EXHIBIT 4.2
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of ___________, 1998 between Galacticomm
Technologies, Inc., a Florida corporation, having its principal place of
business at 0000 X.X. 00xx Xxx., Xxxxx 000, Xx. Xxxxxxxxxx, XX 00000, (the
"Company") and Continental Stock Transfer & Trust Company, a New York
corporation, having its principal place of business at 0 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Warrant Agent").
W I T N E S S E T H :
WHEREAS, the Company proposes to issue and sell to the public in an
initial public offering (the "IPO") 1,500,000 shares of the Company's Common
Stock, par value $.0001 per share ("Shares") and 1,500,000 Redeemable Common
Stock Purchase Warrants (the "Public Warrants") (plus an additional 225,000
Shares and/or an additional 225,000 Public Warrants to cover overallotments);
WHEREAS, the Company also proposes to issue and sell to Security
Capital Trading, Inc. and First Equity Corporation of Florida, the
representatives of the several underwriters (the "Representatives") in the IPO
warrants (the "Representatives' Warrants") to purchase 150,000 Shares and/or
150,000 Warrants similar but not identical to the Warrants (the Warrants
underlying such Representatives' Warrants, the "Representatives' Underlying
Warrants" and together with the Public Warrants sometimes hereinafter referred
to as the "Warrants") pursuant to a Representatives' Warrant Agreement of even
date herewith (the "Representatives' Warrant Agreement"), a true and correct
copy of which has been provided to the Warrant Agent;
WHEREAS, the Warrants (subject to technical modification to conform to
the terms of the Representatives' Underlying Warrants) shall be evidenced by
certificates substantially in the form of Exhibit A annexed hereto (the "Warrant
Certificate"), with one (1) Warrant entitling the holder thereof to purchase one
(1) share of Common Stock;
WHEREAS, the Public Warrants will have an exercise price of $7.50 [125%
of the offering price of the Units] and the Representatives' Underlying Warrants
will have an exercise price of $12.375 [165% of the exercise price of the Public
Warrants], per share of Common Stock, subject to certain adjustments (the
"Warrant Price"), will be exercisable commencing one year from the effective
date of the IPO, or such earlier date as may be determined by the Company and
the Representatives (as such term is defined in the Underwriting Agreement in
connection with the IPO) ("First Exercise Date"), until a date which is the
fifth anniversary of the effective date of the registration statement for the
IPO ("Last Exercise Date"), unless extended by the Company, and, except for the
Representatives' Underlying Warrants, will be exercisable during any period of
time fixed for that Warrant's redemption in a Redemption Notice (hereinafter
defined in Section 2.03),
which period of time will terminate on a stated Redemption Date (hereinafter
defined in Section 2.03);
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act in connection with the
issuance, registration, transfer, exchange and replacement of the Warrant
Certificates and exercise of the Warrants; and
WHEREAS, the Company and the Warrant Agent desire to set forth in this
Agreement the terms and conditions upon which the Warrant Certificates shall be
issued, transferred, exchanged and placed and the Warrants exercised, and to
provide for the rights of the holders of the Warrants;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and the respective undertakings herein below set forth, the
Company and the Warrant Agent agree as follows:
ARTICLE I
ISSUANCE AND EXECUTION OF WARRANTS
SECTION 1.01 The Company hereby appoints the Warrant Agent to act on
behalf of the Company in accordance with the terms and conditions herein set
forth, and the Warrant Agent hereby accepts such appointment and agrees to
perform the same in accordance with such provisions.
SECTION 1.02 The Warrant Certificates for the Warrants shall be issued
in registered form only. The text of the Warrant Certificate, including the form
of assignment and subscription printed on the reverse side thereof, shall be
substantially in the form of Exhibit A annexed hereto (subject to technical
modification to conform to the terms of the Representatives' Underlying
Warrants), which text is hereby incorporated in this Agreement by reference as
though fully set forth herein and to whose terms and conditions the Company and
the Warrant Agent hereby agree. Each Warrant Certificate shall evidence the
right, subject to the provisions of this Agreement and of such Warrant
Certificate, to purchase the number of validly issued, fully paid and
non-assessable shares of Common Stock, as that term is defined in Section 1.05
of this Agreement, stated therein, free of preemptive rights, subject to
adjustment as provided in Article III of this Agreement.
SECTION 1.03 Upon the written order of the Company, signed by the
President, the Chief Executive Officer or any Vice President, and the Secretary,
Treasurer, Assistant Secretary or Assistant Treasurer of the Company, the
Warrant Agent shall issue and register Warrants in the names and denominations
specified in that order, and will countersign and deliver Warrant Certificates
evidencing the same in accordance with that order. Each Warrant Certificate
shall be dated the date of its countersignature. Each Warrant Certificate shall
be executed on behalf of the Company by the manual or facsimile signature of the
President or any Vice President of the Company, under its corporate seal,
affixed or facsimile, attested by the manual or facsimile signature of the
Secretary of the Company and shall be countersigned manually by the Warrant
Agent. The
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Warrant Certificates shall not be valid for any purpose unless so countersigned.
