<PAGE>
EXHIBIT 2.10
THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION
TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION
S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE 1933 ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY
NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A
U.S. PERSON UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE 1933 ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS THEREOF IS AVAILABLE. IN ADDITION, HEDGING TRANSACTIONS INVOLVING
THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.
"UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933
ACT.
--------------------------------------------------------------------------------
FORM OF SPECIAL WARRANT CERTIFICATE
--------------------------------------------------------------------------------
FORM OF SPECIAL WARRANT FOR SHARES
================================================================================
THIS SPECIAL WARRANT WILL BECOME NULL AND VOID
AT 4:00 P.M. (VANCOUVER TIME) ON MARCH 31, 2002
LML PAYMENT SYSTEMS INC.
A company continued in the Yukon Territory
DATE OF ISSUANCE: March ___, 2000.
THIS IS TO CERTIFY THAT ____________________., a __________________ (herein
called the "Holder"), is entitled to acquire during the period (the "Exercise
Period") commencing on the date hereof and ending at 4:00 p.m. (Vancouver time)
on March 31, 2002 (the "Expiry Date"), up to ___________ common shares (the
"Shares") in the capital of LML Payment Systems Inc. (the "Company"), without
the payment of any additional consideration therefor.
1. This Special Warrant is issued subject to the terms and conditions attached
as Schedule "A" hereto (the "Terms and Conditions"), and, in particular,
the right of the Holder to acquire Shares hereunder during the exercise
period shall be subject to the Terms and Conditions.
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2. In the event of any deemed exercise of the rights represented by this
Special Warrant, the Company will cause certificates for the Shares so
acquired to be delivered to the Holder within a reasonable time, not
exceeding ten (10) business days after the rights represented by this
Special Warrant shall be deemed to have been so exercised.
3. The Company covenants and agrees that all Shares which may be issued upon
the deemed exercise of the rights represented by this Special Warrant will,
upon issuance, be fully paid and non-assessable and free of all liens,
charges and encumbrances. The Company further covenants and agrees that
during the period within which the rights represented by this Special
Warrant may be exercised, the Company will at all times have authorized and
reserved, a sufficient number of Shares to provide for the exercise of the
rights represented by this Special Warrant.
4. This Special Warrant is not validly created until this Special Warrant
Certificate is signed by the Company.
5. This Special Warrant is not transferable or assignable.
6. The Holder hereof may not offer, sell or transfer the Shares prior to the
expiration of the Restricted Period (as defined below), except in
compliance with Rule 903 or Rule 904 of Regulation S under the United Sates
Securities Act of 1933, as amended (the "1933 Act"). "Restricted Period"
shall mean the 40 day period beginning on the date on which the Holder
acquired this Special Warrant from the Company.
7. Any Shares which may be issued upon the deemed exercise of the rights
represented by this Special Warrant may not be sold or transferred in
British Columbia until that date which is one year following the issue date
of this Special Warrant, except pursuant to an exemption from the
prospectus requirement of the Securities Act (British Columbia).
IN WITNESS WHEREOF the Company has caused this Warrant Certificate to
be signed by its duly authorised director or officer under its corporate seal as
of the date of issuance first above written.
LML PAYMENT SYSTEMS INC
Per: __________________________
Authorised Signatory
<PAGE>
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PLEASE NOTE THAT ALL SHARE CERTIFICATES MUST BE LEGENDED AS FOLLOWS:
THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE
TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN)
PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT").
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE 1933 ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE
UNITED STATES OR TO A U.S. PERSON UNLESS SUCH SECURITIES ARE REGISTERED
UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE. IN
ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND
"U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.
<PAGE>
SCHEDULE "A"
------------
TERMS AND CONDITIONS ATTACHED TO
THE NON-TRANSFERABLE SPECIAL WARRANT
ISSUED BY LML PAYMENT SYSTEMS INC.
