise Period, each Warrant will, respectively, expire and become void and of
no value.
3. Certificates. The certificates evidencing Warrants ("Warrant
Certificates") shall be registered as to holder and be substantially in the form
set forth in Exhibit A to this Agreement. Warrant Certificates shall be signed
by, or shall bear the facsimile signature of the President or a Vice President
of the Company and the Secretary or an Assistant Secretary of the Company. If
any person whose signature appears upon any Warrant Certificate as an officer of
the Company shall have ceased to be such officer before such Warrant Certificate
is issued and delivered, such Warrant may be issued and delivered as if such
person had not ceased to be an officer. Any Warrant Certificate may be signed
by, or made to bear the facsimile signature of, any person who at the actual
date of the preparation of such Warrant Certificate shall be a proper officer of
the Company to sign such Certificate even though such person was not such an
officer upon the date of this Agreement.
4. Registration of Transfers and Exchanges. Subject to the provisions of
Section 3, the Warrant Agent shall from time to time register the transfer of
any outstanding Warrant Certificate upon records maintained by the Warrant Agent
for such purpose following the surrender of such Warrant Certificate to the
Warrant Agent for transfer, accompanied by appropriate instruments of transfer
in form satisfactory to the Company and the Warrant Agent and duly executed by
the Warrant Holder or a duly authorized attorney. Upon any such registration of
transfer, a new Warrant Certificate shall be issued in the name of and to the
transferee and the surrendered Warrant Certificate shall be canceled.
5. Exercise of Warrants.
(a) A Warrant shall be exercised by the Warrant Holder by surrendering to
the Warrant Agent the certificate evidencing such Warrant with the exercise form
on the reverse of such Warrant Certificate duly completed and executed and
delivering to the Warrant Agent, by good check payable to the order of the
Company, the aggregate Exercise Price of the shares of Common Stock to be
purchased.
1
(b) During its Warrant Exercise Period, a Warrant may be exercised in whole
at any time or in part from time to time, provided that not less than 100 shares
of Common Stock, or any integral multiple of such amount, shall be purchased
upon any partial exercise.
(c) Upon receipt of a Warrant Certificate with the exercise form thereon
duly executed together with payment in full of the aggregate Exercise Price of
the shares of Common Stock to be purchased, the Warrant Agent shall requisition
from the transfer agent for the Common Stock (including the Company acting as
such transfer agent), and upon receipt shall make delivery of, certificates
evidencing the total number of shares of Common Stock issuable upon such
exercise, in such names and denominations as are required for delivery to, or in
accordance with the instructions of the Warrant Holder. Such Common Stock
certificates shall be deemed to be issued, and the person to whom such shares of
Common Stock are issued of record shall be deemed to have become a holder of
record of such shares of Common Stock, as of the date of the surrender of such
Warrant Certificate and payment of the Exercise Price, whichever shall last
occur; provided, that if the books of the Company with respect to the transfer
of Common Stock are then closed, such shares shall be deemed to be issued, and
the person to whom such shares of Common Stock are issued of record shall be
deemed to have become a record holder of such shares, as of the date on which
such transfer books of the Company shall next be open (whether before, on or
after the expiration of the applicable Warrant Exercise Period).
(d) Subject to Section 6(b), if less than all the Warrants evidenced by a
Warrant Certificate are exercised upon a single occasion, a new Warrant
Certificate for the balance of the Warrants not so exercised shall be issued and
delivered to, or in accordance with transfer instructions properly given by, the
Warrant Holder, until the expiration of the applicable Warrant Exercise Period.
(e) All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled.
(f) Upon the exercise of any Warrant, the Warrant Agent shall promptly
deposit all funds received in payment of the Exercise Price into a segregated
account ("Collection Account") established by mutual agreement of the Company
and the Warrant Agent at a federally insured commercial bank (which may be the
Warrant Agent). All funds deposited in the Collection Account will be disbursed
on a weekly basis to the Company after they have been determined by the Warrant
Agent to be collected funds. Once funds deposited in the Collection Account are
determined to be collected, the Warrant Agent shall cause the certificate(s)
representing the shares of Common Stock issued upon the exercise of Warrants to
be delivered to the record holder(s) of such Common Stock.
