-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PJ+2MbUVdzSdXv8zPSCXBymbcw6Akm9iwrIXZBc1OBeoZQNOH8yokmmwR1A7Ajt6 /PBdi1Kc47kYq2m1G9ph7Q== 0001046532-02-000165.txt : 20020520 0001046532-02-000165.hdr.sgml : 20020520 20020520145007 ACCESSION NUMBER: 0001046532-02-000165 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRECOM TECHNOLOGY INC CENTRAL INDEX KEY: 0001123195 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL- COMPUTER & PRERECORDED TAPE STORES [5735] IRS NUMBER: 061588136 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-31507 FILM NUMBER: 02657468 BUSINESS ADDRESS: STREET 1: 2001 W. MAIN STREET, STE. 208 CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2039610306 10QSB 1 f10qsb32002_precom.txt QUARTERLY REPORT FOR MARCH 31, 2002. U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] Quarterly Report Under Section 13 Or 15(D) Of The Securities Exchange Act Of 1934 For the quarterly period ended March 31, 2001 [ ] Transition Report Under Section 13 Or 15(D) Of The Exchange Act For the transition period from ____________ to ____________ Commission File No. 0-31507 PRECOM TECHNOLOGY, INC. (Name of Small Business Issuer in Its Charter) Florida 06-1588136 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 2001 West Main Street, Suite 208, Stamford, CT 06902 (Address of Principal Executive Offices) (203) 961-0306 (Issuer's Telephone Number, Including Area Code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of May 13, 2002, the Company had 44,204,131 shares of Common Stock outstanding, $0.001 par value and no shares of preferred stock outstanding. Transitional Small Business Disclosure Format (check one): Yes No X ----- ----- PRECOM TECHNOLOGY, INC. FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 TABLE OF CONTENTS Page No. Part I - FINANCIAL INFORMATION Item 1. Financial Statements 1 INDEPENDENT ACCOUNTANTS' REVIEW REPORT 2 FINANCIAL STATEMENTS Balance Sheets 7 Statements of Operations 8 Statement of Changes in Stockholders' Equity (Deficit) 9 Statements of Cash Flows 11 Notes to Financial Statements 12 Item 2. Plan of Operations 17 PART II - OTHER INFORMATION Item 1. Legal Proceedings 18 Item 2. Changes in Securities 19 Item 3. Defaults Upon Senior Securities 19 Item 4. Submission of Matters to a Vote of Security Holders 19 Item 5. Other Information 20 Signatures 21 Index to Exhibits 22 PART I - FINANCIAL INFORMATION Item 1. Financial Statements: BASIS OF PRESENTATION As used herein, the term "Company" refers to Precom Technology, Inc., a Delaware corporation, unless otherwise indicated. The accompanying unaudited financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements for the year ended December 31, 2001 which are included in our Form 10-KSB filed with the Securities and Exchange Commission ("SEC") on April 15, 2002. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of results that may be expected for the year ending December 31, 2002. The financial statements are presented on the accrual basis. I-1 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 I-2 TABLE OF CONTENTS Page No. INDEPENDENT ACCOUNTANTS' REVIEW REPORT .... 1 FINANCIAL STATEMENTS Balance Sheets ..................... 2 Statements of Operations ........... 3 Statement of Stockholders' (Deficit) 4 Statements of Cash Flows ........... 5 Notes to Financial Statements ...... 6 - 10 I-3 INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors and Stockholders Precom Technology, Inc. (A Development Stage Company) We have reviewed the accompanying balance sheet of Precom Technology, Inc. (a development stage company) as of March 31, 2002 and the related statements of operations, stockholders' (deficit) and cash flows for the three months ended March 31, 2002 and 2001 and for the period from September 1, 1996 (date of inception) to March 31, 2002, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountant. All information included in these financial statements is the representation of the management of Precom Technology, Inc. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 7 to the financial statements, the Company has incurred net losses of $482,185, has a deficit stockholders' equity, and needs additional capital to finance its operations. In addition, the Company does not have any assets. These conditions raise uncertainty about its ability to continue as a going concern. Management's plans regarding these matters also are described in Note 7. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. We have audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of Precom Technology, Inc. as of December 31, 2001, and the related statements of operations, stockholders' (deficit) and cash flows for the year then ended (not presented herein); and in our report dated March 8, 2002, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2001, is fairly stated in all material respects in relation to the balance sheet from which it has been derived. Moffitt & Company, P.C. Scottsdale, Arizona April 22, 2002 F-1 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS MARCH 31, 2002 AND DECEMBER 31, 2001 ASSETS