MARCH ___, 2000
ARTICLE 1
INTERPRETATION
--------------
1.1 Definitions
-----------
In these Terms and Conditions, unless there is something in the subject
matter or context inconsistent therewith:
(a) "Business Day" means any day other than a Saturday, Sunday or any
other day on which the principal chartered banks located at the City
of Vancouver, Canada, are not open for business during normal banking
hours;
(b) "Shares" means the common shares in the capital of the Company as
constituted at the date hereof and any shares resulting from any
subdivision or consolidation of the Shares;
(c) "Company" means LML Payment Systems Inc. or its successor corporation
as a result of consolidation, amalgamation or merger with or into any
other corporation or corporations, or as a result of the conveyance or
transfer of all or substantially all of the properties and estates of
the Company as an entirety to any other corporation and thereafter
"Company" will mean such successor corporation;
(d) "Company's Notice" has the meaning assigned thereto in Section 3.2(a);
(e) "Company's Auditors" means an independent firm of accountants duly
appointed as auditors of the Company;
(f) "Deemed Exercise Date" has the meaning assigned thereto in Section
3.2(b);
(g) "Expiry Date" means March 31, 2002;
(h) "herein", "hereby" and similar expressions refer to these Terms and
Conditions as the same may be amended or modified from time to time;
and the expression "Article" and "Section" followed by a number refer
to the specified Article or Section of these Terms and Conditions;
(i) "Holder" means ________________________.
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(j) "Issue Date" means the date of issuance of the Special Warrant, as
specified on the face of the Special Warrant;
(k) "person" means an individual, corporation, partnership, trustee or any
unincorporated organization and words importing persons have a similar
meaning;
(l) "Private Placement" means the private placement by the Company of up
to 1,000,000 Units at a purchase price of U.S.$12.00 per Unit, which
closed on the Issue Date;
(m) "Qualification Period" has the meaning ascribed thereto in Section
3.2(a)
(n) "Qualifying Subscribers" means those subscribers under the Private
Placement who were introduced to the Company by the Holder;
(o) "Reorganization" has the meaning ascribed thereto in Section 3.6(b);
(p) "Special Warrant" means the special warrant to acquire up to ________
Shares issued by the Company to the Holder and represented by the
Special Warrant Certificate;
(q) "Special Warrant Certificate" means the certificate representing the
Special Warrant to which these Terms and Conditions are annexed as
Schedule "A"
(r) "Units" means the units sold under the Private Placement, each
consisting of one Share and one Warrant; and
(s) "Warrant" means a share purchase warrant, forming part of a Unit,
which entitles the holder thereof to purchase one Share at an exercise
price of U.S.$16.00 at any time beginning on the date of payment of
the purchase price for the Unit through the Expiry Date.
1.2 Gender
------
Words importing the singular number include the plural and vice versa
and words importing the masculine gender include the feminine and neuter
genders.
1.3 Interpretation Not Affected by Headings
---------------------------------------
The division of these Terms and Conditions into Articles and Sections,
and the insertion of headings are for convenience of reference only and will not
affect the construction or interpretation thereof.
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1.4 Applicable Law
--------------
The Special Warrant will be construed in accordance with the laws of
the Province of British Columbia and the laws of Canada applicable thereto and
will be treated in all respects as a British Columbia contract.
ARTICLE 2
ISSUE OF ADDITIONAL SPECIAL WARRANTS
------------------------------------
2.1 Additional Special Warrants
---------------------------
The Company may at any time and from time to time issue additional
special warrants or grant options or similar rights to acquire or purchase
Shares.
2.2 Issue in Substitution for Lost Special Warrant Certificate
----------------------------------------------------------
(a) In case the Special Warrant Certificate becomes mutilated, lost,
destroyed or stolen, the Company, at its sole discretion, may issue
and deliver a new Special Warrant Certificate of like date and tenor
as the one mutilated, lost, destroyed or stolen, in exchange for and
in place of and upon cancellation of such mutilated Special Warrant
Certificate, or in lieu of, and in substitution for such lost,
destroyed or stolen Special Warrant Certificate and the substituted
Special Warrant Certificate will be entitled to the benefit hereof.
