EXHIBIT 10.2
 
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE
TRANSFERRED, SOLD, ASSIGNED, OR HYPOTHECATED, ONLY IF REGISTERED BY PSI
CORPORATION, A NEVADA CORPORATION (THE “COMPANY”). UNDER THE SECURITIES ACT OF
1933 (THE “ACT”) AND IF REGISTERED OR QUALIFIED IN EVERY APPLICABLE STATE, OR IF
THE COMPANY HAS RECEIVED THE FAVORABLE OPINION OF COUNSEL TO THE WARRANTHOLDER,
WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE
COMPANY, TO THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION OF THE WARRANT OR
THE UNDERLYING SECURITIES IS NOT NECESSARY IN CONNECTION WITH SUCH TRANSFER,
SALE, ASSIGNMENT, OR HYPOTHECATION.

WARRANT TO PURCHASE 2,500,000 SHARES COMMON STOCK
OF PSI CORPORATION, A NEVADA CORPORATION
 
PSI CORPORATION
Warrant to Purchase Common Stock

This certifies that, for value received, Lazarus Investment Partners LLLP, a
Delaware limited liability limited partnership, the registered holder hereof or
its assigns (the “Warrantholder”) is entitled to purchase from PSI Corporation
f/d/b/a/ friendlyway Corporation, a Nevada corporation (the “Company”), at any
time before 5:00 p.m., Colorado time, on October 10, 2011 (the “Expiration
Date”) at the purchase price of $.20 per share of Common Stock (the “Warrant
Exercise Price”), up to 2,500,000 shares of Common Stock of the Company (the
“Common Stock”). The Warrant Exercise Price and number of shares of Common Stock
purchasable upon exercise of this Warrant shall be subject to adjustment from
time to time as provided herein. This Warrant was issued pursuant to the terms
of a Purchase Agreement (“Purchase Agreement”; all terms defined in the Purchase
Agreement to have the same meanings herein) dated the date hereof between the
Company and the initial Warrantholder and is subject to, and entitled to the
benefits of, the Purchase Agreement.

1.    Title to Warrant. Prior to the termination hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company,
referred to in Section 2 hereof, by the Warrantholder in person or by duly
authorized attorney, upon surrender of this Warrant together with the Assignment
Form annexed hereto properly endorsed. This Warrant and the Common Stock may be
transferred, sold, assigned, or hypothecated, only if registered by the Company
under the Act and registered and qualified in every applicable jurisdiction, or
if the Company has received the favorable opinion of counsel to the
Warrantholder, which opinion and counsel shall be reasonably satisfactory to
counsel to the Company, to the effect that registration of the Warrant or the
Common Stock issuable upon its exercise (“Underlying Securities”) and
registration and qualification in every applicable jurisdiction is not necessary
in connection with such transfer, sale, assignment, or hypothecation. Unless the
provisions hereof relating to transfer shall have been complied with, the
Company shall not be required to take any action in respect of any purported
transferee or holder of this Warrant.

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2.    Exercise of Warrant. The purchase rights represented by this Warrant are
exercisable by the registered Warrantholder, in whole or in part from time to
time before its termination, by the surrender of this Warrant, together with the
Notice of Exercise attached hereto duly completed and executed at the office of
the Company, at 7222 Commerce Center Drive, Suite 240, Colorado Springs,
Colorado 80919 (or such other office or agency of the Company as it may
designate by notice in writing to the Warrantholder, at the address of such
Warrantholder appearing on the books of the Company), and upon payment of the
Warrant Exercise Price for the shares thereby purchased (by cash, by check or
bank draft payable to the order of the Company, or by cancellation of
indebtedness of the Company to the Warrantholder, if any, at the time of
exercise, in an amount equal to the Warrant Exercise Price for the shares
thereby purchased), and/or by execution of an election by the Warrantholder to
effect a cashless exercise pursuant to Section 12 hereof); whereupon the
Warrantholder shall be entitled to receive a certificate for the number of
shares of Common Stock so purchased; provided, however, that the Company will
place on each certificate a legend substantially the same as that appearing on
this Warrant, in addition to any legends required by any applicable state or
federal law. The date upon which the Company shall have received this Warrant
and payment of the applicable Warrant Exercise Price is the Exercise Date. If
this Warrant is exercised in part, the Company will issue to the Warrantholder a
new Warrant upon the same terms as this Warrant, but for the balance of shares
of Common Stock for which this Warrant then remains exercisable. Subject to the
foregoing limitations, the Company agrees that if, upon the Exercise Date, the
Warrantholder shall be entitled to exercise this Warrant, the shares so
purchased shall be deemed to be issued to such Warrantholder as the record owner
of such shares as of the close of business on the Exercise Date.

