EXHIBIT 1
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement ("Agreement") between PreCom Technology,
Inc., a Florida corporation ("PreCom"), Greenwich Financial Group ("GFG"),
Concilium Group, Inc., a Delaware corporation ("CGI") and the persons listed in
EXHIBIT A hereof (collectively the "Shareholders"), being the owners of record
of all of the issued and outstanding stock of CGI, is entered into as of
February 21, 2002.
RECITALS
A. CGI is a diversified financial services company that takes advantage of a
wide range of business opportunities and tax and asset protection strategies for
its clients at varying investment levels. Through its business units, CGI acts
as a vehicle and advisor for acquisition of strategically placed companies in
fragmented industries, as well as a full-service financial and tax advisor, and
a venture capital firm.
B. The Shareholders own all of the issued and outstanding shares of common stock
of CGI (the "CGI Shares").
C. The Shareholders have agreed to sell to PreCom, and PreCom has agreed to
purchase, the CGI Shares from the Shareholders in exchange for shares of PreCom
common stock, pursuant to the terms and conditions set forth in this Agreement.
D. CGI will become a wholly-owned subsidiary of PreCom.
E. GFG is a control person with respect to PreCom, controlling directly or
indirectly a majority of the outstanding shares of PreCom.
F. The parties to this Agreement intend that the share exchange transaction
contemplated by this Agreement qualify as a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended
In consideration of the mutual representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as follows:
1. Exchange of Stock.
(a) The Shareholders agree to transfer to PreCom, and PreCom agrees to purchase
from the Shareholders, all of the Shareholders' right, title and interest in
their CGI Stock, representing 100% of the issued and outstanding stock of CGI,
free and clear of all mortgages, liens, pledges, security interests,
restrictions, encumbrances, or adverse claims of any nature.
(b) At the Closing (as defined in Section 2 below), upon surrender by the
Shareholders of the certificates evidencing the CGI Stock duly endorsed for
transfer to PreCom or accompanied by stock powers executed in blank by the
Shareholders, PreCom will cause
20,000,000 shares (subject to adjustment for fractionalized shares as set forth
below) of the common voting stock, par value $0.001 of PreCom (the "PreCom
Stock") to be issued to the Shareholders, in full satisfaction of any right or
interest which each Shareholder held in the CGI Stock. The PreCom Stock will be
issued to the Shareholders on a pro rata basis, in the same proportion as the
percentage of their ownership interest in the CGI Stock, as set forth on EXHIBIT
A. Any fractional shares that will result due to such pro rata distribution will
be rounded up to the next highest whole number. As a result of the exchange of
the CGI Stock in exchange for the PreCom Stock, CGI will become a wholly-owned
subsidiary of PreCom.
(c) Immediately following the Closing, the current CGI employee stock option
plan will be adopted by PreCom, and 2,371,441 shares of common stock,
representing ten percent of the common shares then outstanding, will be reserved
for future issuance under the plan, to be known as the Concilium Group, Inc.
Employee Stock Option Plan.
(d) PreCom intends to change its name to Concilium Group, Inc. or such
derivation thereof as the Shareholders and CGI shall designate prior to Closing
and the stock certificates to be issued to the shareholders may be issued in the
name of PreCom or Concilium Group, Inc.
2. Closing.
(a) The parties to this Agreement will hold a closing (the "Closing") for the
purpose of executing and exchanging all of the documents contemplated by this
Agreement and otherwise effecting the transactions contemplated by this
Agreement. The Closing will be held as soon as possible at CGI's current
principal office located at 2755 Cottonwood Parkway, Sixth Floor, Salt Lake
City, UT 84121, or at such other location as the parties mutually agree in
writing, following PreCom's compliance with the shareholder notification
requirements of Florida state law and the requirements of Section 14 of the
Securities Exchange Act of 1934, as amended, but no later than March 31, 2002
unless extended in writing by the parties. All proceedings to be taken and all
documents to be executed and exchanged at the Closing will be deemed to have
been taken, delivered and executed simultaneously, and no proceeding will be
deemed taken nor documents deemed executed or delivered until all have been
taken, delivered and executed. If agreed to by the parties, the Closing may take
place through the exchange of documents by fax and/or express courier.
(b) With the exception of any stock certificates which must be in their original
form, any copy, fax, e-mail or other reliable reproduction of the writing or
transmission required by this Agreement or any signature required thereon may be
used in lieu of an original writing or transmission or signature for any and all
purposes for which the original could be used, provided that such copy, fax,
e-mail or other reproduction is a complete reproduction of the entire original
writing or transmission or original signature, and the originals are promptly
delivered thereafter.
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(c) A Closing will be deemed to have occurred, upon the exchange of 80% of the
currently issued and outstanding shares of CGI for 16,000,000 shares of PreCom
common stock. This Agreement shall be binding upon the parties when executed by
CGI, PreCom and Shareholders holding at least 60% of the total issued and
outstanding shares of CGI. In the event that the full amount of CGI shares have
not been exchanged for the full amount of PreCom shares (20 million shares) at
the Closing, the parties will cooperate to complete the full exchange
contemplated by this Agreement as quickly as possible following the Closing, but
no later than ten days after Closing.
