PREPAID TELECOM CORPORATION
WARRANT AGREEMENT
FOR CLASS A COMMON STOCK PURCHASE WARRANTS
DATED AS OF _______________
TABLE OF CONTENTS
Page
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I ISSUANCE AND EXECUTION OF CLASS ___ WARRANTS
1.01 Appointment of Warrant Agent . . . . . . . . . . . 1
1.02 Form of Warrant . . . . . . . . . . . . . . . . . . 1
ARTICLE II EXERCISE PRICE, TERM, METHOD OF EXERCISE
2.01 Exercise Price . . . . . . . . . . . . . . . . . . . 2
2.02 Warrant Rights and Term . . . . . . . . . . . . . . 2
2.03 Expiration . . . . . . . . . . . . . . . . . . . . . . 2
2.04 Method of Exercise . . . . . . . . . . . . . . . . . 2
2.05 Method of Redemption . . . . . . . . . . . . . . . . 3
2.06 Reduction of Exercise Price . . . . . . . . . . . . 3
ARTICLE III ADJUSTMENTS TO CLASS ___ WARRANTS UPON CERTAIN EVENTS
3.01 Adjustment of Purchase Price and Number of 3
Shares Purchasable . . . . . . . . . . . . . . . . 5
3.02 Notice of Adjustment. . . . . . . . . . . . . . . . 5
3.03 Notice of Certain Events . . . . . . . . . . . . .
3.04 Effect of Adjustment on Warrant
Certificate . . . . . . . . . . . . . . . . . . . . 6
3.05 Company Not Responsible for
Adjustment . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV RIGHTS OF WARRANT HOLDERS
4.01 No Right of Stockholders . . . . . . . . . . . . . 6
4.02 Lost Warrants. . . . . . . . . . . . . . . . . . . . 7
4.03 Maintenance of Sufficient and Proper
Shares of Common Stock . . . . . . . . . . . . . 7
4.04 Fractional Shares of Warrants . . . . . . . . . . . 8
4.05 Registered Holder as Owner . . . . . . . . . . . . 9
4.06 Exchange and Transfer of
Warrants . . . . . . . . . . . . . . . . . . . . . . 9
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ARTICLE V THE WARRANT AGENT
5.01 Additional Warrant Agents . . . . . . . . . . . . . 10
ARTICLE VI GENERAL
6.01 Canceled Warrants . . . . . . . . . . . . . . . . . 10
6.02 Taxes on Issuance of Shares of
Common Stock . . . . . . . . . . . . . . . . . . . 10
6.03 Dates and Times . . . . . . . . . . . . . . . . . . 10
6.04 Amendments to Warrant Agreement. . . . . . . . . . 10
6.05 Binding Agreement 10
6.06 Copies of Agreement with Warrant
Agent . . . . . . . . . . . . . . . . . . . . . . . 11
6.07 Notices . . . . . . . . . . . . . . . . . . . . . . . 11
6.08 Governing Law. . . . . . . . . . . . . . . . . . . . 11
6.09 Headings. . . . . . . . . . . . . . . . . . . . . . . 11
6.10 Counterparts. . . . . . . . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Form of Warrant Certificate. . . . . . . . . . . . . . . . . . Exhibit A
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CLASS ___ WARRANT AGREEMENT
THIS AGREEMENT is dated as of ___________, 2001, by and between PREPAID
TELECOM CORPORATION, a Nevada corporation (the "Company"), and the holders
listed on Schedule 1 hereto, with reference to the following recitals:
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Registration Statement on Form SB-2 dated _______,
200__, the Company is selling units, each unit consisting of (1) one share of
common stock, par value $.001 per share ("Common Stock"), (2) one Class A
redeemable warrant to purchase one (1) share of Common Stock at a purchase price
of $0.50 per share ("Class A Warrant"), (3) one Class B redeemable warrant to
purchase one (1) share of Common Stock at a purchase price of $0.50 per share
("Class B Warrant"), (4) one Class C redeemable warrant to purchase one (1)
share of Common Stock at a purchase price of $0.50 per share ("Class C
Warrant"), and (5) one Class D redeemable warrant to purchase one (1) share of
Common Stock at a purchase price of $0.50 per share ("Class D Warrant").