Certificates for shares purchased hereunder shall be delivered to the
Warrantholder within 10 business days after the date on which this Warrant shall
have been exercised as aforesaid.

The Company covenants that all shares of Common Stock that may be issued upon
the exercise of rights represented by this Warrant will, upon exercise of the
rights represented by this Warrant in accordance with the terms hereof, be fully
paid and non-assessable and free from all preemptive rights, taxes, liens, and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

3.    No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu
thereof, the Company shall issue one full additional share of Common Stock for
any fraction that exceeds one-half, and any fraction that is equal to or less
than one-half shall be extinguished, without further consequence or payment
therefor. Upon the partial exercise of this Warrant, no portion of the Warrant
for the unexercised remainder hereof shall refer to fractional shares of Common
Stock, and any such fractions shall be eliminated from the Warrant for such
remainder, without further consequence or payment therefor.

4.    Charges, Taxes, and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Warrantholder, for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company (except that the Warrantholder and/or transferee
shall be responsible for taxes in respect of any transfer occurring
contemporaneously therewith), and such certificates shall be issued in the name
of the Warrantholder or in such name or names as may be directed by the
Warrantholder; provided, however, that in the event certificates for shares of
Common Stock are to be issued in a name other than the name of the
Warrantholder, this Warrant when surrendered for exercise shall be accompanied
by the Assignment Form attached hereto duly executed by the Warrantholder; and
provided further, that upon any transfer involved in the issuance or delivery of
any certificates for shares of Common Stock or replacement for this Warrant (or
any portion thereof), the Company may require, as a condition thereto, that the
Warrantholder shall make payment of a sum sufficient to reimburse the Company
for any transfer tax incidental thereto and that the transferee shall execute an
appropriate investment representation.

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5.    No Rights as Shareholders. This Warrant does not entitle the Warrantholder
to any voting rights, dividend rights, liquidation rights, or other rights as a
shareholder of the Company, or holder of any of the Underlying Securities, prior
to the exercise hereof.

6.    Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
surrender hereof by the Warrantholder, at the above-mentioned office or agency
of the Company, for a new Warrant of like tenor and dated as of such exchange.
The Company shall maintain at the above-mentioned office or agency a registry
showing the name and address of the registered Warrantholder. This Warrant may
be surrendered for exchange, transfer, or exercise, in accordance with its
terms, at such office or agency of the Company, and the Company shall be
entitled to rely in all respects, prior to written notice to the contrary, upon
such registry.

7.    Loss, Theft, Destruction, or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant, and in case of loss, theft, or
destruction, upon receipt by the Company of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of this Warrant, if
mutilated, the Company will make and deliver a new Warrant of like tenor (but
with no additional rights or obligations) and dated as of such cancellation, in
lieu of this Warrant.

8.    Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or a Sunday or shall be a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding business day
in the State of Colorado that is not a Saturday, Sunday, or legal holiday.

9.    Cash Distributions. Except as hereinafter specifically provided, no
adjustment will be made to the Warrant Exercise Price on account of cash
dividends or other cash payments on the Underlying Securities.

10.    Forced Cashless Exercise. If on each of thirty consecutive trading days
(i) a Registration Statement has been effective covering the resale of the
Common Stock issuable upon exercise of this Warrant, (ii) the Company’s Common
Stock (including the shares issuable upon exercise of this Warrant) has been
listed on a national securities exchange, the Nasdaq National Market, or the OTC
Bulletin Board and (iii) the Company’s Common Stock has had a closing bid price
of more than $.50 a share (as adjusted for stock splits, stock dividends,
combinations, recapitalizations and similar events), the Company upon written
notice to the Warrantholder given within 5 days after the expiration of such 30
trading days may force a cashless exercise of this Warrant effective upon the
giving of such notice and the contemporaneous delivery to the Warrantholder of
the Common Stock issuable upon such cashless exercise.

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11.    Adjustment of Warrant Shares and Warrant Exercise Price.

(a)    In each case wherein the Company shall at any time after the date of this
Warrant subdivide (by way of a stock split) or declare a stock dividend or
combine the outstanding shares of Common Stock, the number of Underlying
Securities shall forthwith be proportionately increased in the case of a
subdivision or stock dividend or decreased in the case of a combination.

