Void after 5:00 p.m., New York Time on [Date], 2003
Warrant to Purchase [Number] Shares of Common Stock
--------------------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
INVU, INC.
--------------------------------------------
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER RULE 506 OF REGULATION D PROMULGATED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION OR EXCLUSION FROM
THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES LAWS.
FOR VALUE RECEIVED, INVU, Inc., a Colorado corporation (the "Company"),
grants the following rights to [name], a [jurisdiction] corporation, with an
office at [address] and/or its assigns ("Holder"):
ARTICLE 1. DEFINITIONS.
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Convertible Debenture Purchase Agreement by and between
the Company and the Holder (the "Purchase Agreement") and entered into on April
___,2000. As used in this Agreement, the following terms shall have the
following meanings:
Dallas1 587669 v 1, 40687.00001
1
"Closing" shall have the same meaning as defined in the Purchase Agreement.
"Corporate Office" shall mean the office of the Company (or its successor) at
which at any particular time its principal business shall be administered.
"Escrow Agent" shall mean Xxxxxx, Xxxxxxxxxx & Xxxxxxxx, LLP, 000 Xxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, XX 00000, as the Company's escrow agent, or its authorized
successor, as such.
"Escrow Agreement" means the escrow agreement by and among the Company, the
Holder and Xxxxxx Xxxxxxxxxx & Xxxxxxxx, LLP, annexed as Exhibit E to the
Purchase Agreement.
"Exercise Date" shall mean [to be determined in accordance with Purchase
Agreement], any date upon which the Holder shall give the Company a Notice of
Exercise.
"Exercise Price" shall mean [the lower of US$3.00 or one hundred twenty five
percent (125%) of the average closing bid price of the Common Stock for the five
(5) Trading Days immediately prior to the Closing Date] per share of Common
Stock, subject to adjustment as provided herein.
"Expiration Date" shall mean 5:00 p.m. (New York time) on [third anniversary of
the Closing Date] 2003.
"SEC" shall mean the United States Securities and Exchange Commission.
"Warrant Shares" shall mean the shares of the Common Stock issuable upon
exercise of the Warrant.
ARTICLE 2. EXERCISE AND AGREEMENTS.
2.1 Exercise of Warrant. This Warrant shall entitle Holder to purchase up to
[number equal to twenty percent (20%) of the Purchase Price (as defined in the
Purchase Agreement) divided by a number which is equal to twenty-five percent
(25%) less than the average Per Share Market Value of the Common Stock for the
five (5) Trading Days immediately prior to the Closing Date] shares of Common
Stock (the "Shares") at the Exercise Price. This Warrant shall be exercisable at
any time and from time to time prior to the Expiration Date (the "Exercise
Period"). This Warrant and the right to purchase Warrant Shares hereunder shall
expire and become void on the Expiration Date.
2.2 Manner of Exercise.
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(a) Holder may exercise this Warrant at any time, starting at the time of
the issuance of this Warrant and from time to time during the Exercise Period,
in whole or in part (but not in denominations of fewer than 10,000 Warrant
Shares, except upon an exercise of this Warrant with respect to the remaining
balance of Warrant Shares purchasable hereunder at the time of exercise), by
delivering to the Escrow Agent (as defined in an escrow agreement dated of the
same date as this Warrant between the Company and the Holder incorporated herein
by reference) (i) a duly executed
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Notice of Exercise in substantially the form attached as Appendix 1 hereto, (ii)
the Warrant Certificate representing the Warrants, (iii) a bank cashier's or
certified check for the aggregate Exercise Price of the Warrant Shares being
purchased, and (iv) a bank cashier's, certified check or wire transfer of $350
to the Escrow Agent for an exercise fee.
(b) The Holder may, at its option, in lieu of paying cash for the Warrant
Shares, exercise this Warrant by exchanging the Warrants, in whole or in part (a
"Warrant Exchange"), by delivering to the Escrow Agent (i) a duly executed
Notice of Exercise electing a Warrant Exchange, (ii) the Warrant Certificate
representing the Warrants, and (iii) a bank cashier's, certified check or wire
transfer of $350 to the Escrow Agent for an exercise fee. In connection with any
Warrant Exchange, the Holder shall be deemed to surrender or exchange, for the
Warrant Shares to be issued to it, the number of Warrant Shares equal to the
quotient obtained by dividing (A) the product of the number of Warrant Shares
exercised and the existing Exercise Price of the Warrants by (B) the average Per
Share Market Value of a share of Common Stock for the ten (10) Trading Days
ending on the date the Notice of Exercise is sent to the Escrow Agent.