In case any officer whose facsimile signature has been placed upon any Warrant
Certificate shall have ceased to be such before such Warrant Certificate is
issued, it may be issued with the same effect as if such officer had not ceased
to be such on the date of issuance.
SECTION 1.04 Except as otherwise expressly stated herein, all terms
used in the Warrant Certificate have the meanings provided in this Agreement.
SECTION 1.05 As used herein, the term "Common Stock" shall mean the
aggregate number of shares of common stock that the Company, by its Articles of
Incorporation, as from time to time amended, is authorized to issue, which are
not limited by its Articles of Incorporation to a fixed sum or percentage of the
book value in respect of the rights of the holders thereof to participate in
dividends or in distribution of assets upon the voluntary or involuntary
liquidation, dissolution, or winding up the Company.
SECTION 1.06 The Warrant Agent understands and agrees that the Shares
and the Public Warrants are being issued in the IPO initially as a unit, each
unit consisting of one Share and one Warrant, and will be detachable and
separately transferable immediately following completion of the IPO.
ARTICLE II
WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS, CALL OF
WARRANTS AND TRADING OF WARRANTS
SECTION 2.01
(a) One (1) Warrant shall entitle the person in whose name at
the time the Warrant shall be registered upon the books to be maintained by the
Warrant Agent for that purpose (the "Warrant Holder"), subject to the provisions
of the Warrant Certificates and of this Agreement, to purchase from the Company
any time on or after the First Exercise Date but at or before the Last Exercise
Date, one (1) share of Common Stock, as adjusted, at the Warrant Price in effect
at such date, payable in full at the time of purchase in the manner provided in
Section 2.02 of this Agreement.
(b) Each Warrant shall be exercisable in accordance with the
terms herein and in the Warrant Certificate which, among other things, contains
certain terms as to the Warrant Price.
SECTION 2.02
(a) The Warrant Holder may exercise a Warrant, in whole or in
part, by surrender of the Warrant Certificate, with the form of subscription
thereon duly executed by the Warrant Agent at its corporate office, together
with the Warrant Price for each share of Common Stock to be
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purchased in lawful money of the United States, or by certified check, bank
draft, or postal or express money order payable in United States Dollars to the
order of the Company.
(b) Upon receipt of a Warrant Certificate with the form of
election to purchase thereon duly executed and accompanied by payment of the
aggregate Warrant Price for the shares of Common Stock for which the Warrant is
then being exercised, the Warrant Agent shall requisition from the transfer
agent certificates for the total number of the shares of Common Stock for which
the Warrant is being exercised in such names and denominations as are required
for delivery to the Warrant Holder, and the Warrant Agent shall thereupon
deliver such certificates to or in accordance with the instructions of the
Warrant Holder. The Company covenants and agrees that it has duly authorized and
directed its transfer agent (and will authorize and direct all its future
transfer agents) to comply with all such requests of the Warrant Agent.
(c) In case any Warrant Holder shall exercise his Warrant with
respect to less than all of the shares of Common Stock that may be purchased
under the Warrant, a new Warrant Certificate for the balance shall be
countersigned and delivered to or upon the order of the Warrant Holder.
(d) The Company covenants and agrees that it will pay when due
and payable any and all taxes which may be payable in respect to the issuance of
Warrants, or the issuance of any shares of Common Stock upon the exercise of
Warrants. However, neither the Company nor the Warrant Agent shall be required
to issue or deliver any Warrant Certificate or shares of Common Stock in a name
other than that of the Warrant Holder at the time of surrender if any tax is
payable in respect of such transfer until the person requesting the same has
paid to the Company the amount of such tax or has established to the Company's
satisfaction that such tax has been paid or shall not be due and payable. In the
event that any transfer tax is due and payable, the Warrant Agent shall be under
no obligation to issue or deliver any Warrant Certificate or shares of Common
Stock in a name other than that of the Warrant Holder until the Company has
notified the Warrant Agent that the transfer tax, if any, has been paid, or in
the alternative, that no transfer tax is due and payable by reason of an
exemption.
(e) The Warrant Agent shall account promptly to the Company
with respect to Warrants exercised and concurrently account to the Company for
all moneys received by the Warrant Agent for the purchase of shares of Common
Stock upon the exercise of Warrants.
