EXHIBIT 2
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE OKLAHOMA SECURITIES ACT OR THE
SECURITIES LAWS OF ANY OTHER STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND/OR THE SECURITIES LAWS OF ANY OTHER STATE OR AN OPINION OF COUNSEL OR OTHER
DOCUMENTATION SATISFACTORY TO XXXX X. XXXXXX THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR ACTS.
WARRANT AGREEMENT
(TRANSFEREE OF PAVILION CAPITAL PARTNERS)
THIS WARRANT AGREEMENT (this "Agreement") is made and entered into this
4th day of April, 2002 by and between XXXX X. XXXXXX, an individual ("Kruger")
whose address for purposes of notice under this Agreement is 0000 Xxxxx XxXxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, and XXXXXX X. XXXX, an individual
("Xxxx") whose address for purposes of notice under this Agreement is 0000
Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000.
WHEREAS, on Xxxxx 0, 0000, Xxxxxx and Xxxxx Xxxxxx in her capacity as
guardian for Xxxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx, enter into Warrant
Agreements (the "Initial Warrant Agreements") to purchase up to Two Hundred
Thousand (200,000) shares of Precis Common Stock on the same terms and
conditions set forth in this Agreement;
WHEREAS, on March 27, 2002, Xxxxx Xxxxxx in her capacity as guardian for
Xxxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxx Xxxxxx assigned that portion of the
Initial Agreement to permit Pavilion Capital Partners, Ltd. to purchase up to
Ninety-Nine Thousand (99,000) shares of Precis Common Stock;
WHEREAS, on March 27, 2002, Palmeria Capital Partners, Ltd. assigned to
Pavilion its rights to purchase up to One Thousand (1,000) shares of Precis
Stock;
WHEREAS, on this date, Pavilion Capital Partners, Ltd. assigned to Xxxx
its rights to purchase up to One Hundred Thousand (100,000) shares of Precis
Stock;
WHEREAS, pursuant to these assignments on this date, Xxxx has the right to
purchase up to One Hundred Thousand (100,000) shares of Precis Common Stock, and
Kruger and Xxxx pursuant to Section 4.2 of the above-mentioned execute this
Warrant Agreements to give effect to the transfer and evidence Xxxx'x right to
purchase such shares of Precis Common Stock;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement and for value received, Kruger and
Pavilion agree as follows:
SECTION 1. GRANT OF RIGHT TO ACQUIRE PRECIS COMMON STOCK. Subject to the
terms and conditions of this Agreement and in reliance upon the representations,
warranties, covenants and agreements contained in this Agreement, Xxxx or any
subsequent holder or holders of the rights under this Agreement by virtue of
assignment or transfer (the "Holder") is entitled to acquire, subject to the
provisions of this Agreement, from Kruger up to One Hundred Thousand (100,000)
shares of Precis Common Stock (the "Stock") for Fifty Cents ($.50) per share
(the "Exercise Price"). With the exception of any adjustments pursuant to
Section 5 of this Agreement, the Stock transferrable upon exercise of the
Holder's right under this Agreement shall be in all respects identical to the
Precis Common Stock issued and outstanding as of the date hereof. The shares of
Stock (including cash, property and stock dividends paid on or with respect to
the Stock) and other securities deliverable upon the exercise of the Holder's
rights under this Agreement, as adjusted from time to time, are hereinafter
sometimes referred to as the
"Warrant Securities." Unless the context otherwise requires, the term
"Warrant" as used herein refers to the right to acquire the Stock pursuant to
this Warrant Agreement and any other warrant agreement or agreement that may
be executed and delivered pursuant to the provisions of this Agreement,
whether upon transfer, assignment, partial exercise, divisions, combinations,
exchange or otherwise, and the term "Holder" includes any registered
transferee or transferees or registered assignee or assignees of Holder, who
in each case shall be subject to the provisions of this Warrant Agreement,
and when used with reference to Warrant Securities, means the holder or
holders of the Warrant Securities.
