AMENDMENT NUMBER 1
TO
WARRANT
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THIS IS AMENDMENT NUMBER 1 ("this Amendment") that is being executed
and delivered by and between GCA Strategic Investment Fund Limited, a Bermuda
corporation ("GCA") and PCS Research Technology, Inc., formerly named Direct
Placement, Inc., a Delaware corporation (the "Company"), and dated effective as
of February 28, 2003 in order to amend that certain Warrant to purchase 35,000
shares of the Company's Common Stock dated December 14, 2001 (the "Warrant") and
by which GCA and the Company, in consideration of the mutual promises contained
in the Warrant and in this Amendment and other good and valuable consideration
(the sufficiency, mutuality and adequacy of which are hereby acknowledged),
hereby agree as follows:
1. Amendment to Exercise Price. The Exercise Price, as such term is
defined in the Warrant shall be $0.086.
2. Registration Rights. Section 13 of the Warrant shall be deleted in
its entirety.
3. Amendment to Section 2, Exercise of Warrant. Section 2.1 of the
Warrant shall be deleted in its entirety and shall be replaced with the
following text:
"(a) This warrant may be exercised in whole or in part
(but not as to a fractional share of Common Stock), at any time and
from time to time during the Exercise Period by the Holder hereof by
delivery of a notice of exercise (a "Notice of Exercise") substantially
in the form attached hereto as Exhibit A via facsimile to the Company.
Promptly thereafter the Holder shall surrender this Warrant to the
Company at its principal office, accompanied by payment of the Purchase
Price multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the "Exercise Price"). Payment of the
Exercise Price shall be made, at the option of the Holder, (i) by check
or bank draft payable to the order of the Company, or (ii) by wire
transfer to the account of the Company.
(b) In addition to the foregoing, at the option of
Holder, this Warrant may be exercised, at any time or from time to
time, in the following "cashless exercise" transactions:
(i) Upon written notice of exercise from the
Holder to the Company that the Holder is exercising this
Warrant in whole or in part and as consideration of such
exercise is authorizing the Company to withhold from issuance
a number of shares of Common Stock issuable upon exercise of
this Warrant, the Company shall deliver to the Holder (without
payment by the Holder of the aggregate Purchase Price) that
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number of shares of Common Stock equal to the quotient
obtained by dividing (x) the Spread Value by (y) the Fair
Market Value of one share of Common Stock immediately prior to
the exercise of the Conversion Right. The shares withheld by
the Company shall no longer be issuable under this Warrant.
(ii) Fair Market Value of a share of Warrant
Shares as of a particular date (the "Determination Date")
shall mean:
(A) If the Warrant Shares are traded on
an exchange or are quoted on the Nasdaq National
Market or the Nasdaq SmallCap Market ("Nasdaq"), then
the average of the closing or last sale price,
respectively, reported for the five trading days
immediately preceding the Determination Date.
(B) If the Warrant Shares are not
traded on an exchange or on Nasdaq but are traded in
the over-the-counter market or other similar
organization (including the OTC Bulletin Board), then
the average of the closing bid and ask prices
reported for the five trading days immediately
preceding the Determination Date.
(C) If the Warrant Shares are not
traded as provided above, then the price determined
in good faith by the Board of Directors of the
Company, provided that (i) the basis or bases of each
such determination shall be set forth in the
corporate records of the Company pertaining to
meetings and other actions of such board, and (ii)
such records are available to the Holder for
inspection during normal business hours of the
Company upon the giving of reasonable prior notice.
(D) If the Determination Date is the
date of a liquidation, dissolution or winding up, or
any event deemed to be a liquidation, dissolution or
winding up pursuant to the Company's certificate of
incorporation, then all amounts to be payable per
share to Holders of the securities then comprising
Warrant Shares pursuant to the charter in the event
of such liquidation, dissolution or winding up, plus
all other amounts to be payable per share in respect
of the Warrant Shares in liquidation under the
certificate of incorporation, assuming for the
purposes of this clause (D) that all of the shares of
Warrant Shares then issuable upon exercise of all of
the Warrants are outstanding at the Determination
Date.
(iii) The term "Spread Value" shall mean (i) the
number of shares exercised at a given time multiplied by the
Fair Market Value of one share of Common Stock, less (ii)
aggregate applicable Exercise Price.
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(c) Upon exercise, the Holder shall be entitled to
receive, promptly after payment in full, one or more certificates,
issued in the Holder's name or in such name or names as the Holder may
direct, subject to the limitations on transfer contained herein, for
the number of shares of Common Stock so purchased. The shares of Common
Stock so purchased shall be deemed to be issued as of the close of
business on the date on which the Company shall have received from the
Holder payment in full of the Exercise Price (the "Exercise Date").
(d) Notwithstanding anything to the contrary set forth
herein, upon exercise of all or a portion of this Warrant in accordance
with the terms hereof, the Holder shall not be required to physically
surrender this Warrant to the Company. Rather, records showing the
amount so exercised and the date of exercise shall be maintained on a
ledger substantially in the form of Annex B attached hereto (a copy of
which shall be delivered to the Company or transfer agent with each
Notice of Exercise). It is specifically contemplated that the Holder
hereof shall act as the calculation agent for all exercises of this
Warrant. In the event of any dispute or discrepancies, such records
maintained by the Holders shall be controlling and determinative in the
absence of manifest error. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following an exercise of a portion of
this Warrant, the number of shares of Common Stock represented by this
Warrant will be the amount indicated on Annex B attached hereto (which
may be less than the amount stated on the face hereof)."
4. No Other Effect on the Warrant. Except as amended by this Amendment,
the Warrant remains in full force and effect.
5. Effective Date. This Amendment is effective February 28, 2003.
6. Miscellaneous.
(a) Captions; Certain Definitions. Titles and captions of
or in this Amendment are inserted only as a matter of convenience and
for reference and in no way define, limit, extend or describe the scope
of this Amendment or the intent of any of its provisions. The parties
to this Amendment agree to all definitions in this statement of the
parties to this Amendment. A capitalized term in this Amendment has the
same meaning as it has as a capitalized term in the Warrant unless the
context clearly indicates to the contrary.
(b) Controlling Law. This Amendment is governed by, and
shall be construed and enforced in accordance with the laws of the
State of Delaware (except the laws of that jurisdiction that would
render such choice of laws ineffective).
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(c) Counterparts. This Amendment may be executed in one
or more counterparts (one counterpart reflecting the signatures of all
parties), each of which shall be deemed to be an original, and it shall
not be necessary in making proof of this Amendment or its terms to
account for more than one of such counterparts. This Amendment may be
executed by each party upon a separate copy, and one or more execution
pages may be detached from a copy of this Amendment and attached to
another copy in order to form one or more counterparts.
Signature Page Follows
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DULY EXECUTED and delivered by GCA and the Company, on February 28,
2003 effective as set forth above.
GCA: GCA Strategic Investment Fund Limited
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By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Director
Company: PCS Research Technology, Inc.
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By: /s/ XXXXX XXXXXXXXXX
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Name: Xxxxx Xxxxxxxxxx
Title:
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