WHEREAS, owners of the Class ___ Warrants shall have certain rights as
specified herein; and
WHEREAS, each Class ___ Warrant issued under this Agreement entitles the
holder thereof to purchase one share of Common Stock at the price designated as
the "Exercise Price" herein (subject to adjustment hereunder);
NOW THEREFORE, in consideration of the mutual agreements contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND EXECUTION OF CLASS ___ WARRANTS
Section 1.01. Appointment of Warrant Agent. The Company shall act as
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Warrant Agent in accordance with the terms hereof.
Section 1.02. Form of Warrant. Each Class ___ Warrant shall be
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evidenced by a certificate ("Warrant Certificate"). The text of each Warrant
Certificate (and the related forms of exercise and assignment) shall be
substantially in the form attached hereto as Exhibit "A" and may have such
identification, designation, and information thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of the National Association of
Securities Dealers, Inc., or any stock exchange on which the Class ___ Warrants
may be listed, or to conform to usage.
Warrant Certificates shall be executed on behalf of the Company by its
President or any Vice President and by its Secretary or an Assistant Secretary.
Each Warrant Certificate shall be dated the date of its initial issuance.
Warrant Certificates shall be executed on behalf of the Company manually and
shall have the Company's seal or a facsimile thereof affixed or imprinted
thereon. In case any officer whose signature has been placed upon any Warrant
Certificate ceases to be such before such Warrant Certificate is issued, it may
be issued with the same effect as if such officer had not ceased to be such at
the date of issuance.
ARTICLE II
EXERCISE PRICE, TERM, AND METHOD OF EXERCISE
Section 2.01. Exercise Price. Unless adjusted as otherwise provided
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herein, the exercise price ("Exercise Price") of each Warrant issued hereunder
shall be $0.50 per share. The Exercise Price may be adjusted by the Company
pursuant to Section 2.06 and shall be adjusted upon the occurrence of certain
events as set forth in Article III hereof.
Section 2.02 Warrant Rights and Term. Each Class ___ Warrant shall
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entitle the person in whose name the Warrant Certificate shall then be
registered on the books maintained by the Company ("Warrant Holder"), upon
exercise thereof and subject to the provisions thereof and of this Agreement,
including provisions relating to adjustments, to purchase from the Company one
fully paid and non-assessable share of Common Stock at the then Exercise Price,
at any time on and after the date hereof until the expiration of the Warrant at
5:00 p.m., Houston time, on ______, 2001.
Section 2.03. Expiration. Each Class ___ Warrant not exercised by 5:00
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p.m., Houston time, on the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement shall
thereupon cease.
Section 2.04. Method of Exercise. The Warrant Holder may exercise his
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rights with respect to all or any whole number of Class ___ Warrants evidenced
by a Warrant Certificate, provided that (except as provided in Section 4.04),
Class ___ Warrants shall not be exercisable for other than a whole number of
shares of Common Stock. Exercise shall be effected by surrender of the Warrant
Certificate, with the exercise form thereon duly executed, to the Company at its
offices as designated in Section 6.07 hereof, together with the Exercise Price
for each share of Common Stock to be purchased. Payment of the Exercise Price
shall be made in lawful money of the United States of America by cashier's
check, certified check, federal funds or clearing house check, payable to the
order of the Company.
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Upon receipt of a Warrant Certificate with the exercise form duly executed
and accompanied by full and proper payment of the Exercise Price for the shares
of Common Stock purchased thereby, the Company (after requisitioning any
certificates for shares of Common Stock from the Company's transfer agent, if
necessary) shall deliver to the Warrant Holder certificates for the total number
of whole shares of Common Stock for which the Class ___ Warrants evidenced by
such Warrant Certificate are being exercised in such names and denominations as
the Warrant Holder has directed; provided, however, that if, on the date of
surrender of such Warrant Certificate and payment of the Exercise Price, the
transfer books for the Common Stock shall be closed, the certificates for the
shares of Common Stock shall be issuable as of the date on which such books
shall next be open (whether before, on, or after the Expiration Date) at the
Exercise Price and upon the other conditions in effect on the date of such
surrender.
In the event that any Warrant Holder shall exercise rights with respect to
less than all of the Class ___ Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Class ___ Warrants, a new Warrant Certificate
for the balance of such Class ___ Warrants shall be countersigned and delivered
to, or in accordance with the instructions of, such Warrant Holder.