2.3 Termination. All rights of the Holder in this Warrant, to the extent
they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. Prior to its exercise pursuant to Section
2.2 above, this Warrant shall not entitle the Holder to any voting or other
rights as a shareholder of the Company.
2.5 Fractional Shares. No fractional shares shall be issuable upon exercise
of this Warrant and the number of Warrant Shares to be issued shall be rounded
up to the nearest whole Share. If a fractional Share interest arises upon any
exercise of the Warrant, the Company shall eliminate such fractional Share
interest by issuing Holder an additional full Share.
2.6 Escrow. The Company agrees to enter into the escrow agreement and to
issue into said Escrow certificates to be held by the Escrow Agent (as defined
in the Escrow Agreement), registered in the name of the Holder, representing a
number of shares of Common Stock (in 10,000 share certificates) equal to the
number of Warrant Shares of this Warrant.
2.7 Adjustments to Exercise Price and Number of Securities
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(a) Computation of Adjusted Exercise Price. In case the Company shall at any
time after the date hereof issue or sell any shares of Common Stock (other than
the issuances or sales referred to in Section 2.7 (g) hereof), including shares
held in the Company's treasury and shares of Common Stock issued upon the
exercise of any options, rights or warrants to subscribe for shares of Common
Stock and shares of Common Stock issued upon the direct or indirect conversion
or exchange of securities for shares of Common Stock (excluding shares of Common
Stock issuable upon exercise of options, warrants or conversion rights granted
as of the date hereof and 2,250,000 shares of Common Stock issuable upon
exercise of options to be granted to members of the Company's management and up
to a maximum of 750,000 of shares to be issued as compensation to certain
persons), for a
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consideration per share less than Exercise Price on the date immediately prior
to the issuance or sale of such shares, or without consideration, then forthwith
upon such issuance or sale, the Exercise Price shall (until another such
issuance or sale) be reduced to the price (calculated to the nearest full cent)
equal to the quotient derived by dividing (A) an amount equal to the sum of (X)
the product of (a) the Exercise Price on the date immediately prior to the
issuance or sale of such shares, multiplied by (b) the total number of shares of
Common Stock outstanding immediately prior to such issuance or sale plus, (Y)
the aggregate of the amount of all consideration, if any, received by the
Company upon such issuance or sale, by (B) the total number of shares of Common
Stock outstanding immediately after such issuance or sale; provided, however,
that in no event shall the Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock, as provided by Section 2.7 (c) hereof.
For the purposes of any computation to be made in accordance with this
Section 2.7(a), the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than shares of
the Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of this Section 2.7(a).
(v) The number of shares of Common Stock at any one time outstanding shall
include the
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aggregate number of shares issued or issuable (subject to readjustment upon the
actual issuance thereof) upon the exercise of options, rights, warrants and upon
the conversion or exchange of convertible or exchangeable securities; provided,
however, that shares issuable upon the exercise of the Warrants shall not be
included in such calculation.
(b) Options, Rights, Warrants and Convertible and Exchangeable Securities.
In case the Company shall at any time after the date hereof issue options,
rights or warrants to subscribe for shares of Common Stock, or issue any
securities convertible into or exchangeable for shares of Common Stock, for a
consideration per share less than the Exercise Price immediately prior to the
issuance of such options, rights or warrants (excluding shares of Common Stock
issuable upon exercise of options, warrants or conversion rights granted as of
the date hereof and 2,250,000 shares of Common Stock issuable upon exercise of
options to be granted to members of the Company's management and up to a maximum
of 750,000 of shares to be issued as compensation to certain persons), or such
convertible or exchangeable securities, or without consideration, the Exercise
Price in effect immediately prior to the issuance of such options, rights or
warrants, or such convertible or exchangeable securities, as the case may be,
shall be reduced to a price determined by making a computation in accordance
with the provision of Section 2.7 (a) hereof, provided that:
(i) The aggregate maximum number of shares of Common Stock, as the case may
be, issuable under such options, rights or warrants shall be deemed to be issued
and outstanding at the time such options, rights or warranties were issued, and
for a consideration equal to the minimum purchase price per share provided for
in such options, rights or warrants at the time of issuance, plus the
consideration (determined in the same manner as consideration received on the
issue or sale of shares in accordance with the terms of the Warrants), if any,
received by the Company for such options, rights or warrants.
(ii) The aggregate maximum number of shares of Common Stock issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration (determined in the same
manner as consideration received on the issue or sale of shares of Common Stock
in accordance with the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof.
