WARRANT AGREEMENT
WARRANT AGREEMENT dated as of April 16, 2002 between Precom Technology,
Inc., a Florida corporation (the "Company"), and Greenwich Financial Group, a ,
(hereinafter referred to as "GFG").
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W I T N E S S E T H:
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WHEREAS, the Company proposes to issue to GFG warrants (the "Warrants") to
purchase up to 1,000,000 (as such number may be adjusted from time to time
pursuant to Article 7 of this Agreement) shares (the "Shares") of common stock,
par value $.001 per share (the "Common Stock"), of the Company;
NOW, THEREFORE, in consideration of the premises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant
GFG and/or its designees are hereby granted the right to purchase, pursuant
to the terms and conditions of this Warrant Agreement, at any time from April
16, 2002 until 5:00 p.m., Eastern time, on April 16, 2005, which date may be
extended as set forth in Section 11 (the "Warrant Exercise Term"), up to
1,000,000 fully-paid and non-assessable Shares at an initial exercise price
(subject to adjustment as provided in Article 7 hereof) of $2.00 per Share.
2. Warrant Certificates.
The warrant certificates delivered and to be delivered pursuant to this
Agreement (the "Warrant Certificates") shall be in the form set forth in Exhibit
A attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement.
3. Exercise of Warrant.
3.1. Vesting and Exercise. The Warrants granted herein shall vest in GFG
and shall become exercisable immediately on the issuance of this Warrant
Agreement. The Warrants initially are exercisable at a price of $2.00 per Share,
and payable by wire transfer in immediately available funds to the Company,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased (as hereafter defined), at the Company's principal offices, the
registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a stock certificate or certificates for the Shares so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional Shares). In the case of the purchase of less than all the Shares
purchasable under any
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Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder and for the
balance of the Warrant Exercise Term.
4. Issuance of Certificates.
(a) Upon the exercise of the Warrants, the issuance of stock certificates
for the Shares purchased shall be made forthwith without charge to the Holder
thereof including, without limitation, any excise or transfer tax which may be
payable in respect of the issuance thereof, and such certificates shall (subject
to the provisions of Article 5 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates and the certificates representing the Shares shall
be executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman or Vice Chairman of the Board of Directors, Chief
Executive Officer or resident or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary of the
company, or in such other manner as is then authorized for the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
Upon exercise, in part or in whole, of the Warrants, certificates
representing the Shares shall bear a legend (which legend shall be removed by
the Company pursuant to Section 6.3(b)) substantially similar to the following:
"The securities represented by this certificate have not been
registered for purposes of public distribution under the Securities
act of 1933, as amended (the "Act"), and may not be offered or sold
except (i) pursuant to an effective registration statement under the
Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act
(or any similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company
of an opinion of counsel, reasonably satisfactory to counsel to the
Company, stating that an exemption from registration under such Act is
available."
(b) The Holder hereby covenants and agrees that from and after the date
hereof the Holder may, after five business day prior written notice to the
Company of the Holder's intention thereto, directly or indirectly, sell, offer
or contract to sell, pledge or otherwise dispose or transfer (collectively, a
"transfer") the Warrant to a transferee who expressly and in writing
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agrees with the Holder and the Company at the time of such transfer, to assume
all of the obligations of, and comply with all the provisions applicable to, the
Holder under this Agreement and under the Warrant.
5. Price.
5.1. Initial and Adjusted Exercise Price. The initial exercise price of
each Warrant shall be $2.00 per Share. The adjusted exercise price per Share
shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price per Share in accordance with the
provisions of Article 8 hereof.
5.2. Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price until such price has been adjusted, in which case
thereafter the term Exercise Price shall mean the adjusted exercise price.
6. Registration Rights.
6.1. Registration Under the Securities Act of 1933. None of the Warrants or
Shares have been registered for purposes of public distribution under the
Securities Act of 1933, as amended (the "Act").
