Exhibit 4.2
WARRANT AGREEMENT
THIS WARRANT AGREEMENT, dated as of March ___, 2002, is by and between
RUNCORP, INC., a Nevada corporation (the "Company"), and __________, whose
address is _____________________________________ ("Holder").
W I T N E S S E T H:
1. Issue. The Company shall issue to Holder a certificate (the
"Warrant Certificate") dated as of the date hereof providing Holder, and any
subsequent assignee or transferee of Holder, with the right to purchase, at any
time, commencing one year from the date hereof (the "Effective Date"), until
5:30 p.m., Mountain time, five (5) years from the Effective Date, _______ shares
of Common Stock of the Company (the "Warrant Shares") (subject to adjustment as
provided in Section 9 hereof), at an exercise price (subject to adjustment as
provided in Section 9 hereof) of $0.05 per Common Share.
2. Warrant Certificate. The Warrant Certificate to be delivered
pursuant to this Agreement shall be in the form set forth as an Exhibit,
attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement.
3. Exercisability of Warrants. The Warrants shall be exercisable at
any time commencing one year after the Effective Date, until 5:30 p.m., Mountain
time, five (5) years after the Effective Date.
4. Procedure for Exercise of Warrants.
4.1 Cash Exercise. The Warrants are exercisable at an aggregate
initial exercise price per Common Share set forth in Section 7 hereof payable by
certified check or official bank check. Upon surrender of a Warrant Certificate
with the annexed Form of Election to Purchase duly executed, together with
payment of the Exercise Price (as hereinafter defined) for the Warrant Shares
purchased, at the Company's principal offices in Calgary, Alberta (presently
located at ▇▇▇ ▇▇▇ ▇▇▇. ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ 0M2), Holder shall
be entitled to receive a certificate for the Warrant Shares so purchased. The
purchase rights represented by the Warrant Certificate are exercisable at in
whole. The Warrant Certificate may not be exercised in part.
4.2 Cashless Exercise. In addition to the exercise of all of the
Warrants by the payment of the Exercise Price in cash or check as set forth in
Section 4.1 above, and in lieu of any such payment, Holder has the right to
exercise the Warrants by surrendering the Warrant Certificate with the annexed
Form of Election to Purchase duly executed, in exchange for the number of Common
Shares equal to the product of (x) the number of Common Shares as to which the
Warrants are being exercised multiplied by (y) a fraction, the numerator of
which is the Current Market Price of the Common Shares (as defined below) less
the Exercise Price then in effect and the denominator of which is the Current
Market Price.
4.3 Current Market Price. The term "Current Market Price" shall mean
(i) if the Shares are traded in the over-the-counter market or on the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
the average per Share closing bid prices on the 20 consecutive trading days
immediately preceding the date of exercise, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Shares are
traded on a national securities exchange, the average for the 20 consecutive
trading days immediately preceding the exercise date of the daily per Share
closing prices on the principal stock exchange on which the Shares are listed,
as the case may be. The closing price referred to in clause (ii) above shall be
the last reported sales price or, if no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case on
the national securities exchange on which the Shares are then listed.
5. Issuance of Certificate. Upon the exercise of the Warrants, the
issuance of a certificate for Warrant Shares (or Other Securities) shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to Holder including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificate shall (subject to the
provisions of Sections 6 and 8 hereof) be issued in the name of, or in such
names as may be directed by Holder; provided, however, that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name other
than that of Holder and the Company shall not be required to issue or deliver
such certificate unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid. The
Warrant Certificate and the certificate representing the Warrant Shares (or
Other Securities) shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman of the Board of Directors or
President or any Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or any Assistant Secretary of the Company. The Warrant
Certificate shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
6. Transfer of Warrants. Holder, by his acceptance hereof,
covenants and agrees that the Warrants are being acquired as an investment and
not with a view to the distribution thereof. The Warrants may be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole, without
restriction, subject to compliance with applicable securities laws.
7. Exercise Price.
7.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 9 hereof, the initial exercise price of each Warrant shall
be the price set forth in Section 1 hereof per Warrant Share issued hereunder.
The adjusted exercise price shall be the price which shall result from time to
time from any and all adjustments of the initial exercise price in accordance
with the provisions of Section 8 hereof.
7.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
8. Registration Under the Securities Act of 1933. As of the date
hereof, the Warrants, the Warrant Shares and any of the other securities
issuable upon exercise of the Warrants have not been registered under the
Securities Act of 1933, as amended (the "Act"). Upon exercise of the Warrants, a
certificate representing the Warrant Shares underlying the Warrants, and any of
the other securities issuable upon exercise of the Warrants (collectively, the
"Warrant Securities") shall bear the following legend unless such Warrant Shares
previously have been registered under the Act: THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION
SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
9. Adjustments to Exercise Price and Number of Securities. The
Exercise Price and, in some cases, the number of Warrant Shares purchasable upon
the exercise of the Warrants, shall be subject to adjustment from time to time
upon the occurrence of certain events described in this Section 9.