(b) The applicant for the issue of a new Special Warrant Certificate
pursuant hereto will bear the cost of the issue thereof and in case of
loss, destruction or theft furnish to the Company such evidence of
ownership and of loss, destruction, or theft of the Special Warrant
Certificate so lost, destroyed or stolen as will be satisfactory to
the Company in its sole discretion and such applicant may also be
required to furnish indemnity in amount and form satisfactory to the
Company in its sole discretion, and will pay the reasonable charges of
the Company in connection therewith.
2.3 Holder Not a Shareholder
------------------------
The Holder is not constituted a shareholder of the Company by reason
only of the Holder's ownership of the Special Warrant, is not entitled to any
rights or interests as a shareholder of the Company and has only the rights and
interests expressly provided herein.
<PAGE>
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ARTICLE 3
EXERCISE OF SPECIAL WARRANT
---------------------------
3.1 Determination of Number of Shares to be Acquired Upon Exercise
--------------------------------------------------------------
The Holder shall be entitled to acquire that number of fully paid and
non-assessable Shares, without the payment of any additional consideration
therefor, as shall be determined by dividing:
(a) 10% of the aggregate exercise price from time to time received by the
Company in respect of Warrants exercised by Qualifying Subscribers, by
(b) a deemed subscription price of U.S.$16.00 per Share.
3.2 Method of Exercise
------------------
(a) The Company shall give to the Holder a notice in writing (the
"Company's Notice") confirming the aggregate exercise price received
by the Company in respect of Warrants exercised by Qualifying
Subscribers in each six-month period following the Issue Date, or such
shorter period as may from time to time be determined by the Company
in its sole discretion, in each case not more than five (5) Business
Days following the last day of such six-month or shorter period (each
a "Qualification Period").
(b) The Holder shall be deemed to have exercised the Special Warrant as of
the last day of each Qualification Period (the "Deemed Exercise Date")
to the extent necessary to acquire all of the Shares issuable to the
Holder hereunder with respect to such Qualification Period.
3.3 Effect of Exercise of Special Warrant
-------------------------------------
(a) Upon each deemed exercise of the Special Warrant pursuant to Section
3.2 hereof, the Shares so subscribed for will be deemed to have been
issued, and the Holder will be deemed to have become the holder of
record of such Shares, on the relevant Deemed Exercise Date.
(b) The Company shall, no later than the tenth (10th) Business Day
following the end of each Qualification Period, cause to be sent to
the Holder a certificate representing such number of Shares which the
Holder is entitled to acquire with respect to the Qualification Period
pursuant to Section 3.2 hereof.
3.4 No Fractions of Shares
----------------------
Nothing herein shall entitle the Holder to receive a fraction of a
Share. If the Holder would otherwise be entitled to receive a fraction of a
Share upon deemed exercise of the
<PAGE>
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Special Warrant pursuant to Section 3.2 hereof, the Holder shall receive in lieu
thereof a cash payment determined by multiplying the deemed issue price of a
whole Share by such fraction.
3.5 Expiration of Special Warrant
-----------------------------
All rights under the Special Warrant will wholly cease and terminate,
and the Special Warrant will no longer be valid and of no effect, as of 4:00
p.m. (Vancouver time) on the Expiry Date. The last Qualification Period shall
terminate on the Expiry Date.