6.2. Registrable Securities. As used herein the term "Registrable Security"
means each of the Warrants, the Shares and any shares of Common Stock issued
upon any stock split or stock dividend in respect of such Shares; provided,
however, that with respect to any particular Registrable Security, such security
shall cease to be a Registrable Security when, as of the date of determination,
(i) it has been effectively registered under the Act and disposed of pursuant
thereto, (ii) The Registrable Securities could be sold by the Holder in a single
transaction pursuant to Rule 144 under the Securities Act and the Company has
agreed to remove the legend in Section 4(a) hereof; or (iii) it has ceased to be
outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Article 6.
6.3 Mandatory Registration. (a) At any time after one (1) year from the
date of this agreement any holder of Registrable Securities may demand in
writing that the Company commence the process of preparing and filing with the
U.S. Securities & Exchange Commission (the "Commission"), on one occasion, at
the sole expense of the Company (except as provided in Section 6.4 (b) hereof),
a Registration Statement and such other documents, including a prospectus, as
may be necessary (in the opinion of counsel for the Company), in order to comply
with the provisions of the Act, so as to permit a public offering and sale of
all the Registrable Securities by the holders thereof. The Company shall
commence the process of preparing and filing the Registration Statement within
sixty (60) days after receipt of such written demand. Until the Registration
Statement is effective, the Company shall use its best efforts to cause the
Registration Statement to become effective under the Act, so as to permit a
public offering and
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sale of the Registrable Securities by the holders thereof and will re-file the
Registration Statement at the earliest possible opportunity if not declared
effective. Once effective, the Company will use its best efforts to (a) maintain
the effectiveness of the Registration Statement until the earlier of (i) the
date that all of the Registrable Securities have been sold or (ii) the date that
the holders of the Registrable Securities receive an opinion of counsel to the
Company that all of the Registrable Securities may be freely traded (without
registration under the Act) in a single transaction under Rule 144 (k)
promulgated under the Act or otherwise and the Company has removed the legend
referred to in Section 4(a); and (b) prepare and file with the SEC such
amendments and supplements to the Registration Statement and the prospectus used
in connection with the Registration Statement as may be necessary to comply with
the provisions of the Securities Act with respect to sales of the Registrable
Securities pursuant to the Registration Statement. The Company's obligations
described in this paragraph shall not apply to any issued or issuable
Registrable Securities that are eligible for immediate resale pursuant to Rule
144, without regard to volume limitations.
(b) Notice. The Company covenants and agrees to give written notice of
the effectiveness of any such Registration Statement to all holders of the
Registrable Securities within ten (10) business days from the date of the
Company's receipt of notice of such effectiveness.
(c) Piggy-back Registration. If at any time after the ninety (90) days
from the date of this Agreement, the Company determines to proceed with the
preparation and filing of a registration statement under the Securities Act in
connection with its securities, the Company will give written notice of its
determination to all record holders of the Registrable Securities. Upon written
request by a holder, the Company will include the Registrable Securities issued
or issuable to such holder in that registration statement (other than a
registration statement filed on either Form S-8 or Form S-4) subject to
customary limitations as imposed by the underwriter for any such public
offering. If requested by the Company, the holders of the Registrable Securities
will agree to be bound by such additional restrictions on the sale or transfer
of the Registrable Securities as may be required in order to comply with the
requirements of, any applicable securities exchange in which the Company's
Securities are listed or quoted or the SEC in connection with the public
offering which agreement will be self-executing without the need for execution
of additional instruments. The Company's obligations described in this paragraph
shall not apply to any issued or issuable Registrable Securities that are
eligible for immediate resale pursuant to Rule 144, without regard to volume
limitations. The Company shall pay the expenses for any registration statement
except for underwriting discounts and commissions and legal fees of the holders
of the Registrable Securities.
6.4. Covenants of the Company With Respect to Registration. The
Company covenants and agrees as follows:
(a) In connection with any registration under Section 6.3 hereof, the
Company shall file the Registration Statement as expeditiously as possible, and
until such Registration Statement is declared effective, shall use its best
efforts to have any such Registration Statement declared effective at the
earliest possible time, and shall furnish each holder of Registrable Securities
such number of prospectuses as shall reasonably be requested.