Section 2.05. Method of Redemption. If the closing bid price of the
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Common Stock shall have equaled or exceeded $0.50 per share for ten (10) days
during twenty (20) consecutive trading days at any time during the term hereof,
the Company may, in its sole discretion, redeem the Class ___ Warrants by paying
Warrant Holders $.01 per Class ___ Warrant, provided such notice is mailed to
all Class ___ Warrant Holders not later than twenty (20) days after the end of
such period and prescribes a redemption date at least thirty (30) days
thereafter. Warrant Holders will be entitled to exercise Class ___ Warrants at
any time up to the business day next preceding the redemption date.
Section 2.06. Reduction of Exercise Price. The Board of Directors
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retains the right to reduce the Exercise Price of the Class ___ Warrants.
ARTICLE III
ADJUSTMENTS TO CLASS ___ WARRANTS UPON CERTAIN EVENTS
Section 3.01. Adjustment of Exercise Price and Number of Shares
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Purchasable. The Exercise Price and the number of Shares are subject to
adjustment from time to time as set forth in this Section 3.01.
(a) In case the Company shall at any time after the date of this
Agreement (i) declare a dividend on the Common Stock in shares of its capital
stock, (ii) subdivide the outstanding shares, (iii) combine the outstanding
Common Stock into a smaller number of Common Stock, or (iv) issue any shares of
its capital stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then in each case the Exercise Price,
and the number and kind of shares receivable upon exercise, in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be proportionately adjusted
so that the holder of any Class ___ Warrant exercised after such time shall be
entitled to receive the aggregate number and kind of shares which, if such Class
___ Warrant had been exercised immediately prior to such time, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. Such adjustment shall
be made successively whenever any event listed above shall occur.
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(b) No adjustment in the Exercise Price shall be required if such
adjustment is less than $.05; provided, however, that any adjustments which by
reason of this subsection (b) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 3.01 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Exercise Price as a result of the
calculations made in subsection (a) of this Section 3.01, each Class ___ Warrant
outstanding prior to the making of the adjustment in the Exercise Price shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of Shares (calculated to the nearest thousandth) obtained by (i)
multiplying the number of Shares purchasable upon exercise of a Class ___
Warrant immediately prior to adjustment of the number of Shares by the Exercise
Price in effect prior to adjustment of the Exercise Price and (ii) dividing the
product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(d) In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in subsection (a) of this Section 3.01), or in the case
of the consolidation of the Company with or the merger of the Company into any
other corporation or of the sale, transfer, or lease of the properties and
assets of the Company as, or substantially as, an entirety to any other
corporation, each Class ___ Warrant shall after such capital reorganization,
reclassification of the Common Stock, consolidation, merger, sale, transfer, or
lease be exercisable, upon the terms and conditions specified in this Agreement,
for the number of shares of stock or other securities, assets, or cash to which
a holder of the number of shares of Common Stock purchasable (at the time of
such capital reorganization, reclassification of shares, consolidation, merger,
sale, transfer, or lease) upon exercise of such Class ___ Warrant would have
been entitled upon such capital reorganization, reclassification of the Common
Stock, consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Section 3.01 with respect to the
rights and interests thereafter of the holders of the Class ___ Warrants shall
be appropriately adjusted so as to be applicable, as nearly as may reasonably
be, to any shares of stock or other securities, assets, or cash thereafter
deliverable upon the exercise of the Class ___ Warrants. The subdivision or
combination of the Common Stock at any time outstanding into a greater or lesser
number of shares shall not be deemed to be a reclassification of the Common
Stock for the purposes of this paragraph. The Company shall not effect any such
consolidation, merger, transfer, or lease, unless prior to or simultaneously
with the consummation thereof, the successor corporation (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing, receiving, or leasing such assets or other appropriate corporation
or entity shall assume, by written instrument executed and delivered to the
Warrant Holder, the obligation to deliver to the Warrant Holder such shares of
stock, securities, or assets as, in accordance with the foregoing provisions,
such holders may be entitled to purchase, and to perform the other obligations
of the Company under this Warrant Agreement.
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Section 3.02. Notice of Adjustment. Whenever the Exercise Price is
----------------------
adjusted as provided in this Warrant Agreement:
(a) the Company shall compute the adjusted Exercise Price and the
number of shares of Common Stock issuable upon exercise of a Class ___ Warrant
and shall prepare a notice signed by its Treasurer or Secretary setting forth
the adjusted Exercise Price and the adjusted number of shares of Common Stock
issuable upon the exercise of a Class ___ Warrant or the number of Class ___
Warrants into which each outstanding Class ___ Warrant will be changed, if
applicable. Such notice shall show in reasonable detail the facts (and
computations) upon which such adjustment is based.