9.1 Subdivision or Combination of Common Shares and Common Share
Dividend. In case the Company shall at any time subdivide its outstanding Common
Shares into a greater number of Common Shares or declare a dividend upon its
Common Shares payable solely in Common Shares, the Exercise Price in effect
immediately prior to such subdivision or declaration shall be proportionately
reduced, and the number of Warrant Shares issuable upon exercise of the Warrants
shall be proportionately increased. Conversely, in case the outstanding Common
Shares of the Company shall be combined into a smaller number of Common Shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of Warrant Shares issuable upon
exercise of the Warrants shall be proportionately reduced.
9.2 Notice of Adjustment. Promptly after adjustment of the Exercise
Price or any increase or decrease in the number of Warrant Shares purchasable
upon the exercise of this Warrant, the Company shall give written notice
thereof, by first class mail, postage prepaid, addressed to Holder of this
Warrant at the address shown on the books of the Company. The notice shall be
signed by the Company's chief financial officer and shall state (i) the
effective date of the adjustment and the Exercise Price resulting from such
adjustment and (ii) the increase or decrease, if any, in the number of Common
Shares 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.
9.3 Other Notices. If at any time: (a) the Company shall declare any
cash dividend upon its Common Shares; (b) the Company shall declare any dividend
upon its Common Shares payable in securities (other than a dividend payable
solely in Common Shares) or make any special dividend or other distribution to
Holder of its Common Shares; (c) there shall be any consolidation or merger of
the Company with another corporation, or a sale of all or substantially all of
the Company's assets to another corporation; or (d) there shall be a voluntary
or involuntary dissolution, liquidation or winding-up of the Company; then, in
any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to Holder of this Warrant at the
address of Holder as shown on the books of the Company, (i) at least 15 days'
prior written notice of the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such dissolution,
liquidation or winding-up; (ii) at least 10 days' prior written notice of the
date on which the books of the Company shall close or a record shall be taken
for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger or sale, and (iii) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, at least 15 days' written notice of the date when the
same shall take place. Any notice given in accordance with clause (i) above
shall also specify, in the case of any such dividend, distribution or option
rights, the date on which shall be entitled thereto. Any notice given in
accordance with clause (iii) above shall also specify the date on which Holder
shall be entitled to exchange his Common Shares for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be. If Holder does
not exercise this Warrant prior to the occurrence of an event described above,
except as provided in Sections 9.1 and 9.4, then Holder shall not be entitled to
receive the benefits accruing to existing holders of the Common Shares in such
event.
9.4 Changes in Common Shares. In case at any time the Company shall
be a party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets or
recapitalization of the Common Shares) in which the previously outstanding
Common Shares shall be changed into or exchanged for different securities of the
Company or common stock or other securities of another corporation or interests
in a non-corporate entity or other property (including cash) or any combination
of any of the foregoing (each such transaction being herein called the
"Transaction" and the date of consummation of the Transaction being herein
called the "Consummation Date"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that Holder, upon
the exercise hereof at any time on or after the Consummation Date, shall be
entitled to receive, and this Warrant shall thereafter represent the right to
receive, in lieu of the Common Shares issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
Holder would actually have been entitled upon the consummation of the
Transaction if Holder had exercised such Warrant immediately prior thereto. The
provisions of this Section 9.4 shall similarly apply to successive Transactions.
10. Exchange and Replacement of Warrant Certificate. The Warrant
Certificate is exchangeable without expense, upon the surrender thereof by
Holder at the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of Warrant Shares in such denominations as shall be
designated by Holder thereof at the time of such surrender. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it,
and reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of the Warrants, if mutilated, the Company
will make and deliver a new Warrant Certificate of like tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of Common Shares upon the
exercise of the Warrants, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Common Shares or Other Securities.
12. Reservation of Securities. The Company shall at all times
reserve and keep available out of its authorized Common Shares, solely for the
purpose of issuance upon the exercise of the Warrants, such number of Common
Shares or Other Securities as shall be issuable upon the exercise thereof. The
Company covenants and agrees that, upon exercise of the Warrants and payment of
the Exercise Price therefor, all Common Shares or Other Securities issuable upon
such exercise shall be duly and validly issued, fully paid, non-assessable and
not subject to the preemptive rights of any holder of Common Shares.
13. Notices to Warrant Holder. Nothing contained in this Agreement
shall be construed as conferring upon the holder by virtue of his holding the
Warrant the right to vote or to consent or to receive notice as a holder of
Common Shares in respect of any meetings of such holders for the election of
directors or any other matter, or as having any rights whatsoever as such a
shareholder of the Company.
14. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made and sent when delivered, or mailed by registered or certified mail,
return receipt requested: (a) If to Holder, to the address of Holder as shown on
the books of the Company; or (b) If to the Company, to the address set forth in
Section 4 hereof or to such other address as the Company may designate by notice
to the Holder.
