EXHIBIT 4.2
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of ___________, 199__ between Galacticomm
Technologies, Inc., a Florida corporation, having its principal place of
business at ▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (the
"Company") and Continental Stock Transfer & Trust Company, a New York
corporation, having its principal place of business at ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (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") ______________________ Units, each Unit
consisting of one (1) share of the Company's Common Stock, par value $.0001 per
share ("Shares"), and one (1) Redeemable Common Stock Purchase Warrant (the
"Public Warrants") (plus an additional _____________ Units to cover
overallotments);
WHEREAS, the Company also proposes to issue and sell to First Equity
Corporation of Florida (the "Underwriter") in the IPO an option to purchase
___________________ Units (the Warrants underlying such Units, the "Underwriter
Warrants" and together with the Public Warrants sometimes hereinafter referred
to as the "Warrants");
WHEREAS, the Warrants shall be evidenced by certificates substantially in
the form of Exhibit A annexed hereto (the "Warrant Certificate"), with two (2)
Warrants entitling the holder thereof to purchase one (1) share of Common Stock;
WHEREAS, the Warrants will have an exercise price on the basis of $_____
[120% of the offering price of the Units] per share of Common Stock, subject to
certain adjustments (the "Warrant Price"), will be exercisable commencing 90
days after 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 third anniversary of the effective date of the IPO
("Last Exercise Date"), unless extended by the Company, and, except for the
Underwriter's 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;
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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, 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 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
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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 as a Unit and will be detachable
and separately transferable on the First Exercise Date.
ARTICLE II
WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS, CALL OF
WARRANTS AND TRADING OF WARRANTS
SECTION 2.01
(a) Two (2) Warrants 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 Warrants in denominations of two
or whole number multiples thereof, 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 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. If Warrants in denominations other than two or whole
number multiples thereof shall be exercised at one time by the same Warrant
Holder, the number of full shares of Common Stock which shall be issuable upon
exercise thereof, shall be computed on the basis of the aggregate number of full
shares of Common Stock issuable upon such exercise.
(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 Warrants are 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
Warrants are 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
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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 this 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 two or more 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 Underwriter 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 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 Underwriter
at such time or from time to time as shall be required by the Company or the
Underwriter, 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.
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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% (currently, $________) of the then effective exercise
price of the Warrants, 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 $.05
(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 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 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, as applicable 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 ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, no later than 5:00 P.M.
Miami, Florida time on the Redemption Date.
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(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 ▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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
Underwriter's 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 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 Common Stock (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
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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
Underwriter's 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 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 absent
manifest 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
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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 ▇▇▇▇ or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
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 Warrant prior 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.
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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 Underwriter, 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 it sole
discretion, determine to be advisable.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF
WARRANT HOLDERS
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
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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.
(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-_____) 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
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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 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 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 Whether or not 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
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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 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 incapable of 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
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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
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.
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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.
(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
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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 inconsistent provision or
clerical omission or mistake or manifest error herein contained, or (ii) as
provided in Section 3.09, the Company deems necessary of 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.
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
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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.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Mr. ▇▇▇▇▇ ▇▇▇▇
With a copy to:
Lucio, Mandler, Croland, Bronstein,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
▇▇▇▇▇▇▇ Bank Tower
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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:
Continental Stock Transfer & Trust Company
▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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 Underwriter 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:
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First Equity Corporation of Florida
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Senior Vice President
____________________________________
____________________________________
____________________________________
Attn: _____________________________
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 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, 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.
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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.
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ATTEST: GALACTICOMM TECHNOLOGIES, INC.
______________________________
By:___________________________________
▇▇▇▇▇ ▇▇▇▇, Chairman and
Chief Executive Officer
ATTEST: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
_______________________________
By: ______________________________
Name: ___________________________
Title:___________________________
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EXHIBIT A
Form of Warrant