(b) the Company shall cause to be mailed to each Warrant Holder in
accordance with the provisions of Section 6.07 a notice stating that the
Exercise Price has been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of shares of Common Stock issuable upon the exercise of
a Class ___ Warrant or the number of Class ___ Warrants into which each
outstanding Class ___ Warrant will be changed, if applicable.
Section 3.03. Notice of Certain Events. In the event that any time
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after the date of this Agreement:
(a) the Company shall adopt a dividend policy, change a previously
adopted dividend policy, or declare a dividend in the absence of, or in conflict
with, a dividend policy or declare any distribution with respect to the Common
Stock; or
(b) the Company shall offer for subscription to the holders of the
Common Stock any additional shares of stock of any class or any other securities
convertible into Common Stock or any rights to subscribe thereto; or
(c) the Company shall declare any stock split, stock dividend,
subdivision, combination, or similar distribution with respect to the Common
Stock, regardless of the effect of any such event on the outstanding number of
shares of Common Stock; or
(d) there shall be any consolidation, reclassification, or merger of
the Company with another corporation (other than a merger with a subsidiary in
which merger the Company is the continuing corporation and which does not result
in any reclassification or change of the shares of Common Stock issuable upon
exercise of the Class ___ Warrant); or
(e) there shall be a voluntary or involuntary dissolution, liquidation,
or winding up of the Company;
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(each such event hereinafter being referred to as a "Notification Event"), the
Company shall cause to be mailed to each Warrant Holder, not later than the
earlier of the date public announcement of the Notification Event is first made
or the date 20 days prior to the record date, if any, in connection with such
Notification Event, written notice specifying the nature of such event and the
effective date of, or the date on which the books of the Company shall close or
a record shall be taken with respect to, such event. Such notice shall also set
forth facts indicating 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 of stock or other securities or property deliverable upon
exercise of the Class ___ Warrants. The failure to give the notice required by
this Section 3.03 shall not affect the legality or validity of any such
Notification Event.
Section 3.04. Effect of Adjustment on Warrant Certificates. The form
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of Warrant Certificate need not be changed because of any change in the Exercise
Price, the number of shares of Common Stock issuable upon the exercise of a
Class ___ Warrant, or the number of Class ___ Warrants outstanding pursuant to
this Article and Warrant Certificates issued before or after such change may
state the same Exercise Price, the same number of Class ___ Warrants, and the
same number of shares of Common Stock issuable upon exercise of Class ___
Warrants as are stated in the Warrant Certificates theretofore issued pursuant
to this Agreement. The Company may, however, at any time, in its sole
discretion, make any change in the form of Warrant Certificate that it may deem
appropriate and that does not affect the substance thereof, and any Warrant
Certificates thereafter issued or countersigned, whether in exchange or
substituted for an outstanding Warrant Certificate or otherwise, may be in the
form as so changed.
Section 3.05. Company Not Responsible for Adjustment. The Company
------------------------------------------
shall have the right, but shall not at any time be under any duty or
responsibility to any Warrant Holder, to determine whether such facts exist
which may require any adjustment in the Exercise Price of, or the shares of
Common Stock issuable upon exercise of, the Class ___ Warrants or to make
inquiry or take other action with respect to the nature or extent of any such
adjustments, when made, or with respect to the method employed in making the
same. The Company shall not be accountable with respect to the validity or
value or the kind or amount of any shares of Common Stock or of any securities
or property which may at any time be issued or delivered upon the exercise of
any Class ___ Warrant, and makes no representation with respect thereto.
ARTICLE IV
RIGHTS OF WARRANT HOLDERS
SECTION 4.01. No Rights of Stockholders. No Warrant Holder, as such,
--------------------------
shall be entitled to vote or to receive dividends or shall otherwise be deemed
to be the holder of shares of Common Stock for any purpose, nor shall anything
contained herein or in any Warrant Certificate be construed to confer upon any
Warrant Holder, as such, any of the rights of a stockholder of the Company or
any right to vote upon or give or withhold consent to any action of the Company
(whether upon any reorganization, issuance of securities, reclassification or
conversion of Common Stock, consolidation, merger, sale, lease, conveyance, or
otherwise), receive notice of meetings or other action affecting stockholders
(except for notices expressly provided for in this Agreement) or receive
dividends or subscription rights, until such Warrant Certificate shall have been
surrendered for exercise accompanied by full and proper payment of the Exercise
Price as provided in this Agreement and shares of Common Stock thereunder shall
have become issuable and until such person shall have been deemed to have become
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a holder of record of such shares. If, the date of surrender of such Warrant
Certificate and payment of such Exercise Price, the transfer books for the
Common Stock shall be closed, certificates for the shares of Common Stock shall
be issuable on the date on which such books shall next be open (whether before,
on, or after the Expiration Date) and until such date, the Company shall be
under no duty to deliver any certificate for such shares of Common Stock. No
Warrant Holder shall, upon the exercise of Class ___ Warrants, be entitled to
any dividends if the record date with respect to payment of such dividends shall
be a date prior to the date such shares of Common Stock became issuable upon the
exercise of such Class ___ Warrants.