(g) Reasonable expenses incurred by Grafton State Bank acting in the
capacity as Warrant Agent will be paid or reimbursed by the Company. These
expenses, including delivery of Common Stock certificates to shareholders, will
be deducted monthly from funds held in the Collection Account or, at the option
of the Warrant Agent, paid directly by the Company upon demand. A report
setting forth (i) the names of exercising Warrant Holders, (ii) the number of
shares of Common Stock issuable to such exercising Warrant Holders,
respectively, (iii) the amount of funds remitted by such exercising Warrant
Holders, respectively, and (iv) any expenses paid (including fees and expenses
of the Warrant Agent) will be provided to the Company by the Warrant Agent at
the time of each disbursement of funds held in the Collection Account.
6. Voluntary Redemption of Warrants. Commencing six (6) months following the
initial effective date of the Registration Statement, and at any time thereafter
until and including, but not after, the expiration of the Warrant Exercise
Period, the Company may, at its option, redeem all of the Warrants at any time
or some of them from time to time, upon payment of One Cent ($0.01) per Warrant
to the Warrant Holder, provided that the closing bid or sale price of the Common
Stock, as quoted on the NASD OTC Bulletin Board, or other national securities
exchange, equals or exceeds Five Dollars ($5.00) per share for twenty (20)
consecutive trading days ending within fifteen (15) days of the date upon which
notice of redemption is given as provided herein. In case less than all of the
Warrants at the time outstanding are to be redeemed, the Warrants to be redeemed
shall be selected by the Company by lot. Notices of such optional redemption
will be mailed at least fifteen (15) days prior to the redemption date to each
holder of Warrants to be redeemed at the registered address of such Holder.
Each Holder of a Warrant, by accepting the same, agrees upon any such notice of
redemption to receive payment for such Warrant upon the date fixed for
redemption in the amount herein provided.
2
7. Taxes. The Company will pay all taxes attributable to the initial
issuance of shares of Common Stock upon the exercise of Warrants. Taxes
attributable to (i) the issuance of any Common Stock certificate in the name
other than that of a Warrant Holder upon the exercise of Warrants or (ii) the
transfer of any Warrant shall be paid by the Warrant Holder requesting such
issuance or proposing to effect such transfer; such transactions will only be
effected following the deposit with the Warrant Agent of funds sufficient to pay
in full any tax liability incurred or to be incurred in connection therewith.
8. Mutilated or Missing Warrant Certificates. If any Warrant Certificate is
mutilated, lost, stolen or destroyed, the Company and the Warrant Agent may, on
such terms as to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant Certificate, include the
surrender thereof), and upon receipt of evidence satisfactory to the Company and
the Warrant Agent of such mutilation, loss, theft or destruction, issue a
substitute Warrant Certificate. Applicants for substitute Warrant Certificates
shall comply with any reasonable regulations (and pay any reasonable charges)
prescribed by the Company or the Warrant Agent.
9. Reservation of Shares. For the purpose of enabling the Company to satisfy
its obligation to issue Common Stock upon exercise of Warrants, the Company will
at all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock, the full number of shares
which may be issued upon the exercise of Warrants; such shares of Common Stock
will upon issuance be fully paid, nonassessable, and free from all taxes, liens,
charges and security interests with respect to the issuance thereof.
10. Governmental Restrictions. If any shares of Common Stock issuable upon
the exercise of Warrants require registration with or approval of any
governmental authority, the Company will endeavor to secure such registration or
approval; provided that in no event shall such shares of Common Stock be issued,
and the Company shall have the authority to suspend the exercise of all
Warrants, until such registration or approval shall have been obtained; however
all Warrants, the exercise of which is requested during any such suspension,
shall be exercisable at the Exercise Price. If any such period of suspension
continues past the expiration of its Warrant Exercise Period, any Warrant as to
which exercise has been requested on or prior to the expiration of its Warrant
Exercise Period shall be exercisable upon the removal of such suspension until
the close of business on the business day immediately following the expiration
of such suspension.
11. Adjustments. Subject to the terms set forth in the Warrant Certificates,
if, prior to the exercise of any Warrants, the Company shall have effected one
or more stock split-ups, stock dividends or other increases or reductions of the
number of shares of its Common Stock outstanding without receiving compensation
therefor in money, services or property, the number of shares of Common Stock
subject to the Warrants shall, (i) if a net increase shall have been effected in
the number of outstanding shares of Common Stock, be proportionately increased,
and the cash consideration payable per share shall be proportionately reduced,
and, (ii) if a net reduction shall have been effected in the number of
outstanding shares of Common Stock, be proportionately reduced and the cash
consideration payable per share be proportionately increased.