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(b) The Company shall pay all costs, fees and expenses (other than
underwriting fees, discounts and non-accountable expense allowance applicable to
the Registrable Securities and the fees and expenses of counsel retained by the
holders of Registrable Securities) in connection with all Registration
Statements filed pursuant to Section 6.3 (a) hereof including, without
limitation, the Company's legal and accounting fees, printing expenses,
registration expenses, and blue sky fees and expenses.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Registrable Securities included in the
Registration Statement for offering and sale under the securities or blue sky
laws of such states as are reasonably requested by the holders of such
Registrable Securities.
(d) The Company shall indemnify and hold harmless each Holder, within
the meaning of the Act, who may purchase from or sell for a Holder, any
Registrable Securities, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement of a material fact contained in the
Registration Statement, any other registration statement filed by the Company
under the any post-effective amendment to or supplement thereto such
registration statements, or any prospectus included therein required to be filed
or furnished by reason of this Agreement or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, exceptions so far as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission based
upon information furnished or required to be furnished in writing to the Company
by such Holder within the meaning of the Act and each officer, director,
employee and agent of the Holder; provided, however, that the indemnification in
this paragraph (c) with respect to any prospectus shall not inure to the benefit
of a Holder (or to the benefit of any person controlling such holder) on account
of any such loss, claim, damage or liability arising from the sale of
Registrable Shares by such Holder, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to such Holder by the Company prior to the subject sale and the
subsequent Prospectus was not delivered or sent by such Holder to the purchaser
prior to such sale.
(e) Each Holder, as the case may be, shall indemnify the Company, its
directors, each officer signing the Registration Statement and each person, if
any, who controls the Company within the meaning of the Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the Registration Statement, any
registration statement or any prospectus required to be filed or furnished by
reason of this Agreement or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission based upon information furnished in
writing to the Company by such Holder expressly for use therein.
(f) Promptly after receipt of notice of the commencement of any action
in respect of which indemnity may be sought against any indemnifying party under
this Section 6.4, the indemnified party will notify the indemnifying party in
writing of the commencement thereof, and the indemnifying party will, subject to
the provisions hereinafter stated, assume the defense of such action (including
the employment of counsel satisfactory to the indemnified party and the
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payment of expenses) insofar as such action relates to an alleged liability in
respect of which indemnity may be sought against the indemnifying party. After
notice from the indemnifying party of its election to assume the defense of such
claim or action, the indemnifying party shall no longer be liable to the
indemnified party under this Section 6.4 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the reasonable judgment of the indemnified party or parties, it is
advisable for the indemnified party or parties to be represented by separate
counsel, the indemnified party or parties shall have the right to employ a
single counsel to represent the indemnified parties who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the indemnified parties thereof against the indemnifying party, in which
event the fees and expenses of such separate counsel shall be borne by the
indemnifying party. Any party against whom indemnification may be sought under
this Section 6 shall not be liable to indemnify any person that might otherwise
be indemnified pursuant hereto for any settlement of any action effected without
such indemnifying party's consent, which consent shall not be unreasonably
withheld.
(g) If for any reason the indemnification provided for in Section 6.4
(d) or (e) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnified party and the indemnifying party, but also the
relative fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations.
(h) Nothing contained in this Agreement shall be construed as
requiring any Holder to exercise the Warrants held by such Holder prior to the
initial filing of any registration statement or the effectiveness thereof.
(i) If the Company shall fail to comply with the provisions of this
Article 6, the Company shall, in addition to any other equitable or other relief
available to the holders of Registrable Securities, be liable only for any
direct consequential damages sustained by the holders of Registrable Securities,
resulting from the Company's failure to register the Registrable Securities.