March 31, December 31, 2002 2001 (Unaudited) (Audited) ----------- --------- TOTAL ASSETS $ 0 $ 0 LIABILITIES AND STOCKHOLDERS' (DEFICIT) CURRENT LIABILITIES Accounts payable Stock Transfer Agent $ 17,839 $ 17,814 Greenwich Financial Group 61,187 59,188 Legal and accounting fees 37,796 28,215 ------------------ ------------------ TOTAL CURRENT LIABILITIES 116,822 105,217 ------------------ ------------------ STOCKHOLDERS' (DEFICIT) Preferred stock, par value $ 0.001 per share Authorized 10,000,000 shares Issued and outstanding - 0 - shares 0 0 Common stock, par value $ 0.001 per share Authorized 50,000,000 shares Issued and outstanding - 2,120,820 shares 2,121 2,121 Paid in capital in excess of par value of stock 363,242 363,242 Deficit accumulated during the development stage ( 482,185) ( 470,580) ------------------ ------------------ TOTAL STOCKHOLDERS' (DEFICIT) ( 116,822) ( 105,217) ------------------ ------------------ TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 0 $ 0 ================== ==================
See Accompanying Notes and Indeptendent Accountants' Review Report. F-2 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001 AND FOR THE PERIOD FROM SEPTEMBER 1, 1996 (DATE OF INCEPTION) TO MARCH 31, 2002 (UNAUDITED)
For the Period From Three Months September 1, 1996 Ended March 31, (Date of Inception) ---------------------- 2002 2001 to March 31, 2002 ---- ---- ------------------ REVENUE $ 0 $ 0 $ 6,768 ----------- ----------- ----------- EXPENSES General and administrative expenses 11,605 26,588 115,560 Development costs 0 0 373,393 ----------- ----------- ----------- TOTAL EXPENSES 11,605 26,588 488,953 ----------- ----------- ----------- NET (LOSS) $ (11,605) $ (26,588) $ (482,185) =========== =========== =========== NET (LOSS) PER COMMON SHARE Basic and diluted $ (.01) $ (.01) =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUT- STANDING Basic and diluted 2,120,820 2,120,820 ========= =========
See Accompanying Notes and Indeptendent Accountants' Review Report. F-3 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' (DEFICIT) FOR THE PERIOD FROM SEPTEMBER 1, 1996 (DATE OF INCEPTION) TO MARCH 31, 2002 (UNAUDITED)
Preferred Stock Common Stock --------------- ------------ Shares Amount Shares Amounts ------ ------ ------ ------- September 1, 1996 (Date of inception) 0 $ 0 0 $ 0 September, 1996 - Shares issued for services 0 0 100,000 100 October, 1996 - Shares issued for cash 0 0 100,000 100 Net (loss) for the period from September 1, 1996 to December 31, 1996 0 0 0 0 --------------- --------------- ---------------- ---------------- BALANCE, DECEMBER 31, 1996 0 0 200,000 200 March 1997 - Shares issued for cash 0 0 400,000 400 March 1997 - Shares issued for settlement of failed mergers 0 0 720,820 721 Net (loss) for the year ended December 31, 1997 0 0 0 0 --------------- --------------- ---------------- ---------------- BALANCE, DECEMBER 31, 1997 0 0 1,320,820 1,321 August 1998 - Shares issued for services 0 0 600,000 600 Net (loss) for the year ended December 31, 1998 0 0 0 0 --------------- --------------- ---------------- ---------------- BALANCE, DECEMBER 31, 1998 0 0 1,920,820 1,921 Net (loss) for the year ended December 31, 1999 0 0 0 0 --------------- --------------- ---------------- ---------------- BALANCE, DECEMBER 31, 1999 0 0 1,920,820 1,921 August 2000 - issuance of common stock for Provence Capital Corporation, Inc. 0 0 200,000 200 Net (loss) for the year ended December 31, 2000 0 0 0 0 --------------- --------------- ---------------- ---------------- BALANCE, DECEMBER 31, 2000 0 0 2,120,820 2,121 Net (loss) for the year ended December 31, 2001 0 0 0 0 --------------- --------------- ---------------- ---------------- BALANCE, DECEMBER 31, 2001 0 0 2,120,820 2,121 Net (loss) for the three months ended March 31, 2002 0 0 0 0 --------------- --------------- ---------------- ---------------- BALANCE, MARCH 31, 2002 0 $ 0 2,120,820 $ 2,121 =============== =============== ===================================