12. Notice to Warrant Holders.
(a) Upon any adjustment as described in Section 11 hereof, the Company
within twenty (20) days thereafter shall (i) cause to be filed with the Warrant
Agent a certificate signed by an officer of the Company setting forth the
details of such adjustment, the method of calculation and the facts upon which
such calculation is based, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, and (ii) cause written notice of
such adjustments to be given to each Warrant Holder as of the record date
applicable thereto.
(b) If the Company proposes to enter into any reorganization,
reclassification, sale of all or substantially all of its assets, consolidation,
merger, dissolution, liquidation or winding up, the Company shall give notice of
such fact at least twenty (20) days prior to such action to all Warrant Holders,
which notice shall set forth such facts as indicate the effect of such action
(to the extent such effect may be known at the date of such notice) on the
Exercise Price and the kind and amount of the shares or other securities and
property deliverable upon exercise of the Warrants. Without limiting the
obligation of the Company under the provisions of this Agreement to provide such
notice to each Warrant Holder, failure of the Company to give notice shall not
invalidate any corporate action taken by the Company.
3
13. No Fractional Warrants or Shares. The Company shall not be required to
issue fractions of Warrants upon the reissue of Warrants, any adjustments as
described in Section 11 hereof or otherwise; but the Company in lieu of issuing
any such fractional interest, shall round up or down to the nearest full
Warrant. If the total Warrants surrendered for exercise would result in the
issuance of a fractional share of Common Stock, the Company shall not be
required to issue a fractional share but rather the aggregate number of shares
issuable will be rounded up or down to the nearest full share.
14. Rights of Warrant Holders. No Warrant Holder, as such, shall have any
rights of a shareholder of the Company, either at law or equity, and the rights
of the Warrant 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 Warrant Holder in respect of any Warrant
Certificate as the absolute owner thereof for all purposes notwithstanding any
notice to the contrary.
15. Warrant Agent. The Company hereby appoints the Warrant Agent to act as
the agent of the Company, and the Warrant Agent hereby accepts such appointment,
upon the following terms and conditions by all of which the Company and every
Warrant Holder, by acceptance of a Warrant, shall be bound:
(a) Statements contained in this Agreement and in the Warrant Certificates
shall be taken as statements of the Company. The Warrant Agent assumes
responsibility hereunder only for the correctness of any statement which
describes the Warrant Agent and/or for action taken or to be taken by the
Warrant Agent.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the Company's covenants contained in this
Agreement or in the Warrant Certificates.
(c) The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company), and the Warrant Agent shall incur no
liability or responsibility to the Company or to any Warrant Holder in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel, provided the Warrant
Agent shall have exercised reasonable care in the selection and continued
employment of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any Warrant Holder for any action taken in reliance upon any
notice, resolution, waiver, consent, order, certificate or other paper, document
or instrument believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent the amount(s) described
in Schedule A to this Agreement for the services rendered by the Warrant Agent.
The Company shall also reimburse the Warrant Agent for all expenses, taxes and
governmental charges and all other charges of any kind or nature incurred by the
Warrant Agent in the performance of this Agreement.
(f) The Company shall indemnify the Warrant Agent and hold it harmless
against any and all liabilities, including judgments, costs and counsel fees,
incurred in connection with its performance of this Agreement, except as a
result of the Warrant Agent's negligence or bad faith. In no case shall the
Warrant Agent be liable for special, indirect, incidental or consequential loss
or damage of any kind whatsoever, even if the Warrant Agent has been advised of
the likelihood of such loss or damage.
(g) The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more Warrant Holders shall furnish the Warrant
Agent with reasonable security and indemnity for any costs and expenses which
may be incurred in connection with such action, suit or legal proceeding, but
this provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may, in its sole and absolute discretion, consider
proper, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may
be enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding relative
4
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
shall be brought in its name as Warrant Agent, and any recovery of judgment
shall be for the ratable benefit of the Warrant Holders as their respective
rights or interests may appear, subject to the terms set forth in the Warrant
Certificates.
(h) The Warrant Agent and any shareholder, director, officer or employee of
the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company, or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company, or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement or a shareholder, director, officer or employee of
such Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting
in any other capacity for the Company or for any other legal entity.