Section 4.02. Lost Class ___ Warrants. If any Warrant Certificate is
------------------------
lost, stolen, mutilated, or destroyed, the Company may, upon receipt of evidence
satisfactory to the Company of such loss, theft, mutilation, or destruction and
on such terms as to indemnity or otherwise as the Company may in its discretion
impose (which shall, in the case of a mutilated Warrant Certificate, include the
surrender thereof), issue a new Warrant Certificate of like denomination and
tenor as the lost, stolen, mutilated, or destroyed Certificate. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay any such reasonable charges as the Company may
prescribe. In the event any Warrant Certificate is lost, stolen, mutilated, or
destroyed, and the owner thereof desires to exercise the Class ___ Warrants
evidenced thereby, the Company may, in lieu of issuing a substitute Warrant
Certificate, exercise or authorize the exercise thereof upon receipt of the
above evidence and on such terms of indemnity as it may require.
Section 4.03. Maintenance of Sufficient and Proper Shares of Common
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Stock.
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(a) The Company shall at all times reserve and keep available a number
of authorized shares of Common Stock sufficient to permit the exercise in full
of all outstanding Class ___ Warrants and will cause to be available a
sufficient number of certificates therefor.
(b) If at any time hereafter the Common Stock shall become listed on a
national securities exchange, prior to the issuance of any shares of Common
Stock upon the exercise of Class ___ Warrants, the Company shall use its best
efforts to secure the listing of such shares of Common Stock upon any and all
such securities exchanges.
(c) If at any time the taking of any action would cause an adjustment
in the Exercise Price so that the exercise of a Class ___ Warrant while such
Exercise Price is in effect would cause a share of Common Stock to be issued at
a price below its then par value, the Company shall take such action as may, in
the opinion of its counsel, be necessary in order that it may validly and
legally issue fully paid and non-assessable shares of Common Stock upon the
exercise of the Class ___ Warrants at such Exercise Price.
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(d) Subject to the restrictions on transfer referred to in Section
4.06, if any shares of Common Stock issuable upon the exercise of the Class ___
Warrants require registration or approval of any governmental authority, or the
taking of any other action under the laws of the United States or any political
subdivision thereof or any other jurisdiction before such shares of Common Stock
may be legally and validly issued, then the Company shall in good faith and with
reasonable diligence endeavor to secure such registration or approval or to take
such other actions as may be appropriate to allow for the lawful issuance of
shares of Common Stock upon exercise of the Class ___ Warrants, provided that no
shares of Common Stock shall be issued for the period during which the Company
is endeavoring to obtain such registration or approval or is taking such other
action. Warrant Holders may exercise Class ___ Warrants during any such period
as provided herein and shall be entitled to the issuance of the shares of Common
Stock on such date as the shares of Common Stock may be legally and validly
issued, at the Exercise Price and upon the other conditions in effect on the
date of surrender of the Warrant Certificates accompanied by full and proper
payment for the shares of Common Stock.
Section 4.04. Fractional Shares of Class ___ Warrants.