SECTION 2. EXERCISE OF WARRANT. Subject to the provisions of this
Agreement, the Holder shall be have the right to exercise the Warrant to acquire
the Warrant Securities, in whole or in part at any time and from time to time,
during the period commencing on December 31, 2001 and ending at 5:00 p.m.,
Norman, Oklahoma time, on December 31, 2010 (the "Expiration Date"). The Warrant
may be exercised pursuant to one or more of the following methods:
(i) CASH METHOD OF ACQUISITION. The presentation and surrender to
Kruger of this Agreement, accompanied by the Purchase Form (Cash Payment)
annexed hereto duly executed and accompanied by payment of the Exercise
Price in cash, certified or official bank check payable to the order of
Kruger, in the amount of the Exercise Price for the number of shares of
Stock (or Warrant Securities) specified in the Purchase Form (Cash
Payment); or
(ii) EXCHANGE METHOD OF ACQUISITION. The presentation and surrender
to Kruger of this Agreement, accompanied by the Exchange Form (Exchange
Exercise) annexed hereto duly executed and accompanied by the number of
shares of Precis Common Stock having a Market Value (as defined below) on
the date of exercise equal to the aggregate amount of the Exercise Price
for the number of shares of Stock (or Warrant Securities) specified in the
Exchange Form (Exchange Exercise); or
Upon exercise of the Warrant, Kruger shall deliver to the Holder one or more
certificates for the shares of Stock (or Warrant Securities) as appropriate. If
the Warrant is exercised in part only, Kruger shall, promptly after presentation
of this Agreement upon such exercise or conversion, execute and deliver a new
warrant agreement evidencing the rights of Holder to acquire the balance of the
shares of Stock (or Warrant Securities) upon the same terms and conditions as
herein set forth.
For purposes of this Agreement, "Market Value" shall mean (A) if the
Precis Common Stock (or other Warrant Securities) is listed for trading on a
national or regional stock exchange or is included on the Nasdaq National Market
or SmallCap Market, the closing sale price quoted on such exchange or the Nasdaq
National Market or SmallCap Market which is published in The Wall Street Journal
for the trading day immediately preceding the date of exercise, or if no trade
of the Precis Common Stock (or other Warrant Securities) shall have been
reported on such date, the last sale price so quoted for the next day prior
thereto on which a trade in the Precis Common Stock (or other Warrant
Securities) was so reported or (B) if the Precis Common Stock (or other Warrant
Securities) is not so listed or admitted to trading or included on a national or
regional stock exchange, the Nasdaq National Market or Nasdaq SmallCap Market,
the average of the closing highest reported bid and lowest reported ask price as
quoted on the National Association of Securities Dealer's OTC Bulletin Board or
in the "pink sheets" published by the National Daily Quotation Bureau for the
business day immediately preceding the date of exercise on which the Precis
Common Stock (or other Warrant Securities) is traded or, if no trade of the
Precis Common Stock (or other Warrant Securities) shall have been reported on
such date, the last sale price so quoted for the next day prior thereto on which
a trade in the Precis Common Stock (or other Warrant Securities) was quoted.
SECTION 3. RESERVATION OF SHARES. Kruger shall at all times after December
31, 2001 and until immediately after the earlier of the Expiration Date or full
exercise of the Warrant place in escrow the number of shares of Stock and other
Warrant Securities (accompanied by a fully executed stock power or powers) that
shall be required for transfer and delivery upon exercise of the Warrant in
full. The shares of Stock and other Warrant Securities shall be held in escrow
for the exclusive benefit of Holder and for transfer and delivery upon Holder's
exercise of the
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Warrant. Under the terms of the escrow agreement, the escrow agent shall be
instructed and authorized to transfer the Stock and other Warrant Securities
held in escrow to Holder or Holder's designee upon exercise of the Warrant
upon presentation to and receipt by the escrow agent of the Purchase Form
(Cash Payment) (accompanied by evidence of payment of the Exercise Price) or
Exchange Form (Exchange Exercise) (accompanied by the certificate or
certificates evidencing the Precis Common Stock being exchanged for the
shares of Stock and other Warrant Securities).
SECTION 4. TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT AGREEMENT.
SECTION 4.1 TRANSFERABILITY. This Warrant Agreement may be assigned
or transferred, in whole or in part, as provided herein so long as such
assignment or transfer is in accordance with and subject to the provisions
of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (said Act and such rules and Regulations being
hereinafter collectively referred to as the "Securities Act"). Any
purported transfer or assignment made other than in accordance with this
Section 4 shall be null and void and of no force and effect.
SECTION 4.2 TRANSFER PROCEDURE. Any assignment permitted hereunder
shall be made by surrender of this Agreement to Kruger with the Assignment
Form annexed hereto duly executed and funds sufficient to pay any transfer
tax. In such event Kruger shall, without charge, execute and deliver a new
warrant agreement in the name of the assignee named in the Assignment Form
and designate the assignee as the Holder under the warrant agreement and
this Agreement shall promptly be canceled. This Agreement may be divided
or combined with other warrant agreement that carry the same rights by
presentation of this Agreement to Kruger together with the Assignment Form
signed by Holder, specifying the names and denominations in which the new
warrant agreements are to be issued.