16. Successor Warrant Agent. Any entity into which the Warrant Agent may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which the Warrant
Agent shall be a party, or any entity succeeding to the trust business of the
Warrant Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act of a party or the parties
hereto.
17. Change of Warrant Agent. The Warrant Agent may resign from its duties
under this Agreement upon notice given in writing by the Warrant Agent or the
Company; the Warrant Agent may be discharged by the Company from its duties
under this Agreement upon notice given in writing by the Company to the Warrant
Agent; the foregoing notices shall, in either case, give the date when such
resignation or discharge shall take effect and shall be sent at least thirty
(30) days prior to the date so specified. If the Warrant Agent shall resign, be
discharged or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after it has been notified
in writing of such resignation or incapacity by the resigning or incapacitated
Warrant Agent (or by any Warrant Holder) or after discharging the Warrant Agent,
then any Warrant Holder may apply to the Circuit Court for Ozaukee County,
Wisconsin, for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to the Warrant Agent, either by the Company or by
such Court, the duties of the Warrant Agent shall be carried out by the Company.
Any successor Warrant Agent, whether appointed by the Company or by such Court,
shall be a bank or a trust company, in good standing, organized under the laws
of the State of Wisconsin or of the United States of America, having its
principal office in the United States. After appointment, the successor Warrant
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Warrant Agent, without further act or
deed, and the former Warrant Agent shall deliver and transfer to the successor
Warrant Agent any property at the time held by it thereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary to effect the
delivery or transfer. Failure to give any notice provided for herein, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Warrant Agent or the appointment of the successor Warrant Agent,
as the case may be.
18. Notices. Any notice or demand authorized by this Agreement to be given or
made by the Warrant Agent or by any Warrant Holder to or on the Company shall be
sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
IPO Investors Services, Inc.
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Any notice or demand authorized hereby to be given or made by any Warrant Holder
or by the Company to or on the Warrant Agent shall be sufficiently given or made
if sent by mail, first class, certified or registered, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company), as follows:
Grafton State Bank
000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
5
Any distribution, notice or demand required or authorized by this Agreement to
be given or made by the Company or the Warrant Agent to or on the Warrant
Holders shall be sufficiently given or made if sent by mail, first class,
certified or registered, postage prepaid, addressed to the Warrant Holders at
their last known addresses as such addresses shall appear on the registration
books for the Warrant Certificates maintained by the Warrant Agent.
19. Supplements and Amendments. The Company and the Warrant Agent may from
time to time supplement or amend this Agreement without the approval of any of
the Warrant Holders in order to cure any ambiguity, or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable.
20. Successors. All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns.
21. Termination. This Agreement shall terminate at the close of business on
the date upon which the Warrant Exercise Period expires as to all Warrants (or
the business day next following such date) or such earlier date upon which all
of the Warrants have been exercised; provided, however, that if exercise of the
Warrants is suspended pursuant to Section 10 and such suspension continues
beyond the date upon which the Warrant Exercise Period expires as to all
Warrants, this Agreement shall terminate on the business day immediately
following the expiration of such suspension. The provisions of Section 14 shall
survive such termination.
22. Governing Law. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Colorado and for all purposes shall be construed in accordance with the internal
laws of said state.
23. Benefits of Agreement. Nothing in this Agreement shall be construed to
give to any person or entity other than the Company, the Warrant Agent and the
Warrant Holders, any legal or equitable right, remedy or claim hereunder, this
Agreement being expressly for the sole and exclusive benefit of the Company, the
Warrant Agent and the Warrant Holders.
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 all such counterparts shall together constitute but one and
the same instrument.
Dated:____________________________, 2001
IPO INVESTORS NETWORK, INC.