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(a) Anything contained herein to the contrary notwithstanding, the
Company shall not be required to issue any fraction of a share of Common Stock
in connection with the exercise of Class ___ Warrants. Class ___ Warrants may
not be exercised in such number as would result (except for the provisions of
this Section) in the issuance of a fraction of a share of Common Stock, unless
the Warrant Holder is presenting for exercise Warrant Certificates representing
all Class ___ Warrants then owned of record by such Warrant Holder. In such
event, the Company shall, upon the exercise of all of such Class ___ Warrants,
issue to such Warrant Holder the largest aggregate whole number of shares of
Common Stock called for thereby upon receipt of the Exercise Price for all of
such Class ___ Warrants and pay a sum in cash equal to the remaining fraction of
a share of Common Stock, multiplied by its fair market value as of the first
business day preceding the date on which the Class ___ Warrants are presented
for exercise. Such fair market value shall be (1) the average of the high and
low bid prices of the Common Stock, as reported by the National Association of
Securities Dealers Automated Quotation System on such date, or (2) if the Common
Stock is then listed on a national securities exchange or the national market
system of the over-the-counter market, the closing price of the Common Stock on
such exchange on such date, or (3) if the Common Stock is not trading on an
exchange, or an over-the-counter market, then as determined by the Board of
Directors. Every Warrant Holder, by the acceptance of the Warrant Certificate,
expressly waives any right to exercise Class ___ Warrants for a fractional share
of Common Stock except as provided in this subsection.
(b) Anything herein to the contrary notwithstanding, the Company shall
not be required to issue fractions of Class ___ Warrants on any distribution of
Class ___ Warrants to Warrant Holders or to distribute Warrant Certificates that
evidence fractional Class ___ Warrants nor shall the Company be required to make
any cash adjustment with respect to a fractional interest in a Warrant. Any
person entitled to a fractional interest in a Warrant may elect, during such
period of time (not in excess of 90 days) from the date such fractional interest
is acquired, as the Company shall determine, to purchase the additional
fractional interest required to make up a full Warrant or to sell the fractional
interest to which such person is entitled. Such election shall be made on the
form provided for such purpose by the Company. If such election is not made in
the time prescribed by the Company, the fractional interest to which such person
is entitled shall be sold. Such purchase or sale shall be effected in the
manner set forth in subsection (c) of this Section by the Company, acting as
agent for the person entitled to such fractional interest.
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(c) The Company shall ▇▇▇▇ each person entitled to a fractional
interest in Class ___ Warrants for the cost of any such fractional interest
purchased by it as agent for such person or shall remit to such person the
proceeds of the sale of any such fractional interest sold by it as such agent.
In the case of a purchase, the Company may sell the Class ___ Warrant to which
such person is entitled if payment is not received by the Company within 30 days
after the mailing of such ▇▇▇▇ and, after deducting the amount of such ▇▇▇▇ and
any other charges, shall remit the balance, if any, to such person. Fractional
interests in Class ___ Warrants shall be nontransferable except by or to the
Company acting as herein authorized. The Company may purchase or sell
fractional interests on the basis of market prices of the Class ___ Warrants, as
determined by the Company in its sole discretion, and it is expressly authorized
to value fractional interests without actual purchase or sale on the basis of
the market price of the Class ___ Warrants as determined by it in its sole
discretion. Purchase and sales of fractional interests by the Company may, in
its sole discretion, be set off against each other on the basis of market prices
of the Class ___ Warrants, as determined by the Company in its sole discretion.
Section 4.05. Registered Holder as Owner. Every holder of a Warrant
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Certificate, by accepting the same, consents and agrees with the Company, and
every subsequent holder of such Warrant Certificate that until the Warrant
Certificate is transferred on the books of the Company, the Company may treat
the registered Warrant Holder as the absolute owner thereof for all purposes,
notwithstanding any notice to the contrary.
Section 4.06. Exchange and Transfer of Class ___ Warrants. Warrant
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Certificates may be split-up, combined, or exchanged at any time for other
Warrant Certificates evidencing a like aggregate whole number of Class ___
Warrants and may be transferred in whole or in part. Any Warrant Holder
desiring to split-up, combine, or exchange Warrant Certificates shall make such
request in writing delivered to the Company as provided by Section 6.07 and
shall surrender therewith the Warrant Certificate or Certificates to be so
split-up, combined, or exchanged. Subject to the restrictions on transfer of
the Class ___ Warrants contained in the applicable federal or state securities
laws, transfers of outstanding Warrant Certificates may be effected by the
Company, from time to time, upon the books to be maintained by the Company for
that purpose, upon surrender of the Warrant Certificates to the Company as
provided by Section 6.07, which Certificates must be properly endorsed or
accompanied by appropriate instruments of transfer and written instructions for
transfer, all in form satisfactory to the Company. Upon any such surrender for
a split-up, combination, exchange, or transfer, the Company shall countersign
and deliver to the person entitled thereto a Warrant Certificate or Warrant
Certificates as so requested. The Company shall not be required to effect any
transfer, split-up, or exchange that will result in the issuance of a Warrant
Certificate evidencing other than a whole number of Class ___ Warrants.