SECTION 4.3 LOSS OR DESTRUCTION OF THIS AGREEMENT. Upon receipt by
Kruger of evidence satisfactory to him of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification to Kruger or (in
the case of mutilation) presentation of this Agreement for surrender and
cancellation, Kruger will execute and deliver a new warrant agreement of
like tenor and date and this lost, stolen, destroyed or mutilated
Agreement shall thereupon become void. This Agreement may be exchanged at
the option of the Holder for another warrant agreement or agreements of
exercisable for different denominations of the Stock or Warrant
Securities, of like tenor and evidencing in the aggregate the number of
shares of Stock or Warrant Securities acquirable pursuant to this
Agreement, upon surrender of this Agreement, with the Assignment Form duly
filled in and executed, to Kruger, at any time or from time to time after
the close of business on the date hereof and prior to the close of
business on the Expiration Date. Kruger shall promptly cancel this
Agreement upon surrender and deliver the new warrant agreements pursuant
to the provisions of this Section 4.3.
SECTION 5. ADJUSTMENT IN THE NUMBER, KIND AND PRICE OF WARRANT SECURITIES.
The number and kind of Warrant Securities acquirable upon exercise of the
Warrant shall be subject to adjustment from time to time upon the occurrence,
after the date hereof, of the following events:
SECTION 5.01 DIVIDENDS AND STOCK SPLITS. In the event Precis shall
(i) pay a dividend in, or make a distribution of, cash, property or shares
of Precis Common Stock or of capital stock convertible into Precis Common
Stock on its outstanding shares of Precis Common Stock, (ii) subdivide
(forward split) its outstanding shares of Precis Common Stock into a
greater number of such shares, or (iii) combine (reverse split) its
outstanding shares of Precis Common Stock into a smaller number of such
shares, the total number of shares of Precis Common Stock acquirable upon
the exercise of the Warrant immediately prior thereto shall be adjusted so
that the Holder shall be entitled to receive at the same Exercise Price
the number of shares of Precis Common Stock and the number of shares of
capital stock convertible into Precis Common Stock that the Holder would
have owned or have been entitled to receive immediately following the
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happening of such event, assuming and giving effect to the exercise of the
Warrant by the Holder. Any adjustment made pursuant to this Subsection
5.01 shall, in the case of a stock dividend or distribution or a stock
issuance, become effective as of the record date therefor and, in the case
of a subdivision or combination, be made as of the effective date thereof.
SECTION 5.02 ADJUSTMENT OF WARRANT SECURITIES. In the event of any
adjustment of the total number of shares of Precis Common Stock acquirable
upon the exercise of the Warrant pursuant to Subsection 5.1, the Exercise
Price shall remain unchanged, but the number of shares of capital stock or
Warrant Securities obtainable on exercise of the Warrant shall be adjusted
as provided in Subsection 5.1.
SECTION 5.03 REORGANIZATION, RECAPITALIZATION, ETC. In the event of
a capital reorganization or a reclassification of the Precis Common Stock
(except as provided in Subsection 5.1 or Subsection 5.4), the Holder, upon
exercise of the Warrant, shall be entitled to receive, in lieu of the
Stock that the Holder would have become entitled upon exercise immediately
prior to such reorganization or reclassification, the shares (of any class
or classes) or other Warrant Securities or property of Precis (or cash)
that the Holder would have been entitled to receive at the same Exercise
Price upon such reorganization or reclassification if the Warrant had been
exercised immediately prior thereto; and in any such case, appropriate
provision shall be made for the application of this Section 5 with respect
to the rights and interests thereafter of the Holder of this Option
(including, but not limited to, the allocation of the Exercise Price
between or among the Warrant Securities), to the end that this Section 5
(including the adjustments of the number of shares of Stock or other
Warrant Securities acquirable) shall thereafter be reflected, as nearly as
reasonably practicable, in all subsequent exercises of the Warrant for any
shares or other Warrant Securities or other property (or cash) thereafter
deliverable upon the exercise of the Warrant.
SECTION 5.04 CONSOLIDATION, MERGER, ETC. In case of any
consolidation of Precis with, or merger of Precis with, or merger Precis
into, another corporation (other than a consolidation or merger that does
not result in any reclassification or change of the outstanding Precis
Common Stock), or in case of any sale or conveyance to another corporation
of the property of Precis as an entirety or substantially as an entirety,
the corporation formed by such consolidation or merger or the corporation
which shall have acquired such assets, as the case may be, shall execute
and deliver to the Holder a supplement to this Agreement or a new warrant
agreement providing that the Holder shall have the right thereafter (until
the Expiration Date) to receive, upon exercise of the Warrant or any new
warrant under a new warrant agreement, at the same Exercise Price, solely
the kind and amount of shares or Warrant Securities and property (or cash)
receivable upon such consolidation, merger, sale or transfer by the Holder
for the number and kind of Warrant Securities for which the Warrant might
have been exercised immediately prior to such consolidation, merger, sale
or transfer. Such supplemental option or new option shall provide for
adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided in this Section 5. The above provision of this
Subsection 5.4 shall similarly apply to successive consolidations,
mergers, sales or transfers.