(f) The Warrant Agent covenants and agrees that upon the
exercise of any of the Warrants, the Warrant Agent shall provide written notice
to the Company and to the Representatives at the addresses set forth in Section
6.09 hereof, the expense of which notice shall be borne by the Company. Each
notice shall contain the name of the exercising Warrant Holder, the number of
shares of Common Stock that the Warrant Holder has elected to purchase, the
purchase price paid on a per share basis and the cumulative number of Warrants
exercised by all of the Warrant Holders as of the date of the transaction which
is the subject of the aforesaid notice. Such notice shall be made no later than
two (2) business days following the date of the exercise of the Warrant. Nothing
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contained herein shall be construed so as to prevent the Warrant Agent from
providing the information required in this Section 2.02 (f) in a consolidated or
tabular form, provided that all other provisions of this Section are complied
with.
(g) The Warrant Agent covenants and agrees that it shall
provide a list of each and every holder of the Warrants to the Company and the
Representatives at such time or from time to time as shall be required by the
Company or the Representatives, but in no event shall such a list be provided
less frequently than once per annum at a date as shall be determined by the
Company.
SECTION 2.03
(a) Commencing thirty (30) days after the First Exercise
Date, the Company may, subject to the conditions set forth herein, redeem all,
but not less than all, the Warrants then outstanding upon not less than thirty
(30) days prior written notice (the "Redemption Notice") to the holders thereof
provided that the average closing price of the Common Stock for the 20
consecutive trading days ending three (3) trading days prior to the date of the
Redemption Notice is at least 150% of the initial public offering price of a
Share, subject to adjustment for stock dividends, stock splits and other
anti-dilution provisions as provided for under Article III herein. For purposes
of this Section 2.03, "closing price" at any date shall be deemed to be: (i) the
last sale price regular way as reported on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or (ii) if
the Common Stock is not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices regular way for the
Common Stock as reported by the Nasdaq National Market or Nasdaq Small Cap
Market of the Nasdaq Stock Market, Inc. ("NASDAQ") or (iii) if the Common Stock
is not listed or admitted for trading on any national securities exchange, and
is not reported by NASDAQ, the average of the closing bid and asked prices in
the over-the-counter market as furnished by the National Quotation Bureau, Inc.
or if no such quotation is available, the fair market value of the Common Stock
as determined in good faith by the Board of Directors of the Company. The
Redemption Notice shall be deemed effective upon mailing and the time of mailing
is the "Effective Date of the Notice". The Redemption Notice shall state a
redemption date not less than thirty (30) days from the Effective Date of the
Notice (the "Redemption Date") . No Redemption Notice shall be mailed unless all
funds necessary to pay for redemption of all Warrants then outstanding shall
have first been set aside by the Company in trust with the Warrant Agent for the
benefit of all Warrant Holders so as to be and continue to be available
therefor. The redemption price to be paid to the Warrant Holders will be $.10
(or fraction thereof) for each share (or fraction thereof) of the Common Stock
of the Company to which the Warrant Holder would then be entitled upon exercise
of the Warrant(s) being redeemed, as adjusted from time to time as provided
herein (the "Redemption Price"). In the event the number of shares of Common
Stock issuable upon exercise of the Warrant being redeemed are adjusted pursuant
to Article III hereof, then upon each such adjustment the Redemption Price will
be adjusted by multiplying the Redemption Price in effect immediately prior to
such adjustment by a fraction, the numerator of which is the number of shares of
Common Stock issuable upon exercise of the Warrant being redeemed immediately
prior to such adjustment and the denominator of which is the
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number of shares of Common Stock issuable upon exercise of such Warrant being
redeemed immediately after such adjustment. The Warrants may only be redeemed if
the Company has in effect a current Registration Statement or post-effective
amendment covering the shares underlying the Warrants. The Warrant Holders may
exercise their Warrants between the effective date of the Redemption Notice and
the Redemption Date, such exercise being effective if done in accordance with
Section 2.02 (a), and if the Warrant Certificate, with form of election to
purchase duly executed and the Warrant Price, asapplicable for such Warrant
subject to redemption for each share of Common Stock to be purchased is actually
received by the Warrant Agent at its office located at 0 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, no later than 5:00 P.M. Miami, Florida time on the Redemption Date.
(b) If any Warrant Holder does not wish to exercise any
Warrant being redeemed, the Warrant Holder should mail such Warrant to the
Warrant Agent at its office located at 0 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, after receiving the Redemption Notice required by this Section. If
such Redemption Notice shall have been so mailed, and if on or before the
Effective Date of the Notice all funds necessary to pay for redemption of all
Warrants then outstanding shall have been set aside by the Company in trust with
the Warrant Agent for the benefit of all Warrant Holders so as to be and
continue to be available therefor, then, on and after said Redemption Date,
notwithstanding that any Warrant subject to redemption shall not have been
surrendered for redemption, the obligation evidenced by all Warrants not
surrendered for redemption or effectively exercised shall be deemed no longer
outstanding, and all rights with respect thereto shall forthwith cease and
terminate, except only the right of the holder of each Warrant subject to
redemption to receive the Redemption Price (or fraction thereof) for each share
of Common Stock (or fraction thereof) to which he would be entitled if he
exercised the Warrant upon receiving the Redemption Notice of the Warrant
subject to redemption held by the Holder hereof.
(c) Notwithstanding anything contained in this Article II, the
Representatives' Underlying Warrants shall not be eligible for redemption by the
Company.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF WARRANT PRICE
SECTION 3.01 In case the Company shall at any time after the date of
this Agreement (i) declare a dividend on the outstanding Common Stock in shares
of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine
the outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the Warrant
Price, and the number and kind of shares of Common Stock receivable upon
exercise, in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination, or reclassification shall be
proportionately adjusted so that the holder of any Warrant exercised after such
time shall be
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entitled to receive the aggregate number and kind of shares which if such
Warrant had been exercised immediately prior to such time, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination, or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
SECTION 3.02 In case the Company after the date hereof shall issue
rights,options, or warrants to all holders of Common Stock entitling them to
subscribe for or purchase CommonStock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion
price per share, if a security convertible into or exchangeable for Common
Stock) less than the "current market price" (as defined in Section 3.04 hereof)
per share of Common Stock on the record date established for the issuance of
such rights, options or warrants, then, in such case, the Warrant Price shall be
adjusted by multiplying the Warrant Price in effect on the record date of such
issuance by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on the record date for such issuance plus the number of
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock so to be issued (or the aggregate initial conversion
price of the convertible securities to be issued or sold) would purchase at such
"current market price" and of which the denominator shall be the number of
shares of Common Stock outstanding on the record date for such issuance plus the
number of additional shares of Common Stock to be issued (or into which the
convertible or exchangeable securities to be issued or sold are initially
convertible or exchangeable). Such adjustment shall become effective at the
close of business on such record date; provided, however, that, to the extent
the shares of Common Stock (or securities convertible to or exchangeable for
shares of Common Stock) are not delivered, the Warrant Price shall be readjusted
after the expiration of such rights, options, or warrants (but only with respect
to Warrants exercised after such expiration), to the Warrant Price which would
then be in effect had the adjustments made upon the issuance of such rights or
warrants been made upon the basis of delivery of only the number of shares of
Common Stock or securities convertible into or exchangeable for shares of Common
Stock actually issued. In case any subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error. Shares of Common Stock owned by or held for the account of the
Company or any majority-owned subsidiary shall not be deemed outstanding for the
purpose of any such computation.
Notwithstanding the foregoing, no adjustment in the Warrant
Price or the number of shares of Common Stock issuable upon exercise of the
Warrants shall be made upon (i) the issuance of options (or upon exercise
thereof) by the Company pursuant to its Stock Option Plans, (ii) the issuance of
the Representatives' Warrants or the Representatives' Underlying Warrants, or
(iii) any other options and warrants outstanding as of the date hereof.
SECTION 3.03 In case the Company shall distribute to all holders of
Common Stock (including any such distribution made to the shareholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness or assets (other than cash
dividends distributions and dividends payable in shares of
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Common Stock), subscription rights, options, or warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock (excluding those referred to in Section 3.02 hereof), then, in
each case, the Warrant Price shall be adjusted by multiplying the Warrant Price
in effect immediately prior to the record date for the determination of
shareholders entitled to receive such distribution by a fraction of which the
numerator shall be the "current market price" per share of Common Stock on such
record date, less the fair market value (as determined in good faith by the
board of directors of the Company, whose determination shall be conclusive
absentmanifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such subscription rights, options, or warrants,
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, applicable to the share, and of which the
denominator shall be such "current market price" per share of Common Stock. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of such distribution retroactive to the record date
for the determination of shareholders entitled to receive such distribution.
SECTION 3.04 For the purpose of any computation under sections 3.02 and
3.03 hereof, the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices for the 20
consecutive trading days ending three (3) days prior to such date. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the closing bid price
regular way, in either case on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if the Common Stock
is not listed or admitted to trading on any national securities exchange, the
highest reported bid price as furnished by NASDAQ. If on any such date the
Common Stock is not quoted on NASDAQ or any such organization, the closing price
shall be deemed to be the average of the closing bid and asked prices in the
over-the-counter market as reported by the National Quotation Bureau or if no
such quotation is available, the fair value of the Common Stock on such date, as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error.
SECTION 3.05 No adjustment in the Warrant Price shall be required if
such adjustment is less than $.05; provided, however, that any adjustments which
by reason of this Section 3.05 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article III shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
SECTION 3.06 In any case in which this Article III shall require that
an adjustment in the Warrant Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the holder of any Warrant exercised after such record date,
the shares, if any, issuable upon such exercise over and above the shares, if
any, issuable upon such exercise on the basis of the Warrant Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
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SECTION 3.07 Upon each adjustment of the Warrant Price as a result of
the calculations made in Section 3.01, 3.02, or 3.03 hereof, each Warrant
outstanding prior to the making of the adjustment in the Warrant Price shall
thereafter evidence the right to purchase, at the adjusted Warrant Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (A)
the product obtained by multiplying the number of shares purchasable upon
exercise of a Warrantprior to adjustment of the number of shares by the Warrant
Price in effect prior to adjustment of the Warrant Price by (B) the Warrant
Price in effect after such adjustment of the Warrant Price.