Paid in Deficit Capital in Accumulated Excess of During the Par Value Development of Stock Stage Total -------- ----- ----- $ 0 $ 0 $ 0 900 0 1,000 50,084 0 50,184 0 ( 16,703) ( 16,703) - ---------------------------------------------- ---------------------- ---------------------- 50,984 ( 16,703) 34,481 199,600 0 200,000 6,488 0 7,209 0 ( 178,200) ( 178,200) - ---------------------------------------------- ---------------------- ---------------------- 257,072 ( 194,903) 63,490 99,400 0 100,000 0 ( 171,241) ( 171,241) - ---------------------------------------------- ---------------------- ---------------------- 356,472 ( 366,144) ( 7,751) 0 ( 7,249) ( 7,249) - ---------------------------------------------- ---------------------- ---------------------- 356,472 ( 373,393) ( 15,000) 6,770 0 6,970 0 ( 58,741) ( 58,741) - ---------------------------------------------- ---------------------- ---------------------- 363,242 ( 432,134) ( 66,771) 0 ( 38,446) ( 38,446) - ---------------------------------------------- ---------------------- ---------------------- 363,242 ( 470,580) ( 105,217) 0 ( 11,605) ( 11,605) - ---------------------------------------------- ---------------------- ---------------------- $ 363,242 $ ( 482,185) $ ( 116,822) ====================== ====================== ======================
See Accompanying Notes and Indeptendent Accountants' Review Report. F-4 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001 AND FOR THE PERIOD FROM SEPTEMBER 1, 1996 (DATE OF INCEPTION) TO MARCH 31, 2002 (UNAUDITED)
For the period From September Three Months 1, 1996 (Date of Ended March 31, Inception) to -------------------------------- 2002 2001 March 31,2002 ---------------- --------------- ------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) $ (11,605) $ (38,446) $ (482,185) Adjustments to reconcile net (loss) to net cash (used) by operating activities: Stock issued for merger expenses 0 0 14,179 Stock issued for services 0 0 101,000 Changes in operating assets and liabilities: Accounts payable 11,605 38,446 116,822 ---------------- --------------- ------------------- NET CASH (USED) BY OPERATING ACTIVITIES 0 0 (250,184) ---------------- --------------- ------------------- CASH FLOWS FROM INVESTING ACTIVITIES 0 0 0 ---------------- --------------- ------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 0 0 250,184 ---------------- --------------- ------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 0 0 250,184 ---------------- --------------- ------------------- NET INCREASE IN CASH 0 0 0 CASH AT BEGINNING OF PERIOD 0 0 0 ---------------- --------------- ------------------- CASH AT END OF PERIOD $ 0 $ 0 $ 0 ================ =============== ================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 0 $ 0 $ 0 ================ =============== =================== Taxes $ 0 $ 0 $ 150 ================ =============== =================== SCHEDULE OF NON-CASH FINANCING ACTIVITIES: Issuance of common stock for merger expenses $ 0 $ 0 $ 14,179 ================ =============== =================== Issuance of common stock for services $ 0 $ 0 $ 101,000 ================ =============== ===================
See Accompanying Notes and Indeptendent Accountants' Review Report. F-5 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Precom Technology, Inc. (hereinafter referred to as the Company) was organized on September 1, 1996, under the laws of the State of Florida. In August 2000, the Company completed a merger with Provence Capital Corporation, Inc. by exchanging 200,000 shares of common stock for 100% of the outstanding shares of Provence Capital Corporation, Inc. Name Changes The Company has changed its name as follows: At date of incorporation - Fairbanks, Inc. April 1997 - Jet Vacations, Inc. May 1998 - Precom Technology, Inc. Accounting Estimates Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, Accounting for Income Taxes. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Net (Loss) Per Share The Company adopted Statement of Financial Accounting Standards No. 128 that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per See Accompanying Notes and Indeptendent Accountants' Review Report. F-6 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net (Loss) Per Share (Continued) share is computed by dividing net income (loss) available to common stockholders' by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with FASB 128, any anti-dilutive effects on net (loss) per share are excluded. Recent Accounting Pronouncements In June 2001, the FASB issued the following statements: FASB 141 - Business Combinations FASB 142 - Goodwill and other Intangible Assets FASB 143 - Accounting for Asset Retirement Obligations FASB 144 - Accounting for the Impairment or Disposal of Long-Lived Assets These FASB statements did not have a material impact on the Company's financial position or results of operations. NOTE 2 RESTATEMENT OF COMMON STOCK AND PAID IN