SECTION 5.05 NOTIFICATION OF ADJUSTMENT. Whenever the Warrant
Securities acquirable upon exercise of the Warrant are modified as
provided in Subsection 5.1 or 5.4, Kruger will promptly deliver to the
Holder a certificate signed by the Chairman of the Board, Chief Executive
Officer or the President, or a Vice President of Precis and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of Precis setting forth the number and kind of Warrant
Securities acquirable and the other property (including cash) receivable
by the Holder upon exercise of the Warrant or any supplemental or new
option. This certificate will state that the adjustments in the kind of
acquirable Warrant Securities and other property (including cash)
receivable by the Holder upon exercise of the Warrant conform to the
requirements of this Section 5, and setting forth a brief statement of the
facts accounting for such adjustments. In the event, the Holder does not
agree with such determination of the Board of Directors of Precis as set
forth in the certificate, Precis shall retain a firm of independent public
accountants acceptable
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to the Holder to make any computation required under this Section 5, and
a certificate signed by such firm shall be conclusive evidence of the
correctness of any computation made under this Section 5.
SECTION 6. NO RIGHT TO REDEEM. This Agreement and the Warrant may not be
redeemed by Kruger.
SECTION 7. NOTICE OF CERTAIN CORPORATION ACTION. In case Precis after the
date hereof shall propose to effect any consolidation or merger to which Precis
is a party and for which approval of any shareholders of Precis is
required, or any sale, transfer or other disposition of its property and assets
substantially as an entirety, or the liquidation, voluntary or involuntary
dissolution or winding-up of Precis, then, in each such case, Kruger shall mail
(by first-class, postage prepaid mail) to the Holder notice of the proposed
action setting forth and specifying the date on which the reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition,
liquidation, voluntary or involuntary dissolution or winding-up shall take place
or commence, as the case may be, and which shall also specify any record date
for determination of holders of the capital stock of Precis entitled to vote
thereon or participate therein and shall set forth such facts with respect
thereto as shall be reasonably necessary to indicate any adjustments in the
number or kind of Warrant Securities acquirable upon exercise of the Warrant
which will be required as a result of the action, and the Holder may thereafter
exercise the Warrant. This notice shall be filed and mailed in the case of any
action covered by this Section 7, at least 20 days prior to the earlier of (i)
the date on which such reclassification, reorganization, consolidation, merger,
sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up is expected to become effective, (ii) the date on
which it is expected that holders of shares of the capital stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up, or (iii) the record date for determination of holders
of the capital stock of Precis entitled to vote on such action or participate in
such action. Failure of the Holder to exercise the Warrant in whole or in part
prior to any corporate action as described in this Section 7 shall not affect or
alter the rights of the Holder as set forth in this Agreement.
SECTION 8. ACQUISITION FOR INVESTMENT PURPOSES. The Holder represents and
acknowledges to Kruger that the Warrant Securities at the time of transfer and
delivery to the Holder upon exercise of the Warrant (i) will be acquired by the
Holder for investment purposes only without the intent to resell such Warrant
Securities, (ii) will be issued pursuant to exemption from registration under
the Securities Act and any applicable state securities act, (iii) will not be
transferred except pursuant to registration under the Securities Act and any
applicable state securities act unless pursuant to exemption from registration
under such acts, and (iv) the certificates evidencing the Warrant Securities
will bear appropriate restrictive transfer legends as required pursuant to the
Securities Act and any applicable state securities act.
SECTION 9. GOVERNING LAW. This Warrant Agreement shall be construed in
accordance with the laws of the State of Oklahoma applicable to contracts
executed and to be performed wholly within such state.
SECTION 10. NOTICE. Notices and other communications to be given to the
Holder or to Kruger shall be delivered by hand or by first-class mail, postage
prepaid, to the address of Holder or Kruger set forth above or such other
address as the Holder or Kruger shall have designated by written notice to the
other party as provided in this Agreement. Notice by mail shall be deemed given
when deposited in the United States mail, postage prepaid.
SECTION 11. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of Kruger shall bind and inure to the benefit of his
successors and assigns, and all covenants and provisions of this Agreement by or
for the benefit of the Holder shall bind and inure to the benefit of the Holder.