By:_________________________________
W. Xxxxxxx Xxxxxxxxxxx, President
GRAFTON STATE BANK
By:__________________________________
Xxxxxx X. Xxxxxxx, President
6
=========================================================================
WARRANT AGREEMENT
Schedule A
This Schedule A to the Warrant Agreement, dated as of ___________, 2001,
by and between Grafton State Bank ("Warrant Agent") and Micro Enhancement
International, Inc. ("Company"), sets forth the compensation
arrangements referred to in Section 15(e) of such Agreement, as follows:
In consideration of its services performed pursuant to the Warrant
Agreement, the Warrant Agent shall be entitled to receive fees from the Company,
as follows:
Upon execution of this Agreement. . . . . . . . $ 750.00
On of before January 1 of each
year (or part thereof) during
which this Agreement is in effect,
commencing January 1, 1996. . . . . . . . . . $ 250.00
For each Warrant exercise
transaction (full or partial) . . . . . . . . $ 25.00
In addition to payment of the fees described in this Schedule, the Company
shall to reimburse the Warrant Agent for all reasonable expenses, taxes and
governmental charges and all other reasonable charges of any kind or nature
incurred by the Warrant Agent in its performance of the Warrant Agreement (as
provided in Section 6(f) of such Agreement).
The initial fee payment hereunder ($750.00) shall be payable by the Company
upon the execution of the Warranty Agreement by the parties to such Agreement.
Thereafter, fees and reimbursements then due and payable to the Warrant Agent
shall be withdrawn by such Agent from funds held in the Collection Account on
the last day of each calendar month and upon termination of the Warrant
Agreement or, at the option of the Warrant Agent, paid directly by the Company
upon demand.
All terms used herein shall have the same meanings ascribed to them in the
Warrant Agreement of which this Schedule is a part.
=========================================================================
No._____________ EXHIBIT A
WARRANT
To Purchase Common Stock
of
IPO Investors Network, Inc.
THIS CERTIFIES THAT, upon surrender of this Warrant at the office of the
Warrant Agent hereinafter named, in the Village of Grafton, County of Ozaukee,
State of Wisconsin, accompanied by payment as hereinafter provided, ____________
__________________________________________or assigns ("Holder") is entitled to
purchase at any time prior to the expiration of the Warrant Exercise Period (as
hereinafter defined), but not thereafter, ______________________________________
shares of common stock ("Common Stock"), of IPO Investors Network, Inc., a
Delaware corporation ("Company"), as such Common Stock shall be constituted at
the time of purchase, which shares have been duly authorized and set aside for
issuance and will, upon such issuance, be fully paid and nonassessable, at the
price of Four Dollars ($4.00) per share, subject to the terms and provisions set
forth herein and in an agreement by and between the Company and Grafton State
Bank, Grafton, Wisconsin "Warrant Agent"), and not otherwise.
This Warrant shall be exercisable in whole at any time or in part from time to
time (provided that not less than One Hundred (100) shares of Common Stock, or
any integral multiple of such amount, shall be purchased upon any such partial
exercise hereof), for a period of eighteen (18) months, commencing six (6)
months following the initial effective date of the registration statement of the
Company, relating to the Warrants, under the Securities Act of 1933, as amended
("Securities Act"), provided that the Common Stock issuable upon the exercise of
this Warrant is, at the time of exercise, registered or otherwise qualified for
sale under the Securities Act and the securities or "blue sky" laws of the
jurisdiction in which the exercise of this Warrant is proposed to be effected
("Warrant Exercise Period"). Upon the expiration of the Warrant Exercise
Period, this Warrant will expire and become void and of no value. No fractional
shares will be issued upon the exercise hereof.
This Warrant shall be registered at the office of the Warrant Agent and is
transferable only at said office by the registered Holder hereof or his duly
authorized attorney upon surrender of this certificate, properly endorsed.
Upon any adjustment of the number of shares of Common Stock which may be
purchased upon the exercise of this Warrant and/or the purchase price per share,
then in each such case the Company shall give written notice thereof, as
hereinbelow provided, which notice shall state the purchase price per share
resulting from such adjustment and the increase or decrease, if any, in the
number of shares of Common Stock purchasable at such price upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
THIS WARRANT MAY NOT BE TRANSFERRED OR EXERCISED UNLESS SAID WARRANT AND THE
SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE THEREOF ARE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
ARE EXEMPT FROM SUCH REGISTRATION, OR SUCH TRANSFER OR EXERCISE (AND THE
ISSUANCE OF COMMON STOCK PURSUANT TO SUCH EXERCISE) IS EXEMPT FROM REGISTRATION
UNDER SUCH ACT AND SUCH LAWS. THE COMPANY WILL USE ITS BEST EFFORTS TO SO
REGISTER OR QUALIFY THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF, AND/OR TO SO REGISTER OR QUALIFY THE TRANSACTIONS PURSUANT TO
WHICH SUCH SECURITIES ARE ISSUED OR TRANSFERRED, UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE SECURITIES LAWS OF THE JURISDICTIONS IN WHICH WARRANTS
ARE SOLD; THE COMPANY MAY, IN ITS SOLE DISCRETION, ATTEMPT TO SO REGISTER OR
QUALIFY SUCH SECURITIES IN JURISDICTIONS OTHER THAN THOSE IN WHICH WARRANTS ARE
SOLD.