CAPITAL IN EXCESS OF PAR VALUE OF STOCK On February 5, 2001, the Company effected a 1 for 100 reverse stock split on 19,208,522 shares of stock. On March 19, 2001, the Company then had a 10-1 forward stock split on 192,008 shares. The stock splits have been retroactively recorded in the financial statements as if they occurred at the date of inception. NOTE 3 DEVELOPMENT STAGE OPERATIONS As of March 31, 2002, the Company was in the development stage of operations. A development stage company is defined as a company that devotes most of its activities to establishing a new business activity. In addition, planned principal activities have not commenced, or have commenced and have not yet produced significant revenue. The Company expensed $373,393 of development costs for the period from September 1, 1996 (date of inception) to March 31, 2002. See Accompanying Notes and Indeptendent Accountants' Review Report. F-7 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 (UNAUDITED) NOTE 4 INCOME TAXES Significant components of the Company's deferred tax assets and liabilities are as follows as of March 31, 2002 and 2001:
2001 2000 ------------------ ------------------ Deferred tax assets Net operating losses carryforward $ 66,000 $ 62,000 Less valuation allowance 66,000 62,000 ------------------ ------------------ Net deferred tax assets $ 0 $ 0 ================== ================== Deferred tax liabilities $ 0 $ 0 ================== ================== A reconciliation of the valuation allowance is as follows: 2001 2000 Balance at beginning of period $ 64,000 $ 57,959 Addition for the period 2,000 4,041 ------------------ ------------------ Balance at end of period $ 66,000 $ 62,000 ================== ==================
NOTE 5 NET OPERATING LOSS CARRYFORWARDS The Company has the following net operating loss carryforwards at March 31, 2002:
Tax Year Amount Expiration date ----------------- --------------------- --------------- December 31, 1996 $ 16,703 2016 December 31, 1997 178,200 2017 December 31, 1998 171,241 2018 December 31, 1999 7,248 2019 December 31, 2000 15,226 2020 December 31, 2001 38,446 2021 March 31, 2002 11,605 2022 --------------------- $ 438,669 =====================
Future changes in ownership may limit the ability of the Company to utilize its net operating loss carryforwards. See Accompanying Notes and Indeptendent Accountants' Review Report. F-8 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 (UNAUDITED) NOTE 6 PREFERRED STOCK No rights or preferences have been assigned to the preferred stock. NOTE 7 GOING CONCERN These financial statements are presented on the basis that the Company is a going concern. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The Company has incurred net losses of $482,185, has deficit stockholders' equity and needs additional capital to finance its operations. These factors raise uncertainty as to the Company's ability to continue as a going concern. Management's plans to eliminate the going concern situation include, but are not limited to, seeking a merger candidate. (See Note 10) NOTE 8 BUSINESS COMBINATION In August 2000, the Company merged with Provence Capital Corporation, Inc. and accounted for the transaction as a pooling of interest. The Company recorded the merger as follows: Increase in common stock $ 200 Increase in paid in capital in excess of par value of stock 6,770 The following unaudited information presents certain income statement data of the separate companies for the periods preceding the merger: 2000 Net sales ----------------- Precom Technology, Inc. $ 0 Provence Capital Corporation, Inc. 0 Net (loss) Precom Technology, Inc. ( 42,170) Provence Capital Corporation, Inc. ( 6,970) There were no material transactions between Precom Technology, Inc. and Provence Capital Corporation, Inc. prior to the merger. The effects of conforming Provence Capital Corporation, Inc.'s accounting policies to those of Precom Technology, Inc. were not material. See Accompanying Notes and Indeptendent Accountants' Review Report. F-9 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 (UNAUDITED) NOTE 9 UNAUDITED FINANCIAL INFORMATION The accompanying financial information as of March 31, 2002 and 2001 is unaudited. In management's opinion, such information includes all normal recurring entries necessary to make the financial information not misleading. NOTE 10 SUBSEQUENT EVENT - SALE OF COMMON STOCK On April 9, 2002, the Company sold 40,000,000 shares of common stock to CGI International Holdings, Inc. under the following terms and conditions: A. CGI International Holdings, Inc. issued to the Company a six month note for $2,000,000. B. The note does not bear