SECTION 12. TERMINATION. This Agreement shall terminate as of the close of
business on the earlier of (i) the Expiration Date, or (ii) such earlier date
upon which the rights to acquire the Stock or Warrant Securities pursuant to
this Agreement shall have been exercised in full. However, the representations
set forth in Section 8 shall
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continue on and after the Expiration Date if this Agreement is fully or
partially exercised on or before the Expiration Date.
SECTION 13. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than Kruger and his
successors and assigns and the Holder and his successors and assigns any legal
or equitable right, remedy or claim under this Agreement, but this Agreement
shall be for the sole and exclusive benefit of Kruger and his successors and
assigns and the Holder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
date first above written.
"Kruger" /s/ XXXX X. XXXXXX
------------------------------
Xxxx X. Xxxxxx
"Xxxx" /s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx
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PURCHASE FORM
(CASH METHOD)
(TO BE EXECUTED BY THE HOLDER OF THE WARRANT AGREEMENT
IF EXERCISED IN WHOLE OR IN PART)
To: XXXX X. XXXXXX
The undersigned (___________________________________________________)
Please insert Social Security or other number of Subscriber
hereby irrevocably elects to exercise the right of acquire represented by the
Warrant Agreement (the "Warrant") to which this Purchase Form is attached, for,
and to acquire thereunder, __________________________________________________
(____________________) shares of common stock, $.01 par value per share, of
Precis Smart Card Systems, Inc. ("Common Stock") provided for therein and
tenders payment herewith to the order of XXXX X. XXXXXX in the amount of
$__________. In accordance with Section 2 of the Warrant Agreement, the
undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name:
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Address:
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Deliver to:
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Address:
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and if said number of shares of Common Stock shall not be all the shares of
Common Stock acquirable thereunder, that a new Warrant Agreement for the balance
remaining of shares of Common Stock acquirable under the Warrant Agreement be
registered in the name of, and delivered to the undersigned at the address
stated below:
Name:
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Address:
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Deliver to:
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Address:
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Dated:______________, ____ Signature
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(Signature must conform in all respects
to the name of Holder.)
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EXCHANGE FORM
(EXCHANGE EXERCISE)
(TO BE EXECUTED BY THE HOLDER OF THE WARRANT AGREEMENT
IF EXERCISED IN WHOLE OR IN PART)
To: XXXX X. XXXXXX
The undersigned (___________________________________________________)
Please insert Social Security or other number of Subscriber
hereby irrevocably elects the use _______ shares of common stock, $.01 par value
per share, of Precis Smart Card Systems, Inc. ("Common Stock"), having a
value market value equal to the exercise price of ______ shares of Common Stock
receivable pursuant to the Warrant Agreement to which this Exchange Form is
attached. In accordance with Section 2 of the Warrant Agreement, the
undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name:
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Address:
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Deliver to:
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Address:
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and if said number of shares of Common Stock shall not be all the shares of
Common Stock acquirable thereunder, that a new Warrant Agreement for the balance
remaining of shares of Common Stock acquirable under the Warrant Agreement be
registered in the name of, and delivered to the undersigned at the address
stated below:
Name:
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Address:
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Deliver to:
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Address:
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Dated:______________, ____ Signature
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(Signature must conform in all respects
to the name of Holder.)
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ASSIGNMENT FORM
(TO BE EXECUTED BY THE HOLDER OF THE WARRANT AGREEMENT ONLY UPON ASSIGNMENT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________________________________________________________
____________________________________________ ("Assignee") the right to acquire
____________________________(__________) shares of Common Stock subject to
acquisition under the Warrant Agreement (the "Warrant Agreement") to which this
Assignment is attached, and appoints __________________________________________
Attorney to transfer the Warrant Agreement or portion thereof with the full
power of substitution in the premises. In accordance with Section 4 of the
Warrant Agreement, the undersigned requests that Xxxx X. Xxxxxx execute, issue
and deliver a new Warrant Agreement evidencing the rights of the Assignee to
acquire such assigned shares of Common Stock to Assignee as follows:
Name:
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Address:
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Deliver to:
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Address:
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and if said number of shares of Common Stock shall not be all the shares of
Common Stock acquirable under the Warrant Agreement, that Xxxx X. Xxxxxx
execute, issue and deliver a new Warrant Agreement for the balance remaining of
shares of Common Stock acquirable under the Warrant Agreement to be registered
in the name of, and delivered to the undersigned at the address stated below:
Name:
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Address:
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Deliver to:
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Address:
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Dated:______________, ____
In the presence of:
------------------------------ Signature
Signature Guaranteed:
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(Signature must conform in all respects
to the name of Holder.)
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