(iii) If any change shall occur in the price per share provided for in any
of the options, rights or warrants referred to in subsection (a) of this Section
2.7 (b), or in the price per share at which the securities referred to in
subsection (b) of this Section 2.7 (b) are convertible or exchangeable, such
options, rights or warrants or conversion or exchange rights, as the case may
be, shall be deemed to have expired or terminated on the date when such price
change became effective in respect of shares not theretofore issued pursuant to
the exercise or conversion or exchange thereof, and the Company shall be deemed
to have issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
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(iv) If any options, rights or warrants referred to in subsection (a) of
this Section 2.7, or any convertible or exchangeable securities referred to in
subsection (b) of this Section 2.7, expire or terminate without exercise or
conversion, as the case may be, then the Exercise Price of the remaining
outstanding Warrants shall be readjusted as if such options, rights or warrants
or convertible or exchangeable securities, as the case may be, had never been
issued.
(c) Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
(d) Adjustment in Number of Securities. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Section 2.7, the number of Warrant
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(e) [Reserved].
(f) Merger or Consolidation. In case of any consolidation of the Company
with, or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the Holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, the kind
and amount of shares of stock and other securities and property (except in the
event the property is cash, then the Holder shall have the right to exercise the
Warrant and receive cash in the same manner as other stockholders) receivable
upon such consolidation or merger, by a holder of the number of shares of Common
Stock of the Company for which such warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 2.7. The above provision of
this Subsection shall similarly apply to successive consolidations or mergers.
(g) No Adjustment of Exercise Price in Certain Cases. No adjustment of the
Exercise Price shall be made upon the issuance of the Shares upon conversion of
the convertible debentures of this warrant, or upon the exercise of any options,
rights, or warrants outstanding as of the date of the Purchase Agreement and
disclosed in Section 3.1(c) therein.
(h) Dividends and Other Distributions. In the event that the Company shall
at any time prior to the exercise of all Warrants declare a dividend (other than
a dividend consisting solely of shares of
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Common Stock) or otherwise distribute to its stockholders any assets, property,
rights, evidences of indebtedness, securities (other than shares of Common
Stock), whether issued by the Company or by another, or any other thing of
value, the Holders of the unexercised Warrants shall thereafter be entitled, in
addition to the shares of Common Stock or other securities and property
receivable upon the exercise thereof, to receive, upon the exercise of such
Warrants, the same property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been entitled to
receive at the time of such dividend or distribution as if the Warrants had been
exercised immediately prior to such dividend or distribution. At the time of any
such dividend or distribution, the Company shall make appropriate reserves to
ensure the timely performance of the provisions of this subsection 2.7 (h).
Nothing contained herein shall provide for the receipt or accrual by a Holder of
cash dividends prior to the exercise by such Holder of the Warrants.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. In addition to the representations and
warranties contained in Article 3.1 of the Convertible Debenture Purchase
Agreement, the Company hereby represents and warrants to the Holder as follows:
(a) All shares which may be issued upon the exercise of the purchase right
represented by this Warrant shall, upon issuance, be duly authorized, validly
issued, fully-paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws, and not subject to any pre-emptive rights.
(b) The Company is a corporation duly organized and validly existing under
the laws of the State of Colorado, and has the full power and authority to issue
this Warrant and to comply with the terms hereof. The execution, delivery and
performance by the Company of its obligations under this Warrant, including,
without limitation, the issuance of the Warrant Shares upon any exercise of the
Warrant have been duly authorized by all necessary corporate action. This
Warrant has been duly executed and delivered by the Company and is a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting enforceability of creditors' rights
generally and except as the availability of the remedy of specific enforcement,
injunctive relief or other equitable relief is subject to the discretion of the
court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any provision of any
certificate or articles of incorporation or by-laws, mortgage, deed of trust,
lease, note, bond, indenture, other instrument or agreement, license, permit,
trust, custodianship, other restriction or any applicable provision of any law,
statute, rule, regulation, judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator which could
prevent or be violated by or under which there would be a default (or right of
termination) as a result of the execution, delivery and performance by the
Company of this Warrant.
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(d) The Company is subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, and is current
in its reporting requirements. The Company is eligible to issue the Warrants and
the Warrant Shares pursuant to Rule 506 of Regulation D promulgated under the
Securities Act.
ARTICLE 4. MISCELLANEOUS.
4.1 Transfer. This Warrant may not be transferred or assigned, in whole or
in part, at any time, except in compliance with applicable federal and state
securities laws by the transferor and the transferee (including, without
limitation, the delivery of an investment representation letter and a legal
opinion reasonably satisfactory to the Company), provided that this Warrant may
not be transferred or assigned such that either the Holder or any transferee
will, following such transfer or assignment, hold a Warrant for the right to
purchase fewer than 10,000 Warrant Shares.