(j) The Company shall promptly deliver copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the Registration Statement to each holder of Registrable Securities included
for such registration in such Registration Statement pursuant to Section 6.3
hereof requesting such correspondence and memoranda and to the managing
underwriter, if any, of the offering in connection with which such Holder's
Registrable Securities are being registered and shall permit each holder of
Registrable Securities and such underwriter to do such reasonable investigation,
upon reasonable advance notice, with respect to information contained in or
omitted from the Registration Statement as it deems reasonably necessary to
comply with applicable securities laws or rules of the National Association of
Securities Dealers, Inc. Such investigation shall include access to books,
records and properties and opportunities to
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discuss the business of the Company with its officers and independent auditors,
all to such reasonable extent and at such reasonable times and as often as any
such holder of Registrable Securities or underwriter shall reasonably request.
7. Adjustments of Exercise Price and Number of Shares.
7.1. Computation of Adjusted Price. Except as hereinafter provided, in case
the Company shall at any time after the date hereof issue or sell any shares of
Common stock, 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 (other than the issuances or sales of
Common Stock pursuant to rights to subscribe for such Common Stock distributed
to all the shareholders of the Company and Holders of Warrants pursuant to
Section 7.8 hereof, and except for shares issued as the result of options
granted under any employee stock option of the Company as approved from time to
time by shareholders of the Company) and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than the Exercise Price in effect
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 the total number of shares of
Common Stock outstanding immediately prior to such issuance or sale, multiplied
by (b) the Exercise Price in effect 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 7.3 hereof.
For the purposes of any computation to be made in accordance with this
Section 7.1, the following provisions shall be applicable:
(a) 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 the cash
consideration therefore 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 such securities shall
be sold to underwriters or dealers for public offering without a subscription
offering, the public offering price) before deducting from 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.
(b) 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 therefore 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. For such purposes, Common Stock issued by the Company as a
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matching contribution to Company sponsored 401(k) benefit plans shall be valued
at the same price used in determining the matching contribution amount under the
plan.
(c) 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 shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(d) The reclassification of securities of the Company other than
shares of 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 (b) of this Section 7.1.
(e) The number of shares of Common Stock at any one time outstanding
shall include the aggregate number of shares issued or issuable upon the
exercise of options, rights, vested warrants and upon the conversion or exchange
of convertible or exchangeable securities.
(f) No adjustment shall be made for any issuance or sale of Common
Stock by the Company for a consideration per share equal to or greater than the
Exercise Price at the time of such issuance or sale
7.2. Options, Rights, Warrants and Convertible and Exchangeable Securities.
Except in the case of the Company issuing rights to subscribe for shares of
Common Stock distributed to all the Shareholders of the Company and Holders of
Warrants pursuant to Section 7.8 hereof, and except in the case of employee
stock options issued under existing or future shareholder approved Company stock
option plans, if 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, (i)
for a consideration per share less than the Exercise Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, or (ii) 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 n accordance with the
provisions of Section 7.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under all the outstanding options, rights or warrants
shall be deemed to be issued and outstanding at the time all the outstanding
options, rights or warrants were issued, and for a consideration equal to the
minimum purchase price per share provided for in the 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 Warrants), if any, received by the Company for the options, rights or
warrants, and if no minimum price is provided in the options, right or warrants,
then the consideration shall be equal to zero; provided,
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however, that upon the expiration or other termination of the options, rights or
warrants, if any thereof shall not have been exercised, the number of shares of
Common Stock deemed to be issued and outstanding pursuant to this subsection (a)
(and for the purposes of subsection (e) of Section 7.1 hereof) shall be reduced
by such number of shares as to which options, warrants and/or rights shall not
have vested or shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding, and the Exercise
Price then in effect shall forthwith be readjusted and thereafter be the price
which it would have been had adjustment been made on the basis of the issuance
only of shares actually issued or issuable upon the exercise of those options,
rights or warrants as to which the exercise rights shall be vested or shall not
have expired or terminated unexercised.
(b) 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; provided, however, that
upon the termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares deemed to be issued and outstanding pursuant to this subsection
(b) (and for the purpose of subsection (e) of Section 7.1 hereof) shall be
reduced by such number of shares as to which the conversion or exchange rights
shall have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding and the Exercise Price then in
effect shall forthwith be readjusted and thereafter be the price which it would
have been had adjustment been made on the basis of the issuance only of the
shares actually issued or issuable upon the conversion or exchange of those
convertible or exchangeable securities as to which the conversion or exchange
rights shall not have expired or terminated unexercised.