3.6 Adjustments
-----------
The number of Shares deliverable upon the deemed exercise of the
Special Warrant from time to time will be subject to adjustment in the event and
in the manner following:
(a) if and whenever the Shares at any time outstanding are subdivided into
a greater or consolidated into a lesser number of Shares the number of
Shares deliverable upon the deemed exercise of the Special Warrants
will be increased or decreased proportionately as the case may be;
(b) (i) in case of any capital reorganization or of any
reclassification of the capital of the Company or in the case
of the consolidation, merger or amalgamation of the Company
with or into any other Company (hereinafter collectively
referred to as a "Reorganization"), the Special Warrant will
after such Reorganization confer the right to acquire the
number of shares or other securities of the Company (or of the
company resulting from such Reorganization) which the Holder
would have been entitled to upon Reorganization if the Holder
had been a shareholder at the time of such Reorganization;
(ii) in any such case, if necessary, appropriate adjustments will be
made in the application of the provisions of this Article
relating to the rights and interest thereafter of the holders
of the Special Warrants so that the provisions of this Article
will be made applicable as nearly as reasonably possible to any
shares or other securities deliverable after the Reorganization
or the deemed exercise of the Special Warrant;
(iii) the subdivision or consolidation of Shares at any time
outstanding into a greater or lesser number of Shares (whether
with or without par value) will not be deemed to be a
Reorganization for the purposes of this Section;
(c) the adjustments provided for in this Section are cumulative and will
become effective immediately after the record date for or, if a record
date is fixed, the effective date of the event which results in such
adjustments.
<PAGE>
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3.7 Determination of Adjustments
----------------------------
If any questions will at any time arise with respect to any adjustment
provided for in Section 3.6, such question will be conclusively determined by
the Company's Auditors, or, if they decline to so act any other firm of
chartered accountants, in Vancouver, British Columbia, that the Company may
designate and who will have access to all appropriate records and such
determination will be binding upon the Company and the Holder.
ARTICLE 4
COVENANTS BY THE COMPANY
------------------------
4.1 Reservation of Shares
---------------------
The Company will, if necessary, reserve, and there will remain
unissued out of its authorized capital, a sufficient number of Shares to satisfy
the rights provided for herein and in the Special Warrant should the Holder from
time to time outstanding determine to exercise such rights in respect of all
Shares which the Holder is or may be entitled to acquire pursuant thereto and
hereto.
4.2 Company may Purchase
--------------------
The Company may from time to time offer to purchase and purchase, for
cancellation only, the Special Warrant, in such manner and on such terms and
conditions as it determines.
ARTICLE 5
WAIVER OF CERTAIN RIGHTS
------------------------
5.1 Immunity of Shareholders, Etc.
------------------------------
The Holder, as part of the consideration for the issue of the Special
Warrant, waives and releases and will not have any right, cause of action or
remedy now or hereafter existing in any jurisdiction against any past, present
or future incorporator, shareholder, director or officer (as such) of the
Company for the issue of Shares pursuant to the Special Warrant or on any
covenant, agreement, representation or warranty by the Company herein contained
or in the Special Warrant.
ARTICLE 6
MISCELLANEOUS
-------------
6.1 Notice
------
Any notice required or permitted to be given to the Holder or the
Company will be in writing and may be given by prepaid registered post,
electronic facsimile transmission or other means of electronic communication
capable of producing a printed copy to the address of
<PAGE>
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such party set forth below, or such other address as either party may specify by
notice in writing to the other party:
If to the Holder:
If to the Company:
LML Payment Systems Inc.
Suite 1680 West Pender Street
Vancouver, B.C. V6E 4G1
Attention: The President
------------------------
Facsimile No.: (604) 689-4413
Any such notice will be deemed to have been given and received by the party to
whom it was addressed if mailed, on the fifth Business Day following the mailing
thereof, if by facsimile or other electronic communication, on successful
transmission, or, if delivered, on delivery; but if at the time of mailing or
between the time of mailing and the fifth Business Day thereafter there is a
strike, lockout, or other labour disturbance affecting postal service, then the
notice will not be effectively given until actually delivered.
6.2 Modification of Terms and Conditions for Certain Purposes
---------------------------------------------------------
From time to time the Company may, subject to the provisions of these
Terms and Conditions, modify the Terms and Conditions hereof, for the purpose of
correction or rectification of any ambiguities, defective provisions, errors or
omissions herein.
6.3 Time of Essence
---------------
Time will be of the essence hereof.
6.4 Transferability
---------------
The Special Warrant and all rights attached to it are not transferable
or assignable.