SECTION 3.08 In case of any capital reorganization of the Company, or
of any reclassification of the Common Stock (other than a reclassification of
the Common Stock referred to in Section 3.01 hereof), or in the case of the
consolidation of the Company with or the merger of the Company into any other
corporation or of the sale, transfer, or lease of the properties and assets of
the Company as, or substantially as, an entirety to any other corporation or
other entity, each Warrant shall after such capital reorganization,
reclassification of Common Stock, consolidation, merger, sale, transfer, or
lease, be exercisable, on the same terms and conditions specified in this
Agreement, for the number of shares of stock or other securities, assets, or
cash to which a holder of the number of shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger,
sale, transfer, or lease) upon exercise of such Warrant would have been entitled
upon such capital reorganization, reclassification of Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Article III with respect to the
rights and interests thereafter of the holders of the Warrants shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock, other securities, assets, or cash thereafter deliverable
on the exercise of the Warrants. The subdivision or combination of shares of
Common Stock at any time outstanding into a greater or lesser number of shares
shall not be deemed to be a reclassification of the Common Stock for the
purposes of this subsection. The Company shall not effect any such
consolidation, merger, transfer, or lease, unless prior to or simultaneously
with the consummation thereof, the successor corporation (if other than the
Company) resulting from such consolidation or merger or the Corporation
purchasing, receiving, or leasing such assets or other appropriate corporation
or entity shall expressly assume, by written instrument in form satisfactory to
the Representatives, the obligation to deliver to the holder of each Warrant
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, such holders may be entitled to purchase and to perform the other
obligations of the Company under this Agreement.
SECTION 3.09 The Company may make such reductions in the Warrant Price,
in addition to those required by this Article III, as it shall, in its sole
discretion, determine to be advisable.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF
WARRANT HOLDERS
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SECTION 4.01 No Warrant Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of shares of Common Stock for any
purposes, nor shall anything contained in any Warrant Certificate be construed
to confer upon any Warrant Holder, as such, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any action by
the Company, whether upon any recapitalization, issue of stock, reclassification
of stock,consolidation, merger, conveyance or otherwise, receive dividends or
subscription rights, or otherwise, until in connection with the exercise of any
Warrant, such Warrant shall have been surrendered and the purchase price or the
shares of Common Stock for which such Warrant is being exercised shall have been
received by the Warrant Agent; provided, however, that any such surrender and
payment on any date when the stock transfer books of the Company shall be closed
shall constitute the person or persons in whose name or names the certificate or
certificates for those shares of Common Stock are to be issued as the record
holder or holders thereof for all purposes at the opening of business on the
next succeeding day on which such stock transfer books are open and the Warrant
surrendered shall not be deemed to have been exercised, in whole or in part, as
the case maybe, until such next succeeding day on which stock transfer books are
open.
SECTION 4.02 The Company covenants and agrees that it shall
contemporaneously provide to all Warrant Holders of record any publication,
mailing or notice of an event which it shall provide to all of its shareholders
of record and which event shall result in the adjustment to the Warrant Price as
provided in Article III hereof. For purposes of this Section 4.02, the Warrant
Holders of record shall be those Warrant Holders who are of record on a date
even with the date chosen by the Company for the purpose of determining the
shareholders of record who shall be entitled to receive such publication,
mailing or notice.
SECTION 4.03 If any Warrant Certificate is lost, stolen, mutilated or
destroyed, the Company and the Warrant Agent may, on such terms as to indemnity
or otherwise as they may in their discretion reasonably impose, which shall, in
the case of a mutilated Warrant Certificate, include the surrender thereof,
issue a new Warrant Certificate of like denomination and tenor as, and in
substitution for, the Warrant Certificate so lost, stolen mutilated or
destroyed.
SECTION 4.04
(a) The Company covenants and agrees that at all times it
shall reserve and keep available for the exercise of outstanding Warrants such
number of authorized shares of Common Stock and the aggregate number and kind of
any other securities which the Warrants are exercisable for, pursuant to the
provisions of Article III hereof, as are sufficient to permit the exercise in
full of such Warrants and that it will make available to the Warrant Agent from
time to time a number of duly executed certificates representing shares of
Common Stock and other securities, sufficient therefor.
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(b) The Company shall use its best efforts to secure the
listing, upon official notice of issuance, of the shares of Common Stock
issuable upon exercise of Warrants upon any securities exchange upon which the
Common Stock becomes listed.
(c) The Company covenants that all shares of Common Stock
issued on exercise of Warrants shall be validly issued, fully paid,
non-assessable and free of preemptive rights.
(d) The Company has filed a Registration Statement on Form
SB-2 (Registration No. 333-39805) for the registration of, among other things,
the sale of the Warrants and the shares of Common Stock issuable upon exercise
thereof under the Securities Act of 1933, as amended (the "Act"). The Company
shall use its best efforts to secure the effectiveness of the Registration
Statement under the Act, and to register or qualify such Warrants and shares of
Common Stock under the laws of any states in which the sale of the Warrants and
shares of Common Stock was registered or qualified at the time of the IPO and
shall use its reasonable good faith efforts to register and qualify such
Warrants and shares of Common Stock in such additional states and jurisdictions
as the holders of such Warrants shall reasonably request, provided that no such
qualification will be required in any jurisdiction where, solely as a result
thereof, the Company would be subject to (i) general service of process or to
taxation or qualification as a foreign corporation doing business in such
jurisdiction or (ii) qualification requirements which would require the Company
to (A) amend its Articles of Incorporation or Bylaws or (B) rescind, modify or
amend any action taken by the Board of Directors of the Company in accordance
with their fiduciary obligations to the Company and its shareholders; provided,
however, that the Company will make a good faith effort to obtain a waiver of
any such requirement. The Company further agrees to use its best efforts to
maintain the effectiveness of such Registration Statement and such state
qualifications, as aforesaid, by the filing of any and all amendments to the
Registration Statement and such state qualifications as may be required from
time to time under the Act or the laws of the various states until the
expiration or termination of all the Warrants in accordance herewith.
(e) The Company will furnish to the Warrant Agent, upon
request, an opinion of counsel satisfactory to the Warrant Agent to the effect
that (i) a Registration Statement under the Act is then in effect with respect
to the Warrants and shares of Common Stock issuable upon the exercise of the
Warrants and that the prospectus included therein complies as to form in all
material respects, (except as to financial statements, including schedules, and
other accounting and financial data, as to which such counsel need express no
opinion), with the requirements of the Act and the rules and regulations of the
Commission thereunder; or (ii) a Registration Statement under the Act with
respect to said shares of Common Stock is not required. In the event that said
opinion states that such a Registration Statement is in effect, the Company will
from time to time furnish the Warrant Agent with current prospectuses meeting
the requirements of the Act and such rules and regulations in sufficient
quantity to permit the Warrant Agent to deliver a prospectus ("Prospectus") to
each Warrant Holder upon exercise thereof. The Company further agrees to pay all
fees, costs and expenses in connection with the preparation and delivery to the
Warrant Agent of the foregoing opinions and Prospectuses and the above mentioned
registrations and other actions, and to immediately notify the Warrant Agent in
the event that (i) the Commission shall have issued or
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threatened to issue any order preventing or suspending the use of any
Prospectus; (ii) at any time any Prospectus shall contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; or (iii) for
any reason it shall be necessary to amend or supplement any Prospectus in order
to comply with the Act.
SECTION 4.05 If the number of shares purchasable upon the exercise of
each Warrant is adjusted pursuant to Section 3.07 hereof, the Company shall not
be required to issue fractions of shares upon exercise of the Warrants or to
distribute share certificates which evidence fractional shares. In lieu of
fractional shares, the Company, in its sole discretion, may pay to the
registered holders of Warrant Certificates at the time such Warrants are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share. For purposes of this Section 4.05, the current
market value of a share issuable upon the exercise of a Warrant shall be the
closing price of a share of Common Stock, as determined pursuant to the second
and third sentences of Section 3.04, for the trading day immediately prior to
the date of such exercise.
SECTION 4.06 The holder of a Warrant by the acceptance thereof
expressly waives his right to receive any fractional warrant or any fractional
Shares upon exercise of a Warrant.
ARTICLE V
TREATMENT OF WARRANT HOLDERS
SECTION 5.01 Prior to due presentment for registration of transfer of
any Warrant, the Company and the Warrant Agent may deem and treat the Warrant
Holder as the absolute owner of such warrant, notwithstanding any notation of
ownership or other writing thereon, for the purpose of any exercise thereof and
for all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
ARTICLE VI
CONCERNING THE WARRANT AGENT
AND OTHER MATTERS
SECTION 6.01 The Company will from time to time promptly pay, subject
to the provisions of Section 2.02 (d) of this Agreement, all taxes and charges
that may be imposed upon the Company or the Warrant Agent in respect of the
issuance or delivery of shares of Common Stock upon the exercise of Warrants.