15. Supplements and Amendments. The Company and Holder may from time
to time supplement or amend this Agreement in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Holder
may deem necessary or desirable.
16. Successors. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, Holder and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of
business on the fifth anniversary of the issuance of the Warrants.
18. Governing Law. This Agreement and the Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Nevada and for all purposes shall be construed in accordance with the laws of
the State of Nevada without giving effect to the rules of the State of Nevada
governing the conflicts of laws.
19. Entire Agreement; Modification. This Agreement contains the
entire under- standing between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing duly signed
by the party against whom enforcement of the modification or amendment is
sought.
20. Severability. If any provision of this Agreement shall be held
to be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and Holder
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and Holder.
23. 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 such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day and year first above written.
RUNCORP, INC.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
ACCEPTED AND AGREED TO:
HOLDER
Signature
Address:
Social Security/Tax I.D.
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE. EXERCISABLE FROM THE EFFECTIVE DATE UNTIL 5:30 P.M., MOUNTAIN TIME,
FIVE YEARS (5) AFTER THE EFFECTIVE DATE.
WARRANT CERTIFICATE
This Warrant Certificate certifies that ____________ or his/her
registered assigns ("Holder"), is the registered Holder of _______ Warrants to
purchase initially at any time commencing one year after March ___, 2002
("Effective Date", until 5:30 p.m. Mountain time, five (5) years after the
Effective Date ("Expiration Date"), up to _______ fully-paid and non-assessable
shares of common stock, par value $.001 per share ("Common Shares") of RUNCORP,
INC., a Nevada corporation (the "Company"), at an initial exercise price,
subject to adjustment in certain events (the "Exercise Price"), equal to $0.05
per Common Share, upon surrender of this Warrant Certificate and payment of the
initial exercise price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of the
Effective Date between the Company and Holder (the "Warrant Agreement"). Payment
of the Exercise Price shall be made by certified check or official bank check
payable to the order of the Company, unless exercise is made pursuant to Section
4.2 of the Warrant Agreement. No Warrant may be exercised after 5:30 p.m.,
Mountain time, on the Expiration Date, at which time all Warrants evidenced
hereby, unless exercised prior thereto, shall thereafter be void. The Warrants
evidenced by this Warrant Certificate are part of a duly authorized issue of
Warrants issued pursuant to a certain Warrant Agreement, which Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the Holder (the
word "Holder" meaning the registered Holder) of the Warrants. The Warrant
Agreement provides that upon the occurrence of certain events, the Exercise
Price and the type and/or number of the Company's securities issuable thereupon
may, subject to certain conditions, be adjusted. In such event, the Company
will, at the request of the Holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificate shall not in any way
change, alter, or otherwise impair, the rights of the Holder as set forth in the
Warrant Agreement. Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer. Upon the
exercise of less than all of the Warrants evidenced by this Certificate, the
Company shall forthwith issue to the Holder hereof a new Warrant Certificate
representing such number of unexercised Warrants. The Company may deem and treat
the registered Holder(s) hereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, and of any distribution
to the Holder(s) hereof, and for all other purposes, and the Company shall not
be affected by any notice to the contrary. All terms used in this Warrant
Certificate which are defined in the Warrant Agreement shall have the meanings
assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed.
Dated as of March ___, 2002.
RUNCORP, INC.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Operating Officer
[Form Of Election To Purchase]
The Undersigned Hereby Irrevocably Elects To Exercise The Right,
Represented By This Warrant Certificate, To Purchase __________ Common Shares
And Herewith Tenders In Payment For Such Securities A Certified Check Or
Official Bank Check Payable To The Order Of Runcorp, Inc. In The Amount Of
$___________, All In Accordance With The Terms Of Section 4 Of The Warrant
Agreement Dated As Of March ___, 2002, Between Runcorp, Inc. And The Undersigned
(Or Its Assignor). The Undersigned Requests That A Certificate For Such
Securities Be Registered In The Name Of
___________________________________________ Whose Address Is
__________________________________________________________________ And That Such
Certificate Be Delivered To __________________________________________ Whose
Address Is __________________________________________________.
Dated:
Signature: (Signature Must Conform In All Respects To Name Of Holder As
Specified On The Face Of The Warrant Certificate.)
(Social Security Or Other Identifying Number Of Holder)
[Form Of Assignment]
(To Be Executed By The Registered Holder If Such Holder Desires To
Transfer The Warrant Certificate.)
For Value Received, ____________________________ Hereby Sells, Assigns
And Transfers Unto
(Please Print Name And Address Of Transferee) This Warrant Certificate, Together
With All Right, Title And Interest Therein, And Does Hereby Irrevocably
Constitute And Appoint Attorney, To Transfer The Within Warrant Certificate On
The Books Of The Within-Named Company, With Full Power Of Substitution.
Dated:
Signature: (Signature Must Conform In All Respects To Name Of Holder As
Specified On The Face Of The Warrant Certificate.)
Social Security Or Other Identifying Number Of Assignee: