This Warrant has not been registered under the Securities Act of 1933, as
amended, or applicable state securities laws, nor the securities laws of any
other jurisdiction. This Warrant may not be sold or transferred in the absence
of an effective registration statement under those securities laws or an opinion
of counsel, in form and substance satisfactory to the Company, that the sale or
transfer is pursuant to an exemption to the registration requirements of those
securities laws.
-----------------
PRO TECH COMMUNICATIONS, INC.
(Incorporated under the laws of the State of Florida)
Void after 5:00 p.m., New York City time, on August 31, 2004
Warrant to Purchase
1,000,000 Shares of
Common Stock
Warrant for Purchase of Shares of Common Stock
No. 4
FOR VALUE RECEIVED, PRO TECH COMMUNICATION, INC. (the "Company"), a Florida
corporation, on this 30th day of July, 2001 (the "Grant Date") hereby issues
this warrant (the "Warrant") and certifies that Alpha Capital Aktiengesellschaft
(the "Holder") is granted the right, subject to the provisions of the Warrant,
to purchase from the Company one million (1,000,000) fully paid and
nonassessable shares of Common Stock, $0.001 par value, of the Company at a
price of $0.13 per share (such exercise price per share hereinafter referred to
as the "Exercise Price") in accordance with the terms and exercise schedule set
forth herein. This Warrant is issued pursuant to that certain Securities
Purchase and Supplemental Exchange Rights Agreement dated as of the date hereof
("Securities Purchase Agreement") between the Company, NCT Group, Inc., and the
Holder.
The term "Common Stock" means the shares of Common Stock, $0.001 par value,
of the Company as constituted on the Grant Date of this Warrant, together with
any other equity securities that may be issued by the Company in addition
thereto or in substitution therefor. The number of shares of Common Stock to be
received upon the exercise of this Warrant may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares".
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant so lost, stolen, destroyed
or mutilated shall be at any time enforceable by anyone.
The Holder agrees with the Company that this Warrant is issued, and all the
rights hereunder shall be held, subject to all of the conditions, limitations
and provisions set forth herein.
1. Exercise of Warrant.
1.1 General. This Warrant may be exercised by the Holder in whole or in
part at any time, or from time to time, during the period commencing at 9:00
a.m., New York City local time, on July 31, 2001, and expiring at 5:00 p.m., New
York City local time, on August 31, 2004, or, if such day is a day on which
banking institutions in the City of New York are authorized by law to close,
then on the next succeeding day that shall not be such a day.
1.2 Mechanics of Exercise. Subject to the restrictions and limitations set
forth above, this Warrant may be exercised by presentation and surrender hereof
to the Company at its principal office with the Warrant Exercise Form attached
hereto duly executed and accompanied by payment (either in cash or by certified
or official bank check, payable to the order of the Company) of the Exercise
Price for the number of shares specified in such form and instruments of
transfer, if appropriate, duly executed by the Holder. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new warrant evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant, together with the Warrant Exercise Form
and the Exercise Price, at its office, in proper form for exercise, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to the Holder. The Company
shall pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on
exercise of this Warrant.
2. Mandatory Exercise of Warrant.
2.1 Company Right. The Company has the right to require the Holder to
exercise this Warrant in accordance with the following terms and schedule (such
requirement a "Mandatory Exercise"):
(a) the Company may, in its sole discretion, require the Holder in one
or more Mandatory Exercises, pursuant to one or more Notices of Mandatory
Exercise (as defined in Section 2.2 below), to exercise this Warrant in
part for up to and including three hundred thirty-three thousand three
hundred thirty-three (333,333) shares of Common Stock on or after any such
date that (i) the Closing Bid Price (as defined below) of the Common Stock
for each of the previous fifteen (15) consecutive Trading Days (as defined
below) (each such period a "Test Period") equals or exceeds $0.177 per
share, and (ii) the average daily trading volume of the Common Stock during
such Test Period is equal to or greater than one hundred fifty thousand
(150,000) shares; and
(b) the Company may, in its sole discretion, require the Holder in one
or more Mandatory Exercises, pursuant to one or more Notices of Mandatory
Exercise, to exercise this Warrant in part for a total of up to and
including six hundred sixty-six thousand six hundred sixty-six (666,666)
shares of Common Stock on or after any such date that (i) the Closing Bid
Price of the Common Stock during such Test Period equals or exceeds $0.244
per share, and (ii) the average daily trading volume of the Common Stock
during such Test Period is equal to or greater than one hundred fifty
thousand (150,000) shares; and
(c) the Company may, in its sole discretion, require the Holder in one
or more Mandatory Exercises, pursuant to one or more Notices of Mandatory
Exercise, to exercise this Warrant for a total of up to and including one
million (1,000,000) shares of Common Stock on or after any such date that
(i) the Closing Bid Price of the Common Stock during such Test Period
equals or exceeds $0.295 per share, and (ii) the average daily trading
volume of the Common Stock during such Test Period is equal to or greater
than one hundred fifty thousand (150,000) shares;
provided further, that (i) the Company shall not submit a Notice of
Mandatory Exercise (as defined in Section 2.2) within a period of thirty
(30) Trading Days from any previous Notice of Mandatory Exercise, and (ii)
the Company's right to require a Mandatory Exercise pursuant to any of
subsections a, b or c above, after the conditions in the relevant
subsection are met, shall continue indefinitely and shall not be effected
by any subsequent changes in the Common Stock's Closing Bid Price or
changes to the average daily trading volume of the Common Stock with
respect to the Company's right under each subsection.
If, pursuant to a Mandatory Exercise, this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new warrant evidencing the rights of
the Holder thereof to purchase the balance of the shares purchasable
hereunder.
For purposes of this Warrant, the following terms shall have the following
meanings:
(i) "Closing Bid Price" means, for any security as of any date,
the last Closing Bid Price on the Nasdaq National Market System (the
"Nasdaq-NM") as reported by Bloomberg Financial Markets ("Bloomberg"),
or, if the Nasdaq-NM is not the principal trading market for such
security, the last Closing Bid Price of such security on the principal
securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the
last Closing Bid Price of such security in the over-the-counter market
on the pink sheets or bulletin board for such security as reported by
Bloomberg, or, if no Closing Bid Price is reported for such security
by Bloomberg, the last closing trade price of such security as
reported by Bloomberg. If the Closing Bid Price cannot be calculated
for such security on such date on any of the foregoing bases, the
Closing Bid Price of such security on such date shall be the fair
market value as reasonably determined in good faith by the Board of
Directors of the Company (all as appropriately adjusted for any stock
dividend, stock split or other similar transaction during such
period);
(ii) "Trading Day" shall mean (i) a day on which the Common Stock
is traded on The Nasdaq Small Cap Market, the Nasdaq National Market
or other registered national stock exchange on which the Common Stock
has been listed, or (ii) if the Common Stock is not listed on The
Nasdaq Small Cap Market, the Nasdaq National Market or any registered
national stock exchange, a day on which the Common Stock is traded in
the over-the-counter market, as reported by the OTC Bulletin Board.
2.2 Notice to Holder and Xxxxxx's Response. Such a Mandatory Exercise by
the Company, as provided for in Section 2.1, shall be effectuated by providing
notice to the Holder by facsimile transmission of a mandatory exercise (a
"Notice of Mandatory Exercise"). Upon receipt by the Holder of a facsimile copy
of a Notice of Mandatory Exercise (the "Date of Receipt"), the Holder shall
within five (5) business days of the Date of Receipt exercise this warrant for
the number of shares specified in such Notice of Mandatory Exercise by
presentation and surrender of the Warrant to the Company with the duly executed
Warrant Exercise Form attached hereto and accompanied by payment of the relevant
Exercise Price.
2.3 Holder's Failure to Timely Exercise. If the Holder shall fail to
exercise the Warrant within five (5) business days of the Date of Receipt, then
all rights under the Warrant automatically shall be extinguished.
3. Reservation of Shares. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
of the Company from time to time receivable upon exercise of this Warrant. All
such shares shall be duly authorized and, when issued upon such exercise, shall
be validly issued, fully paid and nonassessable and free of all preemptive
rights.
4. Transfer to Comply with the Securities Act; Registration Rights.
4.1 Warrant Shares Transfer to Comply with the Securities Act of 1933. The
Warrant Shares may not be sold or otherwise disposed of unless registered
pursuant to the provisions of the Securities Act of 1933, as amended (the "1933
Act"), or an opinion of counsel in form and content satisfactory to the Company
is obtained stating that such sale or other disposition is made in compliance
with an available exemption from such registration. Any sale or other
disposition of the Warrant Shares must also comply with all applicable state
securities laws and regulations.
4.2 Registration Rights.
(a) Reference is made to the Registration Rights Agreement, dated
as of the date hereof, to which the Company and Holder are parties
(the "Pro Tech Registration Rights Agreement"). The Warrant Shares are
Registrable Securities, as that term is used in the Pro Tech
Registration Rights Agreement. Subject to and in accordance with the
provisions of the Pro Tech Registration Rights Agreement (the terms of
which are incorporated herein by reference), the Company agrees to
file a registration statement or an amendment to its registration
statement on Form S-1 (or other equivalent short form registration
statement) which shall include the Warrant Shares (as so filed or
amended, the "Registration Statement"), pursuant to the 1933 Act, by
the S-1 Filing Deadline and to have the registration of the Warrant
Shares completed and effective within one year from the closing by the
Registration Deadline (as those terms are defined in the Registration
Rights Agreement) and to maintain such registration. The Company's
obligations under the Pro Tech Registration Rights Agreement and the
other terms and conditions thereof with respect to the Warrant Shares,
including, but not necessarily limited to, the Company's commitment to
file a registration statement including the Warrant Shares, to have
the registration of the Warrant Shares completed and effective, and to
maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 4.2(a), effective after the expiration
of the effectiveness of the Registration Statement as contemplated by
the Pro Tech Registration Rights Agreement, the Holder shall have
piggy-back registration rights with respect to the Warrant Shares then
held by the Holder or then subject to issuance upon exercise of this
Warrant (collectively, the "Remaining Warrant Shares"), subject to the
conditions set forth below. If, at any time after the Registration
Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party)
in the registration of any shares of the Company's stock (other than a
registration on Form S-4 and Form S-8), the Company shall include all
of the Holder's Remaining Warrant Shares in such registration
statement at no cost or expense to the Holder (other than any costs or
commissions which would be borne by the Holder under the terms of the
Pro Tech Registration Rights Agreement). The Holder's rights under
this Section 4 shall expire at such time as the Holder can sell all of
the Remaining Warrant Shares under Rule 144 without volume or other
restrictions or limit.
5. Cashless Exercise. Any other provision of this Warrant to the contrary
notwithstanding, if the effective date of the Registration Statement has not
occurred on or before the first anniversary of the Grant Date of this Warrant
due to the sole act or omission of the Company, the Holder will have the right
(in addition to any other rights contemplated by the Transaction Documents (as
defined in the Securities Purchase Agreement) to exercise any remaining
unexercised portion of this Warrant by means of "cashless" exercise. If the
Holder elects a "cashless" exercise, the Holder shall thereby be entitled to
receive a number of shares of Common Stock equal to (x) the excess of the
Current Market Value (as defined below) over the total cash exercise price of
the portion of the Warrant then being exercised, divided by (y) the Market Price
of the Common Stock (as defined below) as of the conversion date. For purposes
of this Section 5, (i) the "Current Market Value" shall be an amount equal to
the Market Price of the Common Stock as of the conversion date, multiplied by
the number of shares of Common Stock specified in such Warrant Exercise Form,
and (ii) "Market Price of the Common Stock" shall be the closing price of the
Common Stock as reported by Bloomberg, LP or, if not so reported, as reported by
the securities exchange or automated quotation system on which the Common Stock
is listed or on the over-the-counter market for the relevant date.
6. Fractional Shares. The Company shall not issue any fraction of a share
of Common Stock upon any exercise of this Warrant. All shares of Common Stock
(including fractions thereof) issuable upon the exercise of this Warrant thereof
shall be aggregated for purposes of determining whether the exercise would
result in the issuance of a fraction of a share of Common Stock. If, after the
aforementioned aggregation, the issuance would result in the issuance of a
fraction of a share of Common Stock, the Company shall round such fraction of a
share of Common Stock up or down to the nearest whole share.
7. Exchange, Transfer, Assignment of Loss of Warrant. This Warrant is not
registered under the 1933 Act nor under any applicable state securities law or
regulation. This Warrant cannot be sold, exchanged, transferred, assigned or
otherwise disposed of unless registered pursuant to the provisions of the 1933
Act or an opinion of counsel in form and content satisfactory to the Company is
obtained stating that such disposition is in compliance with an available
exemption from registration. Any such disposition must also comply with
applicable state securities laws and regulations.
8. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
9. Redemption. This Warrant is not redeemable by the Company.
10. Anti-Dilution Provisions.
10.1 Adjustment for dividends in Other Securities, Property, Etc.:
Reclassification, Etc. In case at any time or from time to time after the Grant
Date the holders of Common Stock (or any other securities at the time receivable
upon the exercise of this Warrant) shall have received, or on or after the
record date fixed for the determination of eligible shareholders, shall have
become entitled to receive without payment therefor: (a) other or additional
securities or property (other than cash) by way of dividend, (b) any cash paid
or payable except out of earned surplus of the Company at the Grant Date as
increased (decreased) by subsequent credits (charges) thereto (other than
credits in respect of any capital or paid-in surplus or surplus created as a
result of a revaluation of property) or (c) other or additional (or less)
securities or property (including cash) by way of stock-split, spin-off,
split-up, reclassification, combination of shares or similar corporate
rearrangement, then, and in each such case, the Holder of this Warrant, upon the
exercise thereof as provided in Section 1, shall be entitled to receive, subject
to the limitations and restrictions set froth above, the amount of securities
and property (including cash in the cases referred to in clauses (b) and (c)
above) which such Holder would hold on the date of such exercise if on the Grant
Date it had been the holder of record of the number of shares of Common Stock
(as constituted on the Grant Date) subscribed for upon such exercise as provided
in Section 1 and had thereafter, during the period from the Grant Date to and
including the date of such exercise, retained such shares and/or all other
additional (or less) securities and property (including cash in the cases
referred to in clauses (b) and (c) above) receivable by it as aforesaid during
such period, giving effect to all adjustments called for during such period by
Section 10.2.
10.2 Adjustment for Reorganization, Consolidation, Merger, Etc. In case of
any reorganization of the Company (or any other corporation, the securities of
which are at the time receivable on the exercise of this Warrant) after the
Grant Date or in case after such date the Company (or any such other
corporation) shall consolidate with or merge into another corporation or convey
all or substantially all of its assets to another corporation, then, and in each
such case, the Holder of this Warrant upon the exercise thereof as provided in
Section 1 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the securities and property receivable upon the exercise of this Warrant prior
to such consummation, the securities or property to which such Holder would have
been entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in
Section 10.1; in each such case, the terms of this Warrant shall be applicable
to the securities or property receivable upon the exercise of this Warrant after
such consummation.
10.3 Certificate as to Adjustments. In each case of an adjustment in the
number of shares of Common Stock (or other securities or property) receivable on
the exercise of the Warrant, the Company at its expense will promptly compute
such adjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of (a) the consideration
received or to be received by the Company for any additional shares of Common
Stock issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding, and (c) the pro
forma adjusted Exercise Price. The Company will forthwith mail a copy of each
such certificate to the holder of this Warrant.
10.4 Notices of Record Date, Etc.
In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend
(other than a cash dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities, or to receive any other right; or
(b) of any capital reorganization of the Company (other than a
stock split or reverse stock split), any reclassification of the
capital stock of the Company, any consolidation or merger of the
Company with or into another corporation (other than a merger for
purposes of change of domicile) or any conveyance of all or
substantially all of the assets of the Company to another corporation;
or
(c) of any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company shall mail or cause to be
mailed to each holder of the Warrant at the time outstanding a notice
specifying, as the case may be, (i) the date on which a record is to
be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or
right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding-up is to take place, and the time, if any, is
to be fixed, as to which the holders of record of Common Stock (or
such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock
(or such other securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least twenty (20) days prior to the date
therein specified and the Warrant may be exercised prior to said date
during the term of the Warrant no later than five (5) days prior to
said date.
11. Legend. In the event of the exercise of this Warrant and the issuance
of any of the Warrant Share hereunder, all certificates representing Warrant
Shares shall bear on the face thereof substantially the following legends,
insofar as is consistent with Florida law:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN CUSTOMARY FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
12. Applicable Law. This Warrant is issued under and shall for all purposes
be governed by and construed in accordance with the laws of the State of Florida
and of the United States of America.
13. Notice. Notices and other communications to be given to the Holder of
the Warrant evidenced by this certificate shall be deemed to have been
sufficiently given, if (a) delivered personally, sent by facsimile transmission,
or mailed, (b) addressed in the name and at the address of such owner appearing
on the records of the Company, and (c) if mailed, sent registered or certified
mail, postage prepaid. Notices or other communications to the Company shall be
deemed to have been sufficiently given if delivered by hand or mailed, by
registered or certified mail, postage prepaid, to the Company at 0000 Xxxxxxxxxx
00xx Xxxxxx, Xxxx Xxxxxx, Xxxxxxx 00000, Attention: President, or at such other
address as the Company shall have designated by written notice to such
registered owner as herein provided, notice by mail shall be deemed given when
deposited in the United States mail as herein provided.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on its
behalf, in its corporate name, by its duly authorized officer, all as of the day
and year set forth below.
Dated: July 30, 2001
PRO TECH COMMUNICATIONS, INC.
By:/s/ XXXXXXX XXXXXXXXX
--------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chief Financial Officer
WARRANT EXERCISE FORM
(To be executed by the Holder in order to Exercise the Warrant)
TO: Pro Tech Communications, Inc.
0000 Xxxxxxxxxx 00xx Xxxxxx
Xxxx Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, President
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _________ shares of common stock of Pro Tech
Communications, Inc. (the "Company"), par value $.001 per share ("Warrant
Shares") and hereby makes payment at the rate of $0.13 per share, or an
aggregate of $________, in payment for the Warrant Shares.
The undersigned acknowledges that any sales by the undersigned of the
securities issuable to the undersigned upon exercise of the Warrants shall be
made: (A) pursuant to (i) a registration statement effective under the
Securities Act of 1933, as amended (the "Act"), or (ii) an opinion of counsel in
form and content reasonably satisfactory to the Company that such sale is exempt
from registration required by Section 5 of the Act; and (B) in compliance with
applicable state securities laws and those of any other applicable jurisdiction.
Dated:
----------------------
Name of Warrant Holder
Signature
ACKNOWLEDGED AND AGREED:
PRO TECH COMMUNICATIONS, INC.
By: _____________________________
Name:___________________________
Title:____________________________
Date:____________________________
INSTRUCTIONS FOR ISSUANCE OF STOCK
----------------------------------
(IF OTHER THAN TO THE REGISTERED HOLDER OF THE WITHIN WARRANT)
Name: ________________________________________________________
(Please type or print in block letters)
Address: ________________________________________________________
Social Security or Taxpayer Identification Number: ______________________