(d) At Closing, PreCom (CGI) will issue 1,650,000 shares of its common stock to
GFG, all of which shares shall be unregistered shares, except as otherwise
provided. The issuance is contingent on a release from the respective parties of
any liabilities owed by PreCom at Closing. In addition, PreCom (CGI) shall issue
1,000,000 unregistered shares (500,000 shares each) to Compound Capital
Partners, Inc. and iCapital, Inc. in connection with the Agreement attached as
EXHIBIT D hereto. As a result, the total shares outstanding at Closing shall be
equal to 23,714,410, exclusive of any shares issued at or before Closing
pursuant to Section 6(j) hereof. The 1,650,000 shares of PreCom issued to GFG,
its designees and assignees, shall be subject to an undertaking that if PreCom
thereafter undergoes a reverse split of its common stock while GFG or its
original designees or assigns still hold all or part of the said shares, PreCom
will issue to GFG, or such affiliates and assigns, such additional shares of its
common stock as shall be required to make the total average value of the
resulting number of post-split shares for the five trading days commencing 45
days after the completion of the reverse split equal to the total average value
of the pre-split number of shares so held for the five trading days ending on
the last trading day prior to the date of the reverse split.
(e) At Closing, PreCom (CGI) shall issue to GFG warrants to purchase 500,000
shares of the common stock of PreCom (CGI) for a period of three years after
Closing at a per share price of $2.00, in the form and on the terms of the
Warrant Agreement attached as EXHIBIT E hereto.
3. Representations and Warranties of PreCom.
PreCom represents and warrants as follows:
(a) PreCom is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida and is licensed or qualified as
a foreign corporation in all states in which the nature of its business or the
character or ownership of its properties makes such licensing or qualification
necessary.
(b) The authorized capital stock of PreCom consists of (i) 50,000,000 shares of
common stock, $0.001 par value per share, of which 2,128,820 are issued and
outstanding and (ii) 10,000,000 shares of preferred stock, $.0.001 par value, of
which no shares are issued and outstanding. To the knowledge of PreCom, all
issued and outstanding shares of PreCom's common and preferred stock are fully
paid and non-assessable.
(c) PreCom has no subsidiaries.
(d) Execution of this Agreement and performance by PreCom hereunder has been
duly authorized by all requisite corporate action on the part of PreCom, and
this Agreement
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constitutes a valid and binding obligation of PreCom, and PreCom's performance
hereunder will not violate any provision of any charter, bylaw, indenture,
mortgage, lease, or agreement, or any order, judgment, decree, or, to PreCom's
knowledge any law or regulation, to which any property of PreCom is subject or
by which PreCom is bound.
(e) PreCom has full corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder, and will deliver at the Closing a
certified copy of resolutions of its board of directors authorizing execution of
this Agreement by its officers and performance hereunder.
(f) PreCom has provided all financial statements and financial information in
its possession as has been requested by the Shareholders.
(g) There is no litigation or proceeding pending, or to PreCom's knowledge
threatened, against or relating to PreCom, its properties or businesses.
(h) PreCom is not a party to any material contract other than those listed in
PreCom's Form 10-QSB periodic report for the period ending September 30, 2001,
as filed with the Securities Exchange Commission.
(i) PreCom has no material assets and no liabilities, except as listed in
PreCom's Form 10-QSB periodic report for the period ending September 30, 2001,
as filed with the Securities Exchange Commission and any liabilities incurred in
the ordinary course of business from September 30, 2001 to the Closing Date.
(j) Other than Nicholas Calapa and Bruce Keller, PreCom has no employees.
(k) No current officer, director, affiliate or person is known to PreCom to be
the record or beneficial owner of in excess of 5% of PreCom's common stock,
other than Nicholas Calapa and Bruce Keller, who are principals of GFG, the
owner of 12 percent of the outstanding shares of PreCom prior to Closing, and of
Greenwich New Equity, the owner of 26 percent of the outstanding shares of
PreCom prior to Closing, and no person known to be an associate of any of the
foregoing is a party adverse to PreCom or has a material interest adverse to
PreCom in any material pending legal proceeding.
(l) PreCom has filed in correct form all federal, state, and other tax returns
of every nature required to be filed by it and has paid all taxes as shown on
such returns and all assessments, fees and charges received by it to the extent
that such taxes, assessments, fees and charges have become due. PreCom has also
paid all taxes which do not require the filing of returns and which are required
to be paid by it. To the extent that tax liabilities have accrued, but have not
become payable, they have been adequately reflected as liabilities on the books
of PreCom.
(m) PreCom is a publicly reporting company pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Act") and is in compliance
with all reporting
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requirements of the Act, except those reports disclosed on EXHIBIT B, which
shall be filed prior to the Closing. PreCom's Form 10-KSB for the period ending
December 31, 2000, its Form 10-QSB for the periods ending March 31, 2001, June
30, 2001 and September 30, 2001 and any other periodic filings made by PreCom as
filed with the SEC, including all exhibits, documents and attachments thereto,
are true and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make any statement therein not materially
misleading.
(n) PreCom is acquiring the CGI shares to be transferred to it under this
Agreement for investment and not with a view to the sale or distribution
thereof.
(o) PreCom represents that a majority of the shares of its common stock
outstanding have consented to the transaction contemplated by this Agreement,
and GFG represents that it has consented in writing to the transaction
contemplated herein by its execution of this Agreement.