4.2 Transfer Procedure. Subject to the provisions of Section 4.1, Holder may
transfer or assign this Warrant by giving the Company notice setting forth the
name, address and taxpayer identification number of the transferee or assignee,
if applicable (the "Transferee") and surrendering this Warrant to the Company
for reissuance to the Transferee and the Holder, in the event of a transfer or
assignment of this Warrant in part. (Each of the persons or entities in whose
name any such new Warrant shall be issued are herein referred to as a "Holder").
4.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall become
mutilated or defaced or be destroyed, lost or stolen, the Company shall execute
and deliver a new Warrant in exchange for and upon surrender and cancellation of
such mutilated or defaced Warrant or, in lieu of and in substitution for such
Warrant so destroyed, lost or stolen, upon the Holder filing with the Company an
affidavit that such Warrant has been so mutilated, defaced, destroyed, lost or
stolen. However, the Company shall be entitled, as a condition to the execution
and delivery of such new Warrant, to demand reasonably acceptable indemnity to
it and payment of the expenses and charges incurred in connection with the
delivery of such new Warrant. Any Warrant so surrendered to the Company shall be
canceled.
4.4 Notices. All notices and other communications from the Company to the
Holder or vice versa shall be deemed delivered and effective when given
personally, by facsimile transmission with confirmation sheet at such address
and/or facsimile number as may have been furnished to the Company or the Holder,
as the case may be, in writing by the Company or the Holder from time to time.
4.5 Waiver. This Warrant and any term hereof may be changed, waived, or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
4.6 Governing Law. This Warrant shall be governed by and construed in
accordance with the
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laws of the State of New York, without giving effect to its principles regarding
conflicts of law. Any action to enforce the terms of this Warrant shall be
exclusively heard in the State and Federal Courts of New York County and State
and Country of the United States of America.
4.7 Signature. In the event that any signature on this Warrant is delivered
by facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same, with the same force and effect as if such facsimile
signature page were an original thereof.
4.8 Legal Fees. In the event any Party commences a legal action to enforce
its rights under this Warrant, the non-prevailing shall pay all reasonable costs
and expenses (including reasonable attorney's fees) incurred in enforcing such
rights.
(Remainder of this page left intentionally blank)
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4.9 Attorney-in-Fact. To effectuate the terms and provisions of the Purchase
Agreement, the Escrow Agreement, the Debenture and this Warrant, the Company
hereby agrees to give a power of attorney as is evidenced by Exhibit F to the
Convertible Debenture Purchase Agreement. All acts done under the such power of
attorney are hereby ratified and approved and neither the Attorney-in- Fact nor
any designee or agent thereof shall be liable for any acts of commission or
omission, for any error of judgment or for any mistake of fact or law, as long
as the Attorney - in- Fact is operating within the scope of the power of
attorney and within the scope of, and in accordance with, this Warrant, the
Purchase Agreement, the Debenture and the Escrow Agreement. The power of
attorney being coupled with an interest shall be irrevocable while any amount of
the Debenture remains unpaid, any amount of this Warrant remains unexercised or
any portion of the Purchase Agreement or the Escrow Agreement remains
unsatisfied. In addition, the Company shall give the Attorney-in-Fact a
corporate resolution executed by the Board of Directors of the Company which
authorizes future issuances of the shares for the Debentures, and which
resolution states that it is irrevocable while any amount of the Debenture
remains unpaid, any amount of this Warrant remains unexercised or any portion of
the Purchase Agreement or the Escrow Agreement remains unsatisfied.
Dated: INVU, INC.
By:
------------------------------
Name:
Title:
Attest:
------------------------------------
Name:
Title:
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APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects (please check the appropriate box and fill in
the blank spaces):
|_| to purchase ______ shares of Common Stock, no par value per share, of
INVU, Inc. at $_____ per share for a total of $_____________ and pursuant to
the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such Warrant Shares in full; or
|_| to purchase _______ shares of Common Stock, no par value per share, of
INVU, Inc. pursuant to the cashless exercise provision under Section 2.2 (b)
of the Warrant, and tenders herewith the number of Warrant Shares to
purchase such Warrant Shares based on the average closing bid price of the
Common Stock for the ten trading days prior to the date hereof of $ per
share.
2. Please issue a certificate or certificates representing said Warrant Shares
in the name of the undersigned or in such other name as is specified below:
Date By:
-------------------------- -----------------------------------
Name:
Title:
11