A-1
The Holder of this Warrant shall not by virtue thereof have any rights of a
shareholder of the Company or to notice of meetings of shareholders or of any
other proceedings of the Company.
This Warrant is divisible on surrender, in which case a new Warrant or
Warrants will be issued.
Commencing six (6) months following the initial effective date of the
registration statement of the Company, relating to the Warrants, under the
Securities Act, and at any time thereafter until and including, but not after,
the expiration of the Warrant Exercise Period, the Company may, at its option,
redeem all of the Warrants at any time or some of them from time to time, upon
payment of One Cent ($0.01) per Warrant to the Holder, provided that the closing
bid or sale price of the Common Stock, as quoted on the NASD OTC Bulletin Board,
or other national securities exchange, equals or exceeds Five Dollars ($5.00)
per share for twenty (20) consecutive trading days ending within fifteen (15)
days of the date upon which notice of redemption is given as provided herein.
In case less than all of the Warrants at the time outstanding are to be
redeemed, the Warrants to be redeemed shall be selected by the Company by lot.
Notices of such optional redemption will be mailed at least fifteen (15) days
prior to the redemption date to each holder of Warrants to be redeemed at the
registered address of such Holder. Each Holder of this Warrant, by accepting
the same, agrees upon any such notice of redemption to receive payment for this
Warrant upon the date fixed for redemption in the amount herein provided.
If prior to the expiration of this Warrant, by exercise hereof or by its
terms:
(a) The Company shall be recapitalized through the subdivision of its
outstanding shares of Common Stock into a greater number of shares, or shall by
exchange or substitution of or for its outstanding Common Stock or otherwise,
reduce the number of such shares, then in each such case the number of shares
deliverable upon the exercise of this Warrant shall be changed in proportion to
such increase or decrease of the outstanding shares of such Common Stock of the
Company, without any change in the aggregate payment by the Warrant Holder from
the aggregate payment specified on the face of this Warrant.
(b) A dividend shall be declared or paid at any time on the Common Stock of
the Company in its Common Stock or in securities convertible into Common Stock
of the Company, then in each such case the number of shares deliverable upon the
exercise thereafter of this Warrant shall, without requiring any payment by the
Warrant Holder in addition to the payment specified on the face hereof, be
increased in proportion to the increase, through such dividend, in the number of
outstanding shares of Common Stock of the Company. In the computation of the
increased number of shares deliverable upon the exercise of this Warrant, any
dividend paid or distributed upon the Common Stock in securities convertible
into Common Stock shall be treated as a dividend paid in Common Stock to the
extent that shares of Common Stock are issuable upon the conversion thereof.
The obligations of the Company and the rights of the Holder hereof shall not be
affected by the exercise of any conversion privileges heretofore granted to the
holders of any of the stock or securities of the Company or of any other
corporation.
(c) The Company shall, at any time while any of the Warrants are
outstanding, declare a dividend on its Common Stock, other than as provided in
the preceding paragraph (b), then in each such case the Company shall give
notice in writing to the registered Holder of this Warrant, and such dividends
so declared shall be made payable only to the shareholders of record on a date
at least ten (10) days subsequent to the date of such notice, including stock
issued pursuant to the exercise of such Warrants prior to such record date.