4. Representations and Warranties of CGI and the Warranting Shareholders.
CGI, Robert Hipple, Rodney Read and Drew Roberts (the "Warranting Shareholders")
jointly and severally represent and warrant as follows:
(a) CGI is a corporation duly organized, validly existing, and in good standing
under the laws of the state of Delaware and is licensed or qualified as a
foreign corporation in all places in which the nature of its business or the
character or ownership of its properties makes such licensing or qualification
necessary.
(b) There are no agreements purporting to restrict the transfer of the CGI
Shares, nor any voting agreements, voting trusts or other arrangements
restricting or affecting the voting of the CGI Shares. The CGI Shares held by
the Shareholders are duly and validly issued, fully paid and non-assessable, and
issued in full compliance with all federal, state, and local laws, rules and
regulations. There are no subscription rights, options (except for the Employee
Stock Option Plan set forth in Section 1c of this Agreement), warrants,
convertible securities, or other rights (contingent or otherwise) presently
outstanding, for the purchase, acquisition, or sale of the capital stock of CGI,
or any securities convertible into or exchangeable for capital stock of CGI or
other securities of CGI, from or by CGI.
(c) The Shareholders have full right, power and authority to sell, transfer and
deliver the CGI Shares, and upon delivery of the certificates therefor as
contemplated in this Agreement, the Shareholders will transfer to PreCom valid
and marketable title to the CGI Shares, including all voting and other rights to
the CGI Shares, free and clear of all pledges, liens, security interests,
adverse claims, options, rights of any third party, or other encumbrances. Each
of the Shareholders owns and holds the number or percentage of CGI Shares which
are listed opposite their names on EXHIBIT A attached hereto.
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(d) There is no litigation or proceeding pending, or to any Warranting
Shareholder's knowledge, threatened, against or relating to CGI or to the CGI
Shares.
(e) CGI has filed in correct form all tax returns of every nature required to be
filed by it and has paid all taxes as shown on such returns and all assessments,
fees and charges received by it to the extent that such taxes, assessments, fees
and charges have become due. CGI has also paid all taxes which do not require
the filing of returns and which are required to be paid by it. To the extent
that tax liabilities have accrued, but have not become payable, they have been
adequately reflected as liabilities on the books of CGI.
(f) Except as reflected on EXHIBIT C, attached hereto, CGI and the Shareholders
have had the opportunity to perform all due diligence investigations of PreCom
as they have deemed necessary or appropriate and to ask questions of PreCom's
officers and directors and have received satisfactory answers to all of their
questions. CGI and the Shareholders have had access to all documents and
information about PreCom and have reviewed sufficient information to allow them
to evaluate the merits and risks of the acquisition of the PreCom Stock.
(g) The Shareholders are acquiring the PreCom Stock for their own account (and
not for the account of others) for investment and not with a view to the
distribution thereof. The Shareholders will not sell or otherwise dispose of the
PreCom Stock without registration under the Securities Act of 1933, as amended,
or an exemption therefrom, and the certificate or certificates representing the
PreCom Stock will contain a legend to the foregoing effect.
5. Conduct Prior to the Closing.
PreCom agrees that between the date of this Agreement and the Closing it will
take the following actions at its sole expense, which expense shall be paid or
satisfied prior to Closing:
(a) Effect a reverse split of its issued and outstanding common stock of 1 share
for every 2 shares currently issued and outstanding, reducing the amount of
PreCom common stock currently issued and outstanding from 2,128,820 to 1,064,410
shares.
(b) Change the name of the Company from PreCom Technology, Inc. to Concilium
Group, Inc.
PreCom, CGI and the Shareholders covenant that between the date of this
Agreement and the Closing as to each of them:
(c) PreCom and CGI Shareholders will cooperate with each other in the
preparation and filing of an information statement prepared pursuant to Sections
14(c) & (f) of the Securities Exchange Act of 1934 to be sent to the
shareholders of PreCom and filed with the SEC describing the agreed to change in
control of PreCom and the reverse stock split
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and name change contemplated by Sections 5(a) and (b) above, and agree to use
their best efforts to cause such statement to be prepared and filed in
preliminary form within ten (10) days of the date of execution of this Agreement
by all parties. CGI and the Shareholders agrees to bear all expenses for the
filing of the information statement prepared pursuant to Sections 14(c) & (f) of
the Securities Exchange Act of 1934 as well as any amendments to same and the
distribution of the information statement to the shareholders of PreCom. PreCom
agrees to bear all costs and expenses relating to the preparation and filing of
the annual report required on Form 10-KSB for the calendar year 2002 and all
costs of auditing its financial statements reported therein prior to Closing.
(d) No change will be made in the charter documents, by-laws, or other corporate
documents of PreCom or CGI, except as provided in Sections 5(a) and (b) above.
(e) PreCom and CGI will each use its best efforts to maintain and preserve its
business organization, employee relationships, and goodwill intact, and PreCom
will not enter into any material commitment except in the ordinary course of
business.
(f) None of the Shareholders will sell, transfer, assign, hypothecate, lien, or
otherwise dispose of or encumber the CGI Shares owned by them.