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ARTICLE V
THE WARRANT AGENT
Section 5.01. Additional Warrant Agents. The Company may designate one
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or more corporations as a successor Warrant Agent, or as additional Warrant
Agents to perform, either jointly or in place of the Company.
ARTICLE VI
GENERAL
Section 6.01. Canceled Class ___ Warrants. The Company shall cancel
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any Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, or for split-up, combination, exchange, or
substitution and shall deliver to the Company, in a manner satisfactory to the
Company, such canceled Warrant Certificates.
Section 6.02. Taxes on Issuance of Shares of Common Stock. The Company
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shall from time to time promptly pay all taxes and charges that may be imposed
upon the Company with respect to the issuance or delivery of shares of Common
Stock upon the exercise of Class ___ Warrants, but the Company shall not be
obligated to pay any transfer taxes with respect to the issuance or delivery of
the Warrant Certificates or shares of Common Stock in a name other than that of
the Warrant Holder. The Company shall be authorized to charge Warrant Holders a
transfer fee of up to $7.50 per certificate.
Section 6.03. Dates and Times. If any date set forth in this Warrant
----------------
Agreement shall fall on a day other than a full business day in Houston, said
date shall be deemed to be the next business day succeeding that date. All
times shall be the legal time then in effect in Houston.
Section 6.04. Amendments to Warrant Agreement. The Company may,
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without the consent or concurrence of the Warrant Holders, by supplemental
agreement or otherwise, make any amendments, alterations, deletions, or
corrections in this Agreement that it deem necessary or desirable: (a) to cure
any ambiguity or correct any defect, inconsistency, clerical omission or
mistake, or manifest error contained herein; (b) to confer additional rights
upon the Warrant Holders; or (c) in any other respect that does not adversely
affect the rights of the Warrant Holders hereunder.
Section 6.05. Binding Agreement. All the covenants and provisions of this
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Agreement by or for the benefit of the Company shall bind and inure to the
benefit of the respective successors and assigns hereunder. Nothing expressed
in this Agreement and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon or give to any person
or corporation, other than the Company and the Warrant Holders, any legal or
equitable right, remedy, or claim under or by reason of this Agreement or of any
covenant, condition, stipulation, promise, or agreement herein, and all
covenants, conditions, stipulations, promises, and agreements contained in this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Holders, and their respective successors and assigns.
10
Section 6.06. Copies of Agreement. A copy of this Agreement, as such
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may be amended from time to time, shall be available for inspection by any
Warrant Holder at the office of the Company, as designated in Section 6.07,
during normal business hours. As a condition of such inspection, the Company
may require any such Warrant Holder to submit his or her Warrant Certificate for
inspection.
Section 6.07. Notices. Any communication, notice, or demand to be
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given hereunder shall be duly given if in writing and delivered, or sent by
first class mail, certified or registered, postage prepaid and addressed as
follows:
(a) If to the Company:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Prepaid Telecom Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) If to a Warrant Holder: at such person's last known address as
such shall appear on the registration books maintained by the Company.
Any party may change the address to which any communication, notice,
or demand shall be given by giving notice of such change in conformity with the
provisions of this Section.
Section 6.08. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of Texas.
Section 6.09. Headings. The Article and Section headings herein are
--------
for convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.
Section 6.10. Counterparts. This Agreement may be executed in any
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number of counterparts, each of which so executed shall be deemed to be an
original and all such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the day and year first above written.
11
PREPAID TELECOM CORPORATION
By_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
12
__________
EXHIBIT A
__________
(Form of Warrant Certificate)
No. Number of Class ___ Warrants
__________ ________
VOID AFTER ______ P.M., HOUSTON TIME,
___________ (UNLESS EXTENDED)
PREPAID TELECOM CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This Warrant Certificate certifies that __________________________________,
_______________________, or, subject to certain restrictions on transfer
described in the Warrant Agreement (as hereinafter defined), registered assigns,
is the registered holder of the number indicated above of warrants ("Class ___
Warrants") to purchase shares of common stock, $.001 par value ("Common Stock"),
of Prepaid Telecom Corporation, a Nevada corporation ("Company"). Each Warrant
entitles the holder thereof to purchase from the Company, on or before _________
(subject to extension by the Company), one fully paid and nonassessable share of
Common Stock, upon presentation and surrender of this Warrant Certificate, with
the Subscription Form duly executed, at the corporate office of the Company (as
defined below) and upon proper payment of the Exercise Price. Subject to
adjustment as provided in the warrant agreement between the Company and the
holder hereof ("Warrant Agreement"), the exercise price ("Exercise Price") for
each Warrant evidenced hereby shall be $0.50 per share. Payment of the Exercise
Price shall be made in lawful money of the United States of America by cashier's
check, certified check, federal funds or clearing house check payable to the
Company. This Warrant may be redeemed by the Company as provided for in the
Warrant Agreement. As provided in the Warrant Agreement, the Exercise Price and
the number of shares of Common Stock purchasable upon the exercise of the Class
___ Warrants are, upon the happening of certain events, subject to modification
or adjustment.