SECTION 6.02
(a) The Warrant Agent may resign and be discharged from its
duties under this Agreement upon sixty (60) days notice in writing, mailed to
the Company by registered or certified
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mail, and to each Warrant Holder. The Company may remove the Warrant Agent or
any successor warrant agent upon sixty (60) days notice in writing, mailed to
the Warrant Agent or successor Warrant Agent, as the case may be, by registered
or certified mail, and to each Warrant Holder; provided, however, the Company
shall appoint a new Warrant Agent as hereinafter provided and such removal shall
not become effective until a successor Warrant Agent has been appointed and has
accepted such appointment. If the Warrant Agent shall resign or shall otherwise
become incapableof acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of
sixty (60) days after it has been notified in writing of such resignation or
incapability by the Warrant Agent by a Warrant Holder, who shall, with such
notice, submit his Warrant Certificate for inspection by the Company, then any
Warrant Holder may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Any successor Warrant Agent,
whether appointed by the Company or by such a court shall be a registered
transfer agent, bank or trust company, subject to the terms and conditions of
this Section 6.02, in good standing and incorporated under the laws of any State
of the United States, having its principal office in the United States of
America. After appointment, the successor Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Warrant Agent without further act or deed. The former Warrant Agent
shall deliver and transfer to the successor Warrant Agent any property at the
time held by it hereunder and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to give any notice
provided for in this Section, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Warrant Agent or
the appointment of the successor Warrant Agent, as the case may be.
(b) Any corporation into which the Warrant Agent may be merged
or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent,
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Warrant Agent shall succeed to the
agency created by this Agreement, any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent and deliver such
Warrant Certificates so countersigned, and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificate in its own name or in the
name of the successor Warrant Agent; and in all such cases such Warrant
Certificates shall have the full force provided in the Warrant Certificates and
this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under this prior name and deliver Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name
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or in its changed name; and in all such cases such Warrant Certificates shall
have the full force provided in the Warrant Certificates and in this Agreement.
SECTION 6.03 The Company agrees to pay the Warrant Agent a reasonable
fee for all services rendered by it hereunder. The Company also agrees to
indemnify the Warrant Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence, willful misconduct or
bad faith on the part of the Warrant Agent, arising out of or in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
SECTION 6.04 The Company covenants and agrees that it shall, at the
Company's expense, provide to the Warrant Agent copies of its current
prospectus, if any, in such quantity as to enable the Warrant Agent to deliver
one copy of such current prospectus to such Warrant Holder who shall exercise
his rights under a Warrant. Notwithstanding anything else contained in this
Section 6.04, the Company shall not be obligated to provide copies of its
current prospectus for the purpose of allowing the Warrant Agent to deliver such
copies to any Warrant Holder who delivers all of his redeemable warrants for
redemption pursuant to Section 2.03 or who shall notice the Company of his
intent to permit redemption of all of his Warrants pursuant to Section 2.03
herein or to any person who shall hold any Warrant subject to the terms of this
Agreement after the earlier of the Redemption Date or the Last Exercise Date of
the Warrants.
SECTION 6.05 The Warrant Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Warrant certificates, by their acceptance
thereof, shall be bound:
(a) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, that fact or matter, unless other evidence in respect
thereof be herein specifically prescribed, may be deemed to be conclusively
proved and established by a certificate signed by the President or the Secretary
of the Company and delivered to the Warrant Agent. That certificate shall be
full authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon that
certificate.
(b) The Warrant Agent shall be liable hereunder only for its
own gross negligence, willful misconduct or bad faith.
(c) The Warrant Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Warrant Certificates, except its countersignature thereof, or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
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(d) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof,
except the due execution hereof by the Warrant Agent, or in respect of the
validity or execution of any Warrant Certificate, except its countersignature
thereof; nor shall it be responsible for any Warrant Certificate; nor shall it
be responsible for the adjustment of the Warrant Price or the making of any
change in the number of shares of Common Stock required under the provisions of
Article III of this Agreement or responsible for the manner, method or amount of
any such change or the ascertaining of the existence of facts that would require
any such adjustment or change except with respect to the exercise of Warrant
Certificates after actual notice of any adjustment of the Warrant Price; nor
shall it by any act under this Agreement be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Warrant Certificate or as to whether
any share of Common Stock will when issued be validly issued, fully paid,
non-assessable and free of preemptive rights.
(e) The Warrant Agent and any shareholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the Warrant
Certificates or other securities of the Company to retain a pecuniary interest
in any transaction in which the Company may be interested or contract with or
lend money to or otherwise act as fully and freely as though it was not the
Warrant Agent or subject to this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
(f) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any officer or assistant officer of the Company, and to apply to any such
officer or assistant officer for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered to be taken by
it in good faith in accordance with instructions of any such officer or
assistant officer.
(g) The Warrant Agent may consult with its counsel or other
counsel satisfactory to it, including counsel for the Company, and the opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken, offered, or omitted by it hereunder in good faith
and in accordance with the opinion of such counsel.
(h) The Warrant Agent shall incur no liability to the Company
or to any holder of any Warrant for any action taken by it in reliance upon any
Warrant Certificate or certificate for Common Stock, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed, and where necessary, certified or
acknowledged, by the proper person or persons.