(b)    In case of any adjustment in the number of shares of Common Stock
issuable upon exercise of this Warrant, the Warrant Exercise Price per share
will be adjusted by an amount determined by dividing the total exercise price
that would have been payable upon full exercise of this Warrant immediately
prior to the adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately after the adjustment.

(c)    In case the Company shall at any time after the date hereof issue or sell
any of the Company’s shares of Common Stock (including shares held in the
Company’s treasury and shares deemed to have been issued as provided below, but
excluding “Excluded Issuances” (as defined below), for a consideration per share
less than the Warrant Exercise Price in effect immediately prior to the issuance
or sale, the Warrant Exercise Price in effect immediately prior to each such
issuance or sale shall forthwith be adjusted to equal the per share
consideration received by the Company upon the issuance or sale of its Common
Stock. Upon any such adjustment of the Warrant Exercise Price, the number of
shares of Common Stock deliverable upon exercise of this Warrant shall be
determined by (a) dividing the Warrant Exercise Price in effect prior to such
adjustment by the Warrant Exercise Price as adjusted, and (b) multiplying the
resulting quotient by the number of shares of Common Stock deliverable upon
exercise of this Warrant immediately prior to such adjustment. Excluded
Issuances shall mean:

(i)    the issuances of Additional Shares as defined and provided for under
subparagraph 11(a) of the other Warrant issued under the Purchase Agreement;

(ii)    shares of Common Stock issued pursuant to options, warrants, or other
obligations to issue shares outstanding on the date hereof as disclosed in the
Disclosure Documents;

(iii)    options issued and shares of Common stock issued or issuable upon
exercise of such options, that are issued after the date hereof under any
employee incentive stock option plan adopted by the Company, or such other
similar compensatory options, issuances, arrangements, or plans approved by the
Company’s Board of Directors.

In connection with an adjustment under this clause (c), the following will
apply:

(i)    In the case of the issuance of: (A) options to purchase or rights to
subscribe for Common Stock; (B) securities by their terms convertible into or
exchangeable for Common Stock; or (C) options to purchase or rights to subscribe
for securities by their terms convertible into or exchangeable for Common Stock:

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(1)    The aggregate maximum number of shares of Common Stock deliverable upon
exercise of such options to purchase or rights to subscribe for Common Stock
shall be deemed to have been issued at the time such options or rights were
issued and for a consideration equal to the consideration, if any, received by
the corporation upon the issuance of such options or rights plus the minimum
purchase price provided in such options or rights for the Common Stock covered
thereby;

(2)    The aggregate maximum number of shares of Common Stock deliverable upon
conversion of or in exchange for any such convertible or exchangeable
securities, or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversion or
exchange thereof, shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and for a
consideration equal to the consideration received by the Company for any such
securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the additional consideration, if
any, to be received by the Company upon the conversion or exchange of such
securities or the exercise of any related options or rights;

(3)    On any change in the number of shares of Common Stock deliverable upon
exercise of any such options or rights or conversion of or exchange for such
convertible or exchangeable securities, or on any change in the minimum purchase
price of such options, rights, or securities, where such change results in a
lower purchase price per share, the Warrant Exercise Price hereunder shall
forthwith be decreased to such purchase price as would have obtained had the
adjustment made upon (x) the issuance of such options, rights, or securities not
exercised, converted, or exchanged prior to such change, as the case may be,
been made upon the basis of such change, or (y) the options or rights related to
such securities not converted or exchanged prior to such change, as the case may
be, been made upon the basis of such change.

(d)    In case, at any time after the date of this Warrant, of any
reorganization, reclassification of the stock of the Company (other than a
change in par value or as a result of a stock dividend or subdivision, split-up
or combination of shares for which adjustment is made pursuant to
subsections (b) and (c) hereof), or consolidation or merger of the Company with
or into another person (other than a consolidation or merger in which the
corporation is the continuing entity and which does not result in any change in
the Common Stock), this Warrant shall, after the effective date of such
reorganization, reclassification, consolidation, or merger, be exercisable into
the kind and number of shares of stock or other securities or property of the
Company or of the entity resulting from such consolidation or surviving such
merger to which such Warrantholder would have been entitled, if it had exercised
this Warrant, immediately prior to such reorganization, reclassification,
consolidation, or merger. The provisions of this subsection (d) shall similarly
apply to successive reorganizations, reclassifications, consolidations, or
mergers.

(e)    The Company will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Warrantholders against impairment.