References to the Warrant Agent herein shall mean the Company, and any
successor or additional Warrant Agent designated as provided in the Warrant
Agreement.
This Warrant Certificate is subject to all of the terms, provisions, and
conditions of the Warrant Agreement, including the provisions of such Agreement
relating to the amendment thereof, which Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full description of the rights, limitations
of rights, obligations, duties, and immunities of the Company, and the holder of
this Warrant Certificate. Copies of the Warrant Agreement, as such may be
amended from time to time, are available for inspection at the offices of the
Company.
A-1
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender to the Company or any successor or additional Warrant Agent, may be
exchanged for another Warrant Certificate or Warrant Certificates evidencing a
like aggregate number of Class ___ Warrants. If this Warrant Certificate shall
be exercised in part, the holder hereof shall be entitled to receive upon
surrender hereof another Warrant Certificate or Warrant Certificates evidencing
the number of Class ___ Warrants not exercised.
No holder of this Warrant Certificate shall be deemed to be the holder of
Common Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained in
the Warrant Agreement or herein be construed to confer upon the holder of this
Warrant Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any reorganization, issuance of stock,
reclassification or conversion of stock, change of par value, or exchange of
stock to no par value, consolidation, merger, conveyance, or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until this Warrant Certificate shall have been exercised and the
Common Stock purchasable upon the exercise hereof shall have become issuable as
provided in the Warrant Agreement.
Every holder of this Warrant Certificate, by accepting the same, consents
and agrees with the Company and with every other holder of a Warrant Certificate
that:
(a) subject to the restrictions on transfer described in the Warrant
Agreement, this Warrant Certificate is transferable by the registered holder
hereof in person or by attorney duly authorized in writing, at the principal
corporate office of the Company, in whole or in part;
(b) anything herein to the contrary notwithstanding, in no event shall
the Company be obligated to issue Warrant Certificates evidencing other than a
whole number of Class ___ Warrants or issue certificates evidencing other than a
whole number of shares of Common Stock upon the exercise of this Warrant
Certificate; and
(c) the Company may deem and treat the person in whose name this
Warrant Certificate is registered as the absolute, true, and lawful owner hereof
for all purposes whatsoever, and the Company shall not be affected by any notice
to the contrary.
WITNESS the signatures of the proper officers of the Company.
Date:_______________________ PREPAID TELECOM CORPORATION
By__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Attest:_____________________________
Secretary
A-2
Countersigned:______________________
A-3
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Class ___ Warrant)
To Prepaid Telecom Corporation:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________* shares of Common Stock of Prepaid Telecom
Corporation and herewith makes payment of $_______________ therefor, and
requests that the certificate or certificates for such shares be issued in the
name of and delivered to the undersigned.
Dated:______________
_____________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the enclosed Warrant)
_____________________________________________
(Address)
___________________________
(*) Insert here the number of shares called for on the face of the Warrant or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised, in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant Agreement pursuant to which the Warrant was granted, may be
delivered upon exercise.
FORM OF ASSIGNMENT
(To be signed only upon assignment of Class ___ Warrant)
For value received and subject to the restrictions on transfer described in
the Warrant Agreement under which this Warrant was issued,
___________________________________ hereby sells, assigns, and transfers unto
_________________________________________ Class ___ Warrants represented by the
within Warrant Certificate, together with all right, title, and interest
therein, and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer such Class ___ Warrants on
the books of the within named corporation, with full power of substitution.
Dated _________________________, 200__
_________________________________________
Signature of Warrant Holder
_________________________________________
Printed Name of Warrant Holder
=====================================================
Note: The above signature must correspond with the name as written upon the
face of this Warrant in every particular, without any change whatsoever.
TRANSFER FEE: $__________ Per Certificate