(c) 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 7.2, or in the price per share at which the securities referred to in
subsection (b) of this Section 7.2 are convertible or exchangeable, the 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.
7.3. 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.
7.4. Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Article 7, the number of Shares
issuable upon the exercise of
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each Warrant shall be adjusted to the nearest full number by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Shares issuable upon exercise of the Warrants
immediately prior to such adjustment and dividing the product so determined by
the adjusted Exercise Price.
7.5. Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Holders shall thereafter have the right to purchase
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owners of the shares of Common Stock
underlying the Warrants immediately prior to any such events at a price equal to
the product of (x) the number of shares of Common Stock issuable upon exercise
of the Holder's Warrants and (y) the Exercise Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance as if such Holders had exercised the Warrants.
7.6. Determination of Outstanding Shares of Common Stock. The number of
shares of Common Stock at any one time outstanding shall include the aggregate
number of shares of Common Stock issued and the aggregate number of shares of
Common Stock issuable upon the exercise of options, rights, vested warrants and
upon the conversion or exchange of convertible or exchangeable securities.
7.7. Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of all Warrants make any distribution of its assets to holders of its
Common Stock as a liquidating or a partial liquidating dividend, then the holder
of Warrants who exercises its Warrants after the record date for the
determination of those holders of Common Stock entitled to such distribution of
assets as a liquidating or partial liquidating dividend shall be entitled to
receive for the Warrant Price per Warrant, in addition to each share of Common
Stock, the amount of such distribution (or, at the option of the Company, a sum
equal to the value of any such assets at the time of such distribution as
determined by the Board of Directors of the Company in good faith) which would
have been payable to such holder had he been the holder of record of the Common
Stock receivable upon exercise of his Warrant on the record date for the
determination of those entitled to such distribution. At the time of any such
dividend or distribution, the Company shall make the appropriate reserves to
ensure the timely performance of the provisions of this Subsection 7.7.
7.8 Subscription Rights for Shares of Common Stock or Other Securities. In
the case that the Company shall at any time after the date hereof and prior to
the exercise of all the Warrants issue any rights, warrants or options to
subscribe for shares of Common Stock or any other
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securities of the Company to all the shareholders of the Company, the Holders of
unexercised vested Warrants on the record date set by the Company shall be
entitled, in addition to the shares of Common Stock or other securities
receivable upon the exercise of the Warrants, to receive such rights, warrants
or options that such Holders would have been entitled to receive had they been,
on such record date, the holders of record of the number of whole shares of
Common Stock then issuable upon exercise of their outstanding Warrants (assuming
for purposes of this Section 7.8 that the exercise of the Warrants is
permissible immediately upon issuance).
7.9. Adjustment for Dividends of Common Stock, etc. In the Event that the
Company at any time or from time to time after the issuance of this Warrant
shall declare or pay, without consideration, any dividend on the Common Stock
payable in Common Stock or in any right to acquire Common Stock for no
consideration, or shall effect a subdivision of the outstanding shares of Common
Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or
in any right to acquire Common Stock), or in the event the outstanding shares of
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the exercise
price in effect immediately prior to such event shall, concurrently with the
effectiveness of such event, be proportionately decreased or increased, as
appropriate. In the event that the Company shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Company shall be deemed to have made
a dividend payable in Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire Common Stock.
Upon each adjustment of the exercise price pursuant to this Section 7.9 the
Holder of this Warrant shall thereafter be entitled to purchase, at the Stock
Purchase Price resulting from such adjustment, the number of shares of Common
Stock obtained by multiplying the exercise price in effect immediately prior to
such adjustment by the number of shares of Common Stock purchasable pursuant
hereto immediately prior to such adjustment, and dividing the product thereof by
the exercise price resulting from such adjustment.
8. Exchange and Replacement of Warrant Certificate.
8.1. Each Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of securities in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
8.2 Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, receipt of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrant Certificate, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
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9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of Shares pay cash to the Holder in lieu of fractional interests equal
to such fraction multiplied by the market price of the Common Stock (the market
price determined, for any date, as the average of the closing prices of the
Common Stock on such principal securities exchange or automated quotation system
upon which the Common Stock may then be listed for public trading) for the five
immediately preceding trading days on such exchange).
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefore, all Shares
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any shareholder. As
long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of the
Warrants to be listed on or quoted by a national securities exchange.
11. Governmental Approvals.
(a.) The Company and the Holder hereby acknowledge that exercise of this
Warrant by the Holder is subject to receipt of all necessary governmental
consents and approvals and may subject the Company and/or the Holder to the
filing requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and that the Holder may be prevented from acquiring
shares of Common Stock upon exercise of this Warrant until receipt of all
necessary governmental consents and approvals and the expiration or early
termination of all waiting periods imposed by the HSR Act ("Governmental
Approvals"). Promptly following the Holder's notice of exercise or other written
request from the Holder, the Company and the Holder will use their respective
reasonable best efforts to make all filings necessary to obtain all required
Governmental Approvals (the "HSR Filing"). Notwithstanding the foregoing,
neither the Company nor the Holder of this Warrant shall be obligated to take
any action to obtain any Governmental Approvals, if the taking of such action
could have the direct or indirect effect of restricting, limiting or otherwise
subjecting to penalty either the Company or the Holder of this Warrant in the
ownership of their respective assets or the conduct of their respective business
(including, without limitation, requiring that the Holder of this Warrant sell,
divest or otherwise dispose of any of its assets or business). Subject to clause
b) below, if the Holder and, to the extent applicable, the Company are not able
to obtain all such Governmental Approvals on or before the Expiration Date, this
Warrant will expire on the Expiration Date.
(b) Notwithstanding anything to the contrary contained within this
subsection (b), if the Holder has requested that the Company and the Holder use
their respective reasonable best efforts to make all filings necessary to obtain
all required Governmental Approvals (the "Governmental Approval Procedure") at
least six months prior to the Expiration Date, and the
12
necessary Governmental Approvals have not been obtained prior to the Expiration
Date (despite the Holder's and Company's respective reasonable best efforts to
obtain such Governmental Approvals), the Exercise Period shall be extended for a
period not to exceed six months following the Expiration Date (the "Post
Expiration Period") in order to allow for receipt of the necessary Governmental
Approvals. During the Post Expiration Period, the Holder may transfer this
Warrant notwithstanding the transfer restrictions contained herein provided
that, concurrent with such transfer, the transferee exercises this Warrant in
full and tenders to the Company the full Purchase Price for all shares of Common
Stock issuable pursuant to this Warrant and the issuance of the shares of Common
Stock issuable pursuant to this Warrant and the issuance of the shares of Common
Stock to such transferee hereunder is not subject to receipt of any governmental
consent or approval or the expiration or termination of the waiting period under
the HSR Act. If the Governmental approvals are obtained with the Post Expiration
Period but the Holder does not deliver notice to the Company of the exercise of
this Warrant and tender the Purchase Price for the shares of Common Stock
underlying the Warrant in accordance herewith within ten business days following
the Holder's receipt of notice of the receipt of such Governmental Approval,
then (1) this Warrant shall expire as of the close of business on such tenth
business day following the Holder's receipt of notice of the receipt of such
Governmental Approval, and (2) the Holder shall reimburse the Company for all
(a) filing fees and (b) all other costs and expenses (including, without
limitation, all legal expenses) incurred in connection with the required
Governmental Approval with respect solely to this Warrant.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder or Holders the right to vote or to consent or to receive notice as a
shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefore; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; or
(d) reclassification or change of the outstanding shares of Common
Stock (other than a change in par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), consolidation of the
Company with, or merger of the Company
13
into, another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of Common Stock, except a
change as a result of a subdivision or combination of such shares or a change in
par value, as aforesaid), or a sale or conveyance to another corporation of the
property of the Company as an entirety is proposed; or
(e) the Company shall propose to issue any rights to subscribe for
shares of Common Stock or any other securities of the Company to all the
shareholders of the Company;
then in any one or more of said events, the Company shall give written notice to
the Holder or Holders of such event at least fifteen (15) days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
13. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address of the Company's principal
offices or to such other address as the Company may designate by notice to the
Holders
14. Supplements and Amendments.
The Company may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
may deem not to adversely affect the interests of the Holders of Warrant
Certificates.
15. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holders inure to the benefit of their respective successors
and assigns hereunder.
14
16. Termination.
This Agreement shall terminate at the close of business at 5:00 p.m.
eastern time on April 16, 2005 subject to Section 11 adjustment, if any.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date
when all Warrants have been exercised and all the Shares issuable upon exercise
of the Warrants have been either resold to the public or have become free
trading shares.
17. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Florida and for all
purposes shall be construed in accordance with the laws of said State.
18. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and any registered Holder or Holders of the
Warrant Certificates, Warrants or the Shares any legal or equitable right,
remedy or claim under this Agreement; and this Agreement shall be for the sole
and exclusive benefit of the Company and any Holder or Holders of the Warrant
Certificates, Warrants or the Shares.
19. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
Precom Technology, Inc. Greenwich Financial Group
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------- ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman Vice President
15
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITES ISSUEDABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED FOR PURPOSED OF PUBLIC
DISTRIBUTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD EXCEPTE (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICASBLE, PRUSUANT TO RULE 144
UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN TIME, April 16, 2005
No. (W-2002-01) 1,000,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Greenwich Financial Group or
registered assigns, (the "Holder") is the registered holder of 500,000 Warrants
to purchase, at any time from April 16, 2002, until 5:00 P.M. Eastern time on
April 16, 2005, subject to extension of such date pursuant to Section 11 of the
Warrant Agreement ("Expiration Date"), up to 1,000,000 fully-paid and
non-assessable shares ("Shares") of common stock, par value $.001 per share (the
"Common Stock"), of CGI Holdings, Inc., a Florida Corporation (the "Company"),
at the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $2.00 per Share upon surrender of this Warrant Certificate
and payment of the Exercise Price at an office or agency of the Company, but
subject to the conditions set forth herein and in the Warrant Agreement dated as
of April 16, 2002 between the Company and Greenwich Financial Group (the
"Warrant Agreement"). Payment of the Exercise Price may be made in cash, or by
wire transfer payable to the order of the Company, or any combination thereof.
No Warrant may be exercised after 5:00 P.M., Eastern Time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto or extended as provided in the Warrant Agreement, shall thereafter
be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby
16
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the Holder (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
Holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) for the remainder of the
Warrant Exercise Term in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Warrant Agreement, without any charge
except for any tax, or other governmental charge imposed in connection
therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the Holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner (s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: April 16, 2002 Precom Technology, Inc.
[SEAL] By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman
17
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of Common
---------
Stock and herewith tenders in payment for such securities cash or a wire
transfer to the order of Precom Technology, Inc. in the amount of
$ , all in accordance with the terms hereof. The undersigned
---------------
requests that a certificate for such securities be registered in the name of
, whose address is
----------------------------
and that such Certificate be delivered to , whose
--------------------------
address is .
---------------
Dated: Signature: /s/
------------------- -----------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant
Certificate.)
(Insert Social Security or Other Identifying Number of Holder):
----------------
18
[FORM OF ASSIGNMENT]
(To be executed by the registered
holder if such holder desires to
transfer the Warrant Certificate.)
FOR VALUE RECEIVED
---------------------------------------------
hereby sells, assigns and transfers unto
--------------------------------------
at (Please print name and address of transferee)
------------------------------
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ,
--------------------
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: Signature: /s/
------------------------------------
Signature must conform
in all respects to name
of holder as specified
on the face of the
Warrant Certificate.)
(Insert Social Security or Other Identifying Number of Holder):
----------------
19