(d) The Company shall be recapitalized by reclassifying its outstanding
Common Stock into stock without par value, or the Company or a successor
corporation shall consolidate or merge with, or convey all, or substantially
all, of its or any successor corporation's property or assets to, any other
corporation or corporations (any such corporation being included within the
meaning of "successor corporation" as hereinbefore used in the event of any
consolidation or merger of such corporation with, or the sale of all, or
substantially all, of the property or assets of such corporation to another
corporation or corporations) then in each such case, as a condition of such
recapitalization, consolidation, merger or conveyance, lawful and adequate
provision shall be made whereby the Holder of each Warrant shall thereafter have
the right to purchase, upon the basis and upon the terms and conditions
specified in this Warrant, in lieu of the shares of Common Stock of the Company
theretofore purchasable upon the exercise of this Warrant, such shares of stock,
securities or other assets as may be issued or payable with respect to, or in
exchange for, the number of shares of Common Stock of the Company theretofore
purchasable upon the exercise of this Warrant had such recapitalization,
consolidation, merger or conveyance not taken place; and in any such event the
rights of the Warrant Holder to an adjustment of the number of shares of Common
Stock purchasable upon the
A-2
exercise of this Warrant as hereinbefore provided shall continue and be
preserved in respect of any stock which the Warrant Holder becomes entitled to
purchase. It shall be a condition of such consolidation, merger or conveyance
that each successor corporation shall assume, in manner and form satisfactory to
the Warrant Agent, the obligation to deliver to the Warrant Holder, upon the
exercise of this Warrant, such shares of stock, securities or assets as, in
accordance with the provisions of this Warrant, shall have been provided for
such purpose. The Warrant Agent shall assume no liability for its exercise of
discretion hereunder, other than for wilful wrongdoing.
This Warrant shall be deemed to have been exercised, and the Holder exercising
the same to have become a shareholder of record of the Company, for the purpose
of receiving dividends and for all other purposes whatsoever as of the date the
Holder surrendered this Warrant accompanied by payment in cash, as herein
provided. The Company agrees that, while this Warrant shall remain valid and
outstanding, its stock transfer books shall not be closed for any purpose
whatsoever, except under arrangements which shall insure to Holders exercising
Warrants or applying for transfer of stock within five (5) days after the books
shall have been reopened all rights and privileges which they might have had or
received if the transfer books had not been closed and they had exercised their
Warrants at any time during which such transfer books shall have been closed.
Upon each increase or decrease in the number of shares of Common Stock of the
Company deliverable upon the exercise of this Warrant, or in the event of
changes in the rights of the Warrant Holders by reason of other events
hereinbefore set forth, then in each such case the Company shall forthwith file
with the Warrant Agent a certificate executed by its President or one of its
Vice Presidents, and attested by its Secretary or one of its Assistant
Secretaries, stating the increased or decreased number of shares so deliverable
and setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based.
The Company covenants, at all times when Warrants are outstanding and in
effect, to reserve, unissued, such number of shares of Common Stock as it may be
required to deliver pursuant to the exercise of this Warrant, subject to
consolidation, merger or sale, as hereinabove set forth.
As used herein, the terms "Holder" "Warrant Holder" and "Holder of this
Warrant" shall be construed to mean the registered holder hereof, and, in the
case of any notice required by this Warrant to be given to the Warrant Holder,
it shall be sufficient if mailed to the last known address of such Holder as the
same appears on the books of the Company.
IN WITNESS WHEREOF, IPO INVESTORS NETWORK, INC. has caused this Warrant to be
signed in its corporate name by its President or a Vice President, manually or
in facsimile, and its corporate seal or a facsimile to be imprinted hereon and
attested by the manual or facsimile signature of its Secretary or an Assistant
Secretary, as of the day and year first above written.
IPO INVESTORS NETWORK, INC.
Attest:
___________________________________ By: ___________________________________
Secretary President
[CORPORATE SEAL]
A-3
SUBSCRIPTION FORM
(To be Executed Upon Exercise of Warrant)
The undersigned, the Holder(s) or assignee(s) of such Holder(s) of the within
Warrant, hereby (i) subscribes for shares of Common Stock which the undersigned
is entitled to purchase under the terms of the within Warrant and (ii) tenders
herewith the full exercise price of all shares subscribed for.
Dated:_______________________________
Number of Shares Subscribed For:
_____________________________________ ___________________________________
(Signature)
___________________________________
(Signature)
ASSIGNMENT
(To Be Executed By the Registered Holder to Effect
a Transfer of the Within Warrant)
FOR VALUE RECEIVED, the undersigned Warrant Holder(s) do(es) hereby sell,
assign and transfer unto _______________________________________________________
______________________ the right to purchase common stock evidenced by this
Warrant, and does hereby irrevocably constitute and appoint ____________________
_________________________________________________________ to transfer the said
right on the books of the Company, with full power of substitution.
Dated:_____________________________
_________________________________
(Signature)
_________________________________
(Signature)
A-4