6. Conditions to Obligations of Shareholders and CGI.
CGI and the Shareholders' obligation to complete the transactions contemplated
herein is subject to fulfillment on or before the Closing of each of the
following conditions, unless waived in writing by CGI or the Shareholders as
appropriate:
(a) The representations and warranties of PreCom set forth herein will be true
and correct at the Closing as though made at and as of that date, except as
affected by transactions contemplated hereby.
(b) PreCom will have performed all covenants required by this Agreement to be
performed by it on or before the Closing.
(c) This Agreement will have been approved by the Board of Directors of PreCom.
(d) PreCom will have delivered to the Shareholders the documents set forth below
in form and substance reasonably satisfactory to counsel for the Shareholders,
to the effect that:
(i) PreCom is a corporation duly organized, validly existing, and in good
standing;
(ii) PreCom's authorized and issued capital stock is as set forth herein;
(iii) Certified copies of the resolutions of the board of directors of
PreCom authorizing the execution of this Agreement and the consummation
hereof; and
(iv) Any further document as may be reasonably requested by counsel to the
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Shareholders in order to substantiate any of the representations or
warranties of PreCom set forth herein.
(e)There will have occurred no material adverse change in the business,
operations or prospects of PreCom.
(f) Robert Hipple will be appointed as Chairman, President and CEO of PreCom and
Nicholas Calapa will resign from the positions of President and CEO of PreCom.
(g) Bruce Keller will resign from his positions as Vice President and Secretary
of PreCom and his successor shall be selected by CGI.
(h) The Board of Directors of PreCom will appoint Robert Hipple and an
individual selected by CGI to serve on the initial Board of Directors of PreCom
at and after Closing.
(i) Bruce Keller shall resign from PreCom's Board of Directors upon the
appointment of Robert Hipple and CGI's designee. Nicholas M. Calapa shall remain
a board member of PreCom (Concilium Group, Inc.) for at least one (1) year from
the closing date of this Agreement.
7. Conditions to Obligations of PreCom.
PreCom's obligation to complete the transaction contemplated herein will be
subject to fulfillment on or before the Closing of each of the following
conditions, unless waived in writing by PreCom, as appropriate:
(a) The representations and warranties of CGI and the Warranting Shareholders
set forth herein will be true and correct at the Closing as though made at and
as of that date, except as affected by transactions contemplated hereby.
(b) CGI and the Shareholders will have performed all covenants required by this
Agreement to be performed by them on or before the Closing.
(c) This Agreement will have been approved by the Board of Directors of CGI.
(d) CGI and the Shareholders will have delivered to PreCom the documents set
forth below in form and substance reasonably satisfactory to counsel for PreCom,
to the effect that:
(i) CGI is a corporation duly organized, validly existing, and in good
standing;
(ii) CGI's issued and outstanding capital stock is owned as set forth
herein and EXHIBIT A hereto;
(iii) Certified copies of the resolutions of the board of directors of CGI
authorizing the execution of this Agreement and the consummation hereof;
and
(iv) Any further document as may be reasonably requested by counsel to
PreCom in order to substantiate any of the representations or warranties of
the
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shareholders set forth herein.
(e) There will have occurred no material adverse change in the business,
operations or prospects of CGI.
8. Additional Covenants.
(a) Between the date of this Agreement and the Closing, the Shareholders and
CGI, with respect to CGI, and PreCom, with respect to itself, will, and will
cause their respective representatives to (i) afford the other party and its
representatives access to their personnel, properties, contracts, books and
records, and other documents and data, as reasonably requested by the other
party; (ii) furnish the other party and its representatives with copies of all
such contracts, books and records, and other existing documents and data as the
other may reasonably request in connection with the transaction contemplated by
this Agreement; and (iii) furnish the other party and its representatives with
such additional financial, operating, and other data and information as the
other may reasonably request. The Shareholders and CGI will cause CGI to, and
PreCom will provide the Shareholders with, complete copies of all material
contracts and other relevant information on a timely basis in order to keep the
other party fully informed of the status of their respective business and
operations.
(b) PreCom, CGI and the Shareholders will cooperate with each other in the
preparation of a Form 8-K if required to be filed with the SEC describing the
transaction contemplated by this Agreement and such other items as are required
by the SEC rules and regulations.
(c) PreCom will deliver PreCom's corporate books and records, including all
records relating to PreCom's audited financial statements, to the CGI
Shareholders at Closing.
(d) The parties agree that they will not make, and the Shareholders will not
permit CGI to make, any public announcements relating to this Agreement or the
transactions contemplated herein without the prior written consent of the other
party, except as may be required upon the written advice of counsel to comply
with applicable laws or regulatory requirements after consulting with the other
party hereto and seeking their consent to such announcement.
(e) As soon as practicable following the Closing, the Shareholders (as
controlling party of PreCom post-Closing) agree to use their reasonable best
efforts to cause PreCom to file a registration statement on Form SB-2 within 45
days of the Closing, registering for resale 600,000 of the shares to be issued
to Greenwich Financial Group hereunder, and such additional shares as PreCom
shall determine. If the SB-2 is not filed within 60 days of the Closing then,
PreCom shall issue an additional 100,000 shares to GFG with such shares to be
registered in the SB-2 Registration Statement. For each additional 30 days that
the SB-2 is not filed with the SEC, GFG shall receive an additional 100,000
shares
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that shall be registered in the SB-2 Registration Statement. If the SB-2 is not
approved by the SEC and deemed effective within 365 days of filing, then GFG
shall receive an additional 100,000 shares. For each additional 60 days that the
SB-2 is not deemed effective by the SEC, GFG shall receive an additional 100,000
shares.