interest. C. The note is secured by the 40,000,000 shares of stock. D. The Company shall release a portion of the security if partial payments are made on the note. E. The Company will change its name to Concilium Group, Inc. On April 12, 2002, the new chief executive officer purchased 2,030,511 shares of common stock for a cash payment of $101,541. On April 16, 2002, the Company issued 1,000,000 warrants to Greenwich Financial Group (Greenwich). The warrants entitle Greenwich to acquire 1,000,000 shares of common stock at $1.00 per share for a period of three years. The Company agreed to issue Greenwich Financial Group and its shareholders 3,850,000 of restricted common stock as follows: 100,000 shares to stockholders of Greenwich for consulting services. 1,350,000 shares to Greenwich subject to a lock-up agreement which restricts sales of the stock to 210,000 shares per month. The Company agreed to register these shares with the Securities and Exchange Commission by June 15, 2002. The Company is subject to penalty clauses if it does not register and receive SEC approval by June 15, 2002. The penalties are that the Company would have to issue Greenwich addition shares depending on the length of time the SB-2 filing is delayed. 2,400,000 will be restricted shares. On April 17, 2002, the Company issued 2,500,000 shares to Randal Letcavage and Rosemary Nguyen in payment for a consulting agreement. On April 9, 2002, the Company established the 2002 employee stock option plan and reserved 4,642,820 shares of common stock for future issuance under the plan. See Accompanying Notes and Indeptendent Accountants' Review Report. F-10 Item 2. Plan of Operation OVERVIEW - --------- On February 25, 2002, we entered into a Share Exchange Agreement with CGI International Holdings, Inc., a Delaware corporation, ("CGI"), and its shareholders. We reported this transaction in an 8-K filed with the SEC on March 26, 2002 and attached a copy of the Share Exchange Agreement as Exhibit 1 to the 8-K. On April 9, 2002, we decided to rescind that Share Exchange Agreement and to proceed with a simpler transaction that could be accomplished immediately, and with a better result for our shareholders. Under the new transaction, CGI agreed to purchase 40 million shares of our common stock for a capital investment in the Company equal to $2,000,000. Please refer to our Form 10-KSB filed with the SEC April 15, 2002 for further discussion of the share acquisition. A copy of the Subscription Agreement dated April 9, 2002 is attached as Exhibit 10.1 to our Form 10-KSB filed with the SEC on April 15, 2002. The Company intends to integrate the operations of CGI into the Company during 2002. CGI is an international financial services company engaged in financial, tax and business planning, asset protection, insurance management, and merchant banking with offices in the United States and Hong Kong. CGI is organized as a holding corporation with five distinct divisions or subsidiaries currently, and several planned in 2002, which collectively provide all of the necessary elements to manage and execute each comprehensive, specifically tailored service plan developed and maintained to meet the financial needs of CGI's clients. The individuals managing each division or subsidiary are recognized as being among the best in their respective industries. CGI acts as a "financial concierge" by maintaining and coordinating the actions of division each subsidiary into a cohesive set of services. RESULTS OF OPERATIONS - --------------------- The Company had no operations in the first quarter of 2002 and its sole business model since early 2000 has been to identify, acquire or merge with a viable business operation. Management made numerous efforts to pursue the Company's original business plan and to raise capital to operate the business. Unfortunately the equity markets underwent significant turmoil and uncertainty over the past two years. As a result, our ambitious plans for a capital intensive business were unsuccessful and our capital needs could not be realized. Accordingly we abandoned our original business plan and began to look for potential acquisition candidates. In addition, as of the most recent quarter ending March 31, 2002, we have incurred cumulative net losses of $482,185 from inception. We abandoned all further development activities and had no assets as of March 31, 2002. These factors raised doubt as to our ability to continue as a going concern and our auditors included a going concern warning in their audit report for the year ended December 31, 2001, as reported on our 10-K filed with the SEC on April 15, 2002. Management's plans to eliminate the going concern situation included but were not limited to seeking a merger or acquisition candidate. A mature and businesslike evaluation of our affairs required the consideration of the foreseeable possibility of business failure. Accordingly, a reverse acquisition transaction or other merger transaction became a possible and foreseeable solution. I-3 In early January 2001, we had received an offer from GroupNow, Inc. dated November 1, 2000 to acquire a controlling interest in our company. On or about March 5, 2001, we contacted GroupNow, Inc., to follow up on their progress and to consider an opportunity to be acquired by our Company. After the discussions with Information Technology, Inc., we re-opened discussions with GroupNow. We entered into a Stock Exchange Agreement with GroupNow Inc. on June 4, 2001 and commenced the necessary due diligence and SEC disclosure process. In our Form 10Q for the Third Quarter of 2001, filed with the SEC on November 14, 2001, we announced that the proposed transaction with GroupNow Inc. had been called off due to extenuating circumstances. We then began to search for a more suitable acquisition partner. Negotiations between CGI and the Company began in early February, 2002 and resulted in the execution of a Share Exchange Agreement between CGI and its shareholders and the Company dated February 25, 2002. A copy of the Share Exchange Agreement was included in the Form 8-K reporting the agreement filed with the SEC on March 26, 2002. Subsequently, we decided to rescind that Agreement and entered into a Subscription Agreement with CGI on April 9, 2002, under which CGI agreed to subscribe for 40,000,000 shares of our common stock in return for a promissory note, secured by the stock, for $2,000,000. This transaction, and a copy of the Subscription Agreement and Promissory Note, were reported on Form 10-KSB, filed with the SEC on April 15, 2002. The Company incurred general and administrative expenses of $11, 605 during the first quarter of 2002, resulting in a loss for the quarter of $11, 605 and a cumulative loss of $482,185. Currently the Company does not have sufficient resources to meet the Company's cash requirements. The Company is current seeking to raise additional capital through various vehicles including but not limited to acquisitions of other business concerns, private stock placements, or public offerings. FORWARD-LOOKING STATEMENTS - -------------------------- Forward-looking statements, based on management's current views and assumptions, are made throughout this Form 10-QSB. These statements, including consolidated pro forma financial statements, are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected. Among the factors that may affect operating results are the following: success of the Company's change in focus, competitive environment, limited capital resources and general economic conditions. I-4 PART II - OTHER INFORMATION Item 1. Legal Proceedings. Robert Hipple, CEO of the Company, Rodney Read, COO, Drew Roberts, CFO and Aaron Nilsen, Corporate Counsel, as officers of CGI, the 94 percent majority shareholder of the Company, were named as defendants in an action entitled David K. Broadbent, as Receiver, et al. vs. CGI International Holdings, Inc. et al filed March 21, 2002 in the United States District Court for the District of Utah, Central Division, Civil Action No. 2:02-C-230. In that action, the Receiver is seeking to ascertain whether any assets of Merrill Scott & Associates, Inc., a Utah corporation, by which all of the individuals had been employed prior to October 15, 2001 (Mr. Roberts until December 31, 2001) are held by CGI. Merrill Scott & Associates, Inc., which ceased active business prior to the end of 2001, is the subject of an SEC civil enforcement action, along with its principal and several related entities, commenced on January 15, 2002. The Receiver was appointed on January 23, 2002 at the request of the SEC to identify and gather the assets of Merrill Scott & Associates, Inc. for the benefit of its creditors. Based on a review of the pleadings and other documents filed in the Receiver action, no liability is expected to result from this action on the part of CGI, or any of the named individuals, because no assets or other property of Merrill Scott & Associates, Inc. are held by CGI, or any of the named individuals. On April 5, 2002, a Stipulated Order was entered by the Court in the pending civil litigation whereby, in part, CGI agreed to set aside temporarily 40% of any fees or commissions earned by CGI from certain clients for whom CGI might provide services in the future, until it has been determined whether the Receiver has any claim