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12.    Cashless Exercise.

(a)    The Warrantholder may, at its option, elect to exercise this Warrant, in
whole or in part and at any time or from time to time, on a cashless basis, by
surrendering this Warrant, with the Notice of Exercise attached to this Warrant
duly executed by or on behalf of the Warrantholder, at the principal office of
the Company, or at such other office or agency as the Company may designate, by
canceling a portion of this Warrant in payment of the Warrant Exercise Price
payable in respect of the number of Warrant Shares purchased upon such exercise.
In the event of an exercise pursuant to this Section 12, the number of Warrant
Shares issued to the Holder shall be determined according to the following
formula:

X = Y*(A-B)
A

 
Where:
X
=
the number of Warrant Shares that shall be issued to the Warrantholder.

   
Y
=
the number of Warrant Shares for which this Warrant is being exercised (which
shall include both the number of Warrant Shares issued to the Warrantholder and
the number of Warrant Shares subject to the portion of the Warrant being
cancelled in payment of the Warrant Exercise Price).

   
A
=
the Fair Market Value (as defined below) of one share of Common Stock; and

   
B
=
the Warrant Exercise Price then in effect.

(b)    The Fair Market Value per share of Common Stock shall be determined as
follows:

(i)    if the Common Stock is listed on a national securities exchange, the
Nasdaq National Market, the OTC Bulletin Board, or another nationally-recognized
trading system as of the Exercise Date (or within 30 days prior to such date),
the Fair Market Value per share of Common Stock shall be deemed to be the
average of the high and low reported sale prices per share of Common Stock
thereon on the trading day immediately preceding the Exercise Date; provided
that if the Common Stock is not so listed on such day, the Fair Market Value per
share of Common Stock shall be determined on the most recent trading date
preceding the Exercise Date when the Common Stock was so listed, unless such
trading date is more than 30 days before the Exercise Date, in which case, the
Fair Market Value shall be determined below.

(ii)    If clause (i) does not apply but there is a Qualified Private Placement
(as such term is hereafter defined), the Fair Market Value per share of Common
Stock shall be the Common Equivalent Price (as such term is herein defined) in
respect of the Qualified Private Placement. For purposes of this subsection, a
“Qualified Private Placement” shall mean the sale by the Company in one or more
transactions not involving a sale of the Company’s Common Stock pursuant to a
registration statement under the Act, during any twelve-month period ending
within six months prior to such cashless exercise, of equity securities for an
aggregate purchase price in cash of at least Two Million Dollars ($2,000,000).
The term “Common Equivalent Price” shall mean the price determined by dividing
the gross proceeds received by the Company as a result of a Qualified Private
Placement by the number of shares of Common Stock issued, or issuable upon
conversion or exchange of securities issued therein, in exchange for such gross
proceeds (without taking into account any subsequent adjustments that are not
capable of determination at the time of issuance of such securities).

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(iii)    If clauses (i) and (ii) do not apply, then the Fair Market Value per
share of the Common Stock shall be the value placed upon shares of such stock,
on good faith determination by the Company’s Board of Directors, as to Fair
Market Value as of the Exercise Date.

13.    Reservation and Issuance of Shares. At all times the Company will keep
reserved for issuance upon exercise of this Warrant, the number of shares of
Common Stock then issuable upon full exercise hereof. The Company covenants that
its issuance of this Warrant constitutes full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of the Company’s Common Stock upon the
exercise of the purchase rights under this Warrant and to issue replacement,
successor, and/or remainder Warrants in respect hereof.

14.    Notices of Record Date. The Company shall cause to be mailed to the
Warrantholder, at least 20 days prior to the record or transaction date
hereinafter specified, the following notices:

(a)    Notice of the date upon which the Company will take a record of the
holders of its capital stock for the purpose of entitling any of them to
subscribe for or purchase any shares of stock of any class or to receive a
dividend, distribution, or any other rights;

(b)    Notice of the date upon which there will occur any reorganization of the
Company, reclassification of the capital stock of the Company (other than a
subdivision or combination of its outstanding shares of capital stock), or
consolidation or merger of the Company with or into another corporation that
does not constitute a Sale of the Company;

(c)    Notice of the effective date upon which the rights of the holders of any
of the Underlying Securities will be determined in the event of a voluntary or
involuntary dissolution, liquidation, or winding up of the Company; and/or

(d)    Notice of the date upon which a record will be taken, for the purpose to
grant or extinguish any other right, privilege, or obligation of any party, in
respect of this Warrant or the Underlying Securities.

15.    Amendments and Waivers. Neither this Warrant nor any term hereof may be
changed, waived, varied, discharged, or terminated orally or in writing, except
that any term of this Warrant may be amended and the observance of any such term
may be waived (either generally or in a particular instance, and either
retroactively or prospectively) with (but only with) the written consent of the
Company and the Warrantholder; provided, however, that no such waiver shall
extend to or affect any obligation not expressly waived.

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16.    Communications. All notices or other communications hereunder shall be in
writing and shall be given by registered or certified mail (postage prepaid and
return receipt requested), personally delivered (against a receipt signed by the
Warrantholder or its agent), transmitted by facsimile (with verification of
receipt thereof), or sent by means of a nationally recognized overnight delivery
service (with verification of delivery), addressed to the Warrantholder and the
Company, at the following respective addresses:

If to the Warrantholder:
Lazarus Investment Partners LLLP

    2401 East Second Avenue 

    Suite 400 

    Denver, Colorado 80206 

    Attn: Justin Borus, Member 

    Fax: 303-302-9050 

     

  With a copy to:  James A. Jacobson, Esq. 

    Berenbaum, Weinshienk & Eason, P.C. 

    370 Seventeenth Street, 48th Floor 

    Denver, Colorado 80202-5698 

    Fax: 303-629-7610 

     

  If to the Company, to:  PSI Corporation 

    7222 Commerce Center Drive 

    Suite 240 

    Colorado Springs, Colorado 80919 

    Attn: Ken Upcraft, Chief Executive Officer and President 

    Fax: 719-598-3897 

All notices and other communications given in accordance with the foregoing
procedures shall be deemed to have been given as of the date and time of actual
delivery, deposit in the United States mail, proof of transmittal by facsimile,
or 2:00 p.m., Colorado time, on the next business day after deposit with a
nationally recognized overnight delivery service (prior to the applicable local
time for next business day delivery), as the case may be.

17.    Miscellaneous. The provisions of this Warrant shall be construed and
shall be given effect in all respects as if it had been issued and delivered by
the Company on the date hereof.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
President thereunto duly authorized.
 

        COMPANY:       PSI Corporation, a Nevada corporation   
   
   
    By:   /s/ Kenneth J. Upcraft   Name:  Kenneth J. Upcraft    Title:  Chief
Executive Officer    Date:  October 17, 2006 

 
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NOTICE OF EXERCISE

TO: PSI Corporation

1.    The undersigned hereby elects to purchase __________ shares of Common
Stock, of PSI Corporation, pursuant to the terms of the attached Warrant, and:
(a) tenders herewith payment of the Warrant Exercise Price in full, together
with all applicable transfer taxes, if any, payable pursuant to the terms of the
Warrant hereby exercised; or (b) elects a cashless exercise of the attached
Warrant, pursuant to the provisions of Section 12 thereof, if no payment is
herewith tendered.

2.    Please issue a certificate or certificates representing said shares of
Common Stock, in the name of the undersigned or in such other name as is
specified below:

          (Name)                        (Address)     

(Note that any name herein which is not the name of the Warrantholder of record
must be accompanied by an Assignment Form in proper form.

3.    Please issue a Warrant certificate, representing a Warrant for the
remainder of shares of Common Stock, if any, for which the undersigned
Warrantholder has not exercised the Warrant herein, in the name of the
undersigned Warrantholder.
 

      ____________________  Lazarus Investment Partners LLLP, a Date  Delaware
limited liability limited partnership   
   
   
    By:   Lazarus Management Company LLC,   its General Partner       By: 
______________________   
Justin B. Borus, Manager 

 
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ASSIGNMENT FORM

(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)

(This form must accompany any
Notice of Exercise for securities issuable
to any person other than the
Warrantholder of record.)

FOR VALUE RECEIVED, the foregoing PSI Corporation Common Stock Warrant, and all
rights evidenced thereby, are hereby assigned to

  (Please Print)                whose address is:       

        Dated: _______________________, 200_   Lazarus Investment Partners LLLP,
a    Delaware limited liability limited partnership   
   
   
    By:   Lazarus Management Company LLC,   its General Partner     Record
Warrantholder’s Signature:  By: __________________  
Justin B. Borus, Manager 
    Record Warrantholder’s Address:       

 
NOTE: The signature on this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever. Any officer of a corporation or person acting in a fiduciary or
other representative capacity must file proper evidence of authority to assign
the foregoing Warrant.
 
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