SECTION 6.06 The Warrant Agent may, without the consent or concurrence
of the Warrant Holders, by supplemental agreement or otherwise, concur with the
Company in making any changes or corrections in this Agreement that (i) it shall
have been advised by counsel, who may be counsel for the Company, are required
to cure any ambiguity or to correct any defective or
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inconsistent provision or clerical omission or mistake or manifest error herein
contained, or (ii) as provided in Section 3.09, the Company deems necessary or
advisable and which shall not be inconsistent with the provisions of the Warrant
Certificates, provided such changes or corrections do not adversely affect the
privileges or immunities of the Warrant Holders. This Agreement may not be
amended or modified except by an instrument in writing executed by the parties
hereto, subject to any applicable consent of the Representatives required by the
Representatives' Warrant Agreement.
SECTION 6.07 All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION 6.08 Forthwith upon the appointment after the date thereof of
any transfer agent for the Common Stock, or of any subsequent transfer agent for
the Common Stock, the Company will file with the Warrant Agent a statement
setting forth the name and address of such transfer agent.
SECTION 6.09 Notice or demand pursuant to this Agreement to be given or
made by the Warrant Agent or by any Warrant Holder to or on the Company shall be
sufficiently given or made and effective on the third business day after posting
thereof, unless otherwise provided in this Agreement, if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing by
the Company with the Warrant Agent) as follows:
Galacticomm Technologies, Inc.
0000 X.X. 00xx Xxx.
Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attn: Mr. Xxxxx Xxxx
With a copy to:
Lucio, Mandler, Croland, Bronstein,
Xxxxxxx, Xxxxxxxx & Xxxxxxxx, P.A.
Xxxxxxx Bank Tower
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
notice or demand pursuant to this Agreement to be given or made by the Company
or any Warrant Holder to or on the Warrant Agent shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) as follows:
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Continental Stock Transfer & Trust Company
0 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Compliance Department
notice or demand pursuant to this Agreement to be given or made by the Company
or the Warrant Agent to or on the Representatives shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Underwriter
with the Company) as follows:
Security Capital Trading, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxx, Vice President
and
First Equity Corporation of Florida
000 Xxxxx Xxxxxxxx Xxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Senior Vice President
notice or demand pursuant to this Agreement to be given or made by the Company
or the Warrant Agent to or on any Warrant Holder shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed to such Warrant Holder at his last known address as it shall
appear in the records of the Company, if such notice shall be given by the
Company, or, if such notice shall be given by the Warrant Agent, as it shall
appear on the register maintained by the Warrant Agent.
A copy of any Notice or demand given or made pursuant to this
Agreement on the Warrant Agent, Company or Underwriter shall be promptly
forwarded by the recipient thereof to each of the Company, Warrant Agent or
Underwriter who shall not have received or made such demand or Notice.
SECTION 6.10 The validity, interpretation and performance of this
Agreement and the Warrants shall be governed by the law of the State of Florida.
SECTION 6.11 Nothing in this Agreement shall be construed to give to
any person or corporation other than the parties hereto and the Warrant Holders
any right, remedy or claim under promise or agreement hereof. All covenants,
conditions, stipulations, promises and agreements contained in this Agreement
shall be for the sole and exclusive benefit of the Company and the
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Warrant Agent and their successors and of the Warrant Holders, and their heirs,
representatives, successors, assigns and transferees.
SECTION 6.12 A copy of this Agreement shall be available for inspection
by any Warrant Holder during the regular business hours and at the corporate
office of the Warrant Agent in New York, New York, at which time the Warrant
Agent may require any Warrant Holder to submit his Warrant Certificate for
inspection by it.
SECTION 6.13 This Agreement shall terminate on the Last Exercise Date
(as such term is defined herein and, as to the Underwriter Warrants, in the
Purchase Option Agreement, as applicable), or such earlier date upon which all
Warrants have been exercised or redeemed, except that the Warrant Agent shall
account to the Company pursuant to Section 2.02 (e) of this Agreement for all
cash held by it. The provisions of Section 6.03, 6.04 and 6.05 of this Agreement
shall survive such termination.
SECTION 6.14 The Article headings in this Agreement are for convenience
only and are not part of this Agreement and shall not affect the interpretation
thereof.
SECTION 6.15 This Agreement may be executed in any number counterparts,
each of which is so executed shall be deemed to be an original, and all such
counterparts shall together constitute but one and the same agreement.
ATTEST: GALACTICOMM TECHNOLOGIES, INC.
By:
---------------------------
---------------------------- Xxxxx Xxxx
Chief Executive Officer
ATTEST: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
----------------------------- By:
----------------------------
Name:
--------------------------
Title:
-------------------------
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EXHIBIT A
Form of Warrant Certificate