(f) Additionally, the Shareholders (as controlling party of PreCom post-Closing)
agree to use their reasonable best efforts to cause PreCom to file a
registration statement on Form S-8 registering 50,000 of the shares to be issued
to GFG (or its designees) hereunder, provided that the shares are issued
consistent with the requirements for use of Form S-8, unless such shares are
included in the SB-2 registration. The shares of PreCom issued to GFG and
registered as provided herein shall be subject to a separate lock-up agreement
to be executed by GFG at Closing providing for release of the shares is
accordance with the following schedule:
(i) 400,000 shares will have a bleed out of 10% per month once the shares
become free trading and the shares referenced in (ii) below have been sold.
(ii) 200,000 shares will have a bleed out of 15% per month once the shares
become free trading
(g) Within ten (10) days following the Closing, GFG agrees to cause PreCom to
pay all creditors of PreCom existing at the date of Closing, if not paid prior
to Closing.
(h) PreCom will receive the proceeds of the sale of 500,000 shares of its common
stock at $1.00 per share, or shall receive a commitment for the closing of such
a sale, to be closed within ten (10) days after Closing, from or through
Compound Capital Partners, Inc. or iCapital, Inc. pursuant to the Agreement
attached as EXHIBIT D hereto. Notwithstanding same, this Agreement shall not be
contingent upon PreCom receive such proceeds or commitment for th sale of
500,000 shares of its common stock at $1.00 per share.
9. Termination.
This Agreement may be terminated (1) by mutual consent in writing or (2) by
either the Shareholders or PreCom if there has been a material misrepresentation
or material breach of any warranty or covenant by any other party that is not
cured by the Closing.
10. Expenses.
Whether or not the Closing is consummated, each of the parties will pay at or
before Closing all of his, her, or its own legal and accounting fees and other
expenses incurred in the preparation of this Agreement and the performance of
the terms and provisions of this Agreement. Notwithstanding the foregoing,
should the transaction contemplated by this Agreement actually close, CGI (as
controlling party of PreCom post-Closing) agrees to pay those fees set forth in
Section 8 herein, in accordance with the terms of Section 8.
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11. Survival of Representations and Warranties.
The representations and warranties of the Shareholders and PreCom set out in
this Agreement will survive the Closing for a period of thirty days, except for
the representations and warranties set forth in Sections 3(l) and 4(e) regarding
tax liabilities with shall survive for seven years from the date of this
Agreement.
12. Waiver.
Any failure on the part of either party hereto to comply with any of its
obligations, agreements, or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.
13. Brokers.
Except for the Agreement previously entered into between CGI and iCapital
Corporation and Compound Capital Partners, Inc., as set forth in EXHIBIT D, no
finder or broker has been employed by the parties to this Agreement. The parties
understand that the principals of GFG are also the controlling shareholders,
directors and officers of PreCom prior to the Closing. Each party agrees to
indemnify and hold harmless the other party against any fee, loss, or expense
arising out of claims by brokers or finders employed or alleged to have been
employed by the indemnifying party.
14. Notices.
All notices and other communications under this Agreement must be in writing and
will be deemed to have been given if delivered in person or sent by prepaid
first-class certified mail, return receipt requested, or recognized commercial
courier service, as follows:
If to PreCom, to:
PreCom Technology, Inc.
2001 West Main Street
Stamford, CT 06902
Attention: Nicholas M. Calapa
If to the Shareholders or Concilium Group, to :
c/o Concilium Group, Inc.
2755 Cottonwood Parkway
Sixth Floor
Salt Lake City, UT 84121
Attention: Robert J. Hipple
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15. General Provisions.
(a) This Agreement will be governed by and under the laws of the State of
Florida, USA without giving effect to conflicts of law principals. If any
provision hereof is found invalid or unenforceable, that part will be amended to
achieve as nearly as possible the same effect as the original provision and the
remainder of this Agreement will remain in full force and effect.
(b) Any dispute arising under or in any way related to this Agreement will be
submitted to binding arbitration before a panel of three arbitrators of the
American Arbitration Association. The arbitrators will be selected and the
arbitration will conducted in accordance with the Association's commercial rules
then in effect. The arbitration will be conducted in the State of Florida. The
decision of the arbitrators will set forth in reasonable detail the basis for
the decision and will be binding on the parties. The arbitration award may be
confirmed by any court of competent jurisdiction.
(c) In any adverse action, the parties will restrict themselves to claims for
compensatory damages and/or securities issued or to be issued and no claims will
be made by any party or affiliate for lost profits, punitive or multiple
damages.
(d) This Agreement constitutes the entire agreement and final understanding of
the parties with respect to the subject matter hereof and supersedes and
terminates all prior and/or contemporaneous understandings and/or discussions
between the parties, whether written or verbal, express or implied, relating in
any way to the subject matter hereof. This agreement may not be altered,
amended, modified or otherwise changed in any way except by a written agreement,
signed by both parties.
(e) This Agreement will inure to the benefit of, and be binding upon, the
parties hereto and their successors and assigns; provided, however, that any
assignment by either party of CGI rights under this Agreement without the
written consent of the other party will be void.
(f) The parties agree to take any further actions and to execute any further
documents which may from time to time be necessary or appropriate to carry out
the purposes of this Agreement.
(g) The headings of the Sections, paragraphs and subparagraphs of this Agreement
are solely for convenience of reference and will not limit or otherwise affect
the meaning of any of the terms or provisions of this Agreement. The references
in this Agreement to Sections, unless otherwise indicated, are references to
sections of this Agreement.
(h) This Agreement may be executed in counterparts, each one of which will
constitute an original and all of which taken together will constitute one
document. This Agreement may be executed by delivery of a signed signature page
by fax to the other parties hereto and such fax execution and delivery will be
valid in all respects.
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Signed, sealed and delivered as the act of each party hereto on the date first
above written.
PRECOM TECHNOLOGY, INC.
By:
------------------------------------
Nicholas M. Calapa, President
CONCILIUM GROUP, INC.
By:
------------------------------------
Robert J. Hipple, CEO
GREENWICH FINANCIAL GROUP
By:
------------------------------------
Bruce Keller
By:
------------------------------------
Nicholas M. Calapa
SHAREHOLDERS OF CONCILIUM GROUP:
WARRANTING SHAREHOLDERS:
- ---------------------------------------- ------------------------------------
Robert J. Hipple (30.9%) Drew Roberts (14.50%)
- ----------------------------------------
Rodney Read (14.50 %)
OTHER SHAREHOLDERS:
- ---------------------------------------- ------------------------------------
Calvin Jones Dell Gailey
13
- ---------------------------------------- ------------------------------------
David Strong Jan Read
- ---------------------------------------- ------------------------------------
Lisa Hildebrand Perry Bshara
- ---------------------------------------- ------------------------------------
JoAnn Hoggins Lester Katz
- ---------------------------------------- ------------------------------------
Michael Coopet Mark Wood
- ---------------------------------------- ------------------------------------
Lana Tabaracci Aaron Neilsen
- ---------------------------------------- ------------------------------------
Charlene Smith David Smith
- ---------------------------------------- ------------------------------------
Reggie Ainsworth Melanie Decker
- ---------------------------------------- ------------------------------------
Brian Hansen Jackie Groves
- ---------------------------------------- ------------------------------------
Amy Williams Boyce Lowery
- ---------------------------------------- ------------------------------------
Brad Parkin Jennifer Webster
- ---------------------------------------- ------------------------------------
Glen Liddell John Capasso
14
- ---------------------------------------- ------------------------------------
James Drese Mark Nordbrock
- ---------------------------------------- ------------------------------------
Ray Muratori Doug Nelson
- ---------------------------------------- ------------------------------------
Bret Barnes Steve Parker
- ---------------------------------------- ------------------------------------
Walt MacCarron Ryan Audagnotti
15
EXHIBIT A
CONCILIUM GROUP, INC. SHAREHOLDERS
Name Shares Ownership %
- ---- ------ -----------
Robert Hipple 76328 31.54
Rodney Read 35636 14.73
Drew Roberts 35636 14.73
Dell Gailey 8908 3.68
Dave Strong 6236 2.58
Jan Read 1781 0.74
Lisa Hildebrand 1781 0.74
Perry Bsharah 6236 2.58
JoAnn Hoggins 891 0.37
Lester Katz 8908 3.68
Michael Coopet 6236 2.58
Mark Woods 4454 1.84
Lana Tabaracci 3564 1.47
Aaron Nilsen 4454 1.84
Charlene Smith 891 0.37
David Smith 4454 1.84
Reggie Ainsworth 1781 0.74
Melanie Decker 1336 0.55
Brian Hansen 1781 0.74
Jackie Groves 891 0.37
Amy Williams 891 0.37
Boyce Lowrey 2673 1.10
Brad Parkin 2673 1.10
Cal Jones 8908 3.68
Jennifer Webster 891 0.37
Glenn Liddell 1781 0.74
John Capasso 3500 1.45
James Drese 3000 1.24
Bret Barnes 1500 0.62
Ryan Audagnotti 2000 0.83
Ray Muratori 2000 0.83
------
242000
EXHIBIT B
LATE SEC FILINGS
None
EXHIBIT C
EXCEPTIONS TO DUE DILIGENCE
None
EXHIBIT D
CONSULTING AGREEMENT
FINANCIAL CONSULTING SERVICES AGREEMENT
THIS AGREEMENT MADE THE 12TH DAY OF DECEMBER 2001
BETWEEN: INTERNATIONAL PLANNING ASSOCIATES INC.
- -------- 869 E. 4500 S. #501
Salt Lake City, UT 84107
(hereinafter called "International Planning")
AND:
COMPOUND CAPITAL PARTNERS, INC.
8929 Wilshire Blvd., Suite 214
Beverly Hills, CA 90211
- -and-
ICAPITAL CORPORATION
2603 Main Street, Suite #1150
Irvine, CA 92614
(hereinafter called the "Consultants")
WHEREAS:
A. Consultants understand that the privately held corporation of
International Planning, wishes to become a public company by way of a
Reverse Takeover or Merger, (hereinafter referred to as "RTO") into a
reporting trading shell company whose common shares are traded on the
Over-the-Counter Bulletin Board (hereinafter referred to as "OTCBB")
Exchange of the National Association of Securities Dealers;
B. Consultants are engaged in the business of corporate development,
investor relations as it relates to start-up and second stage venture
companies;
C. Consultants initiates the acquisition and merger of private companies
into publicly traded companies;
D. International Planning desired to engage Consultants to perform and
provide corporate and finance related services and to assist
International Planning in going from its current private state to being
publicly trading, and Consultants has agreed to do so for the
consideration and upon the terms and conditions hereinafter set forth.
NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements herein contained, the parties hereto do covenant and agree with
each other as follows:
1.0 Engagement
International Planning hereby engages the Consultants on a non-exclusive
basis, and Consultants hereby accepts the engagement to become a
financial consultant to International Planning and to render such
advice, consultation, information, and services to the Directors and/or
Officers of International Planning regarding general financial and
business matters, merger and acquisition consulting.
2.0 Financial and Corporate Advice Services- Consultants agree to proved
financial advice including consultation with regard to but not limited
to the following:
2.1 Provide analysis and advice with regard to the capital structure and the
appropriate pricing, structuring and procedures for the RTO of
International Planning into the OTCBB shell company;
2.2 Provide analysis and advice with respect to the financial impact of any
proposed capital or R&D expenditures; 2.3 Provide due diligence services
in respect to any proposed transaction, as the need arises; 2.4 Provide
corporate planning, strategy and negotiations with potential strategic
business partners; 2.5 Provide due diligence processes for capital
structures, capital sources and financial transactions.
3.0 Merger Services-Consultants agree to help arrange for the filing of all
necessary documents for the merger process including:
3.1 Introduce to International Planning in writing suitable shell companies;
3.2 Act as advisor to International Planning for any negotiations with the
OCTBB trading shell company; 3.3 Provide advice with any and all
agreements that International Planning shall enter into;
3.4 Provide advice and assistance with the process of a name change, new
stock certificates, appointment of auditor, lawyers and stock transfer
agents;
3.5 Organize and help to bring current unaudited or audited financial
statements of International Planning to most recent fiscal period;
3.6 Supply a list a suitable market makers for International Planning to
engage for an orderly and efficient market of the RTO securities;
3.7 Act as exclusive advisor to International Planning for an y negotiations
with the OCTBB trading shell company;
3.8 Provide any or all documents needed to make an orderly transfer of
control.
4.0 Third Party Introductions- Consultants shall introduce to International
Planning suitable OTCBB shell companies in the following manner:
4.1 Provide for International Planning to sign an acceptance letter;
4.2 Upon Consultants receiving signed acceptance letter, Consultants will
provide International Planning with the name of the company, contact and
company structure information;
4.3 Consultants will then set-up a telephone conference call to introduce
International Planning with the suitable shell company.
5.0 Compensation and Fees - As consideration for Consultants performing the
services in this Agreement, International Planning agrees to pay and
deliver to Consultant the following consideration:
5.1 International Planning agrees that they will compensate Consultants for
expenses incurred and services rendered. The total compensation fee will
be 10% of the total issue and outstanding shares (the "Shares") after
the completion of the RTO. The fee will be allocated as follows;
5.1.1 3% fee to Compound Capital Partners Inc.;
5.1.2 2% fee to iCapital Partners Inc;
5.1.3 5% fee to Current Shell Owner.
5.2 The Shares shall be issued after the completion of the RTO and when
Consultants deliver in writing directions to issue the Shares. The
Shares will be unrestricted common shares, duly authorized, validly
issued and outstanding, and will not be subject to any liens, or
encumbrances or hold periods.
5.3 Consultants will also receive a cash fee of $50,000 US dollars at the
completion of the RTO. This fee will be due and payable within seven (7)
days following the completion of the RTO between International Planning
and OTCBB shell company.
6.0 Non-Circumvention
6.1 The parties will not in any way whatsoever circumvent or attempt to
circumvent each other or any party involved in the transactions the
parties are desirous of entering into and do assure the other that they
will not in any way whatsoever engage in any transaction with such
contact revealed by the other party. In the event that the sources
revealed by one party happen to be the same sources as those already
contacted by the other party or introduced to the other party by another
broker prior to the revelation, this provision will not bind this other
party provided that written proof of such prior contacts or introduction
is available.
6.2 In the event of the circumvention by either party, directly or
indirectly, the circumvented party shall be entitled to a legal monetary
compensation equal to the maximum fee it should hare realized from such
a transaction plus any and all expenses, including attorney fees,
incurred to enforce this provision.
7.0 Representations, Warrants And Covenants
7.1 International Planning represents, warrants and covenants to the
Consultants as follows:
7.1.1 International Planning has the full authority, right, power and
legal capacity to enter into this Agreement and to consummate the
transactions, which are provided for herein. The execution of this
Agreement by International Planning and its delivery to the
Consultants, and the consummation by it of the transactions which
are contemplated herein have been duly approved and authorized by
all necessary action by International Planning's Board of
Directors and no further authorization shall be necessary on the
part of International Planning for the performance and
consummation by International Planning of the transactions which
are contemplated by this Agreement.
7.2 Consultants represents, warrants and covenants to International Planning
that:
7.2.1. Consultants have the full authority, right power and legal
capacity to enter into this Agreement and to consummate the
transactions, which are provided for herein. The execution of
this Agreement by Consultants and its delivery to International
Planning, and the consummation by it of
the transactions which are contemplated herein have been duly
approved and authorized by all necessary action the Consultant's
and no further authorization shall be necessary on the party of
the Consultant's for the performance and consummation by
Consultants of the transactions which are contemplated by this
Agreement.
8.0 Due Diligence
International Planning shall supply an deliver to the Consultants all
information relating to International Planning's company business as may
be reasonably requested by the Consultant to enable the Consultant to
make an assessment of International Planning's company and business
prospects and provide the consulting services described herein.
8.0 Term
The term ("Term") of this Agreement shall commence on the date hereof
and continue for twelve (12) months. The Agreement may be extended in
writing if agreed upon by both parties. Either party may cancel this
Agreement upon five (5) days with written notification of such violation
from the other party. Such cancellation shall not excuse the breach of
non-performance by the other party or relieve the breaching party of its
obligation incurred prior to the date of cancellation.
9.0 Arbitration
Any controversy or claim arising out of relating to this Agreement, or
breach thereof, may be resolved by mutual agreement, or if not, shall be
settled in accordance with the Arbitration rules of the American
Arbitration Association in Irvine, California. Any decision issued there
from shall be binding upon the parties and shall be enforceable as a
judgment in any court of competent jurisdiction. The prevailing party is
such arbitration or other proceeding shall be entitled, in addition to
such other relief an may be granted, to a reasonable sum as and for
attorney's fees in such arbitration or other proceeding. If collection
is required for any payment not made when due, the creditor shall
collect statutory interest and the cost of collection, including
attorney's fees whether or not court action is required for enforcement.
The prevailing party in any such proceeding shall also be entitled to
reasonable attorney's fees and costs in connection all appeals of any
judgment.
10.0 General
10.1 This Agreement shall not be assignable by either party without
prior written consent of the other party.
10.2 This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.3 This Agreement sets forth the entire understanding between the
parties, there being no terms, conditions, warranties or
representations other than those contained herein, and no
amendments hereto shall be valid unless made in writing and signed
by all parties hereto.
10.4 This Agreement shall be binding upon and shall inure to the benefit
to the successors and assigns of all parties hereto.
10.5 This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of California, regardless of
law of conflicts.
10.6 All notices, requests, instructions, and other documents to be
given hereunder shall be writing.
If to International International Planning Associates, Inc.
Attention: Robert Hipple
869 E. 4500 South, #501
Salt Lake City, UT USA 84107
Facsimile No: (801) 365-0888
If to Consultants: iCapital Corporation
Attention Randall Letcavage
2603 Main Street, Suite 1150
Irvine, California USA 92614
Facsimile: (949) 260-0116
Compound Capital Partners, Inc.
Attention: Illya Bond
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
on the date first written above.
INTERNATIONAL PLANNING ASSOCIATES, INC.
Per: /s/ Robert Hipple
------------------------------------
Robert Hipple
Print Title President and CEO
ICapital Corporation
Per: /s/ Randall Letcavage
------------------------------------
Randall Letcavage
Print Title: Managing Director
Compound Capital Partners, Inc.
Per: /s/ Illya Bond
------------------------------------
Illya Bond
Print Title: Managing Director
EXHIBIT E
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 2002 between CGI Holdings, Inc., a
Florida corporation (the "Company"), and Greenwich Financial Group, a
____________ ____________, (hereinafter referred to as "GFG").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue to GFG warrants (the "Warrants") to
purchase up to 500,000 (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 March
2002 until 5:00 p.m., Eastern time, on March 2005, which date may be extended as
set forth in Section 11 (the "Warrant Exercise Term"), up to 500,000 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 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
2
transfer (collectively, a "transfer") the Warrant to a transferee who expressly
and in writing 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
3
efforts to cause the Registration Statement to become effective under the Act,
so as to permit a public offering and 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
4
Securities such number of prospectuses as shall reasonably be requested.
(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
5
of such action (including the employment of counsel satisfactory to the
indemnified party and the 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,
6
Inc. Such investigation shall include access to books, records and properties
and opportunities to 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
7
Directors of the Company. For such purposes, Common Stock issued by the Company
as a 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
8
provided in the options, right or warrants, then the consideration shall be
equal to zero; provided, 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
9
pursuant to the provisions of this Article 7, the number of Shares issuable upon
the exercise of 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
10
issue any rights, warrants or options to subscribe for shares of Common Stock or
any other 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.
11
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 Hart-Scott-Rodino 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 March ____, 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.
CGI Holdings, Inc. Greenwich Financial Group
By: By:
--------------------------------- ------------------------------------
Robert J. Hipple Nicholas M. Calapa
Chairman President
15
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
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 EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT 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, MARCH ___, 2005
No. (W-2002-01) 500,000 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 March ___, 2002, until 5:00 P.M. Eastern time on
March ___, 2005, subject to extension of such date pursuant to Section 11 of the
Warrant Agreement ("Expiration Date"), up to 500,000 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 March, ___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: March __, 2002 CGI Holdings, Inc.
[SEAL] By:
------------------------------------
Robert J. Hipple
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 CGI Holdings, 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:
------------ -----------------------------
(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): ________________
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[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:
-----------------------------
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