to the specific clients. CGI does not expect the any reserved funds will be subject to a claim by the Receiver since the Receiver has already indicated that he will not be providing any services to any of the potential clients. The Stipulated Order any relates to potential clients first identified between October 15, 2001 and January 15, 2002, prior to CGI's incorporation. Motions to Dismiss the claims against CGI and the named individuals for failure to state a cause of action, or for judgment on the pleadings, have been filed in the Receiver's action and are currently pending with the Court. Item 2. Changes in Securities. On February 25, 2002, we entered into a Share Exchange Agreement with CGI, and its shareholders. We reported this transaction in an 8-K filed with the SEC on March 26, 2002 and attached a copy of the Share Exchange Agreement as Exhibit 1 to the 8-K. On April 9, 2002, we decided to rescind that Share Exchange Agreement and to proceed with a simpler transaction that could be accomplished immediately, and with a better result for our shareholders. Under the new transaction, CGI agreed to purchase 40 million shares of our common stock for a capital investment in the Company equal to $2,000,000 (the "Subscription Agreement). Please refer to the Company's Form 10-KSB filed with the SEC on April 15, 2002 for further discussion of the Subscription Agreement. Effective April 16, 2002, the Company issued 1,000,000 warrants to Greenwich Financial Group. Please refer to Item 5 for further discussion of the Warrant Agreement. On April 12, 2002, the Company entered into a subscription agreement with Robert J. Hipple, President, CEO and Chairman of the Company, whereby the Company issued 2,030,811 shares of the Company's common stock to in exchange for $101,540.55. The proceeds from this subscription were used by the Company for payroll and other operating expenses. Item 3. Defaults Upon Senior Securities. None II-1 Item 4. Submission of Matters to a Vote of Security Holders. Prior to the issuance of the new shares to CGI, a majority of our shareholders consented in writing on April 9, 2002 to certain actions, in lieu of an Annual Meeting of the shareholders. Those actions consented to in writing by a majority of our shareholders were: Election of Directors To elect as directors of the Company the following individuals, to serve until the next Annual Meeting or until their successors are elected: Nicholas M. Calapa, Robert Hipple and Rodney Read. Appointment of Auditors for 2002 To appoint Moffitt & Company, PC, of Scottsdale, Arizona, as our auditors again for 2002. Adoption of the 2002 Stock Option Plan for Employees To approve the adoption of the 2002 Employee Stock Option Plan. Please refer to the Company's Form 10-KSB filed with the SEC on April 15, 2002 for further discussion of these shareholder actions. A copy of the 2002 Employee Stock Option Plan is attached to that Form 10-KSB. Item 5. Other information. The Company has agreed to honor and complete certain agreements and conditions that were contemplated under the rescinded Share Exchange Agreement. The following are the related transactions the Company has entered into: The Company has issued warrants to Greenwich Financial Group ("GFG") to purchase 1,000,000 shares of the Company's common stock at $2.00 per share for a period of three (3) years. A copy of the Warrant Agreement with GFG is attached hereto as Exhibit 10.1. The Company will also issue a total of 3,850,000 restricted shares of the Company's common stock to GFG (the GFG Shares"). Issuance of the GFG Shares will be as follows: 100,000 of the GFG Shares have been included in the Company's registration statement on Form S-8 filed with the SEC May 8, 2002 (the "S-8"). 50,000 of these shares were issued each to Nicholas M. Calapa, director of the Company and Bruce Keller, former director of the Company, pursuant to separate consulting agreements with Messers. Calapa and Keller. Copies of the consulting agreements are attached as Exhibits 4.2 and 4.3 to the S-8. 1,350,000 of the GFG Shares are subject to a Lock-up Agreement effective May 8, 2002 (the "Lock-up Agreement") between GFG and the Company. The Lock-up Agreement provides for the release of the subject shares for sale at the rate of 15% per month (210,000 shares) once the subject shares become free trading as a result of an effective registration of the subject shares and elimination of any transfer restrictions. A copy of the Lock-up Agreement is attached hereto as Exhibit 10.2. 2,400,000 of the GFG Shares will remain restricted shares. II-2 The Company has agreed to use its reasonable best efforts to register 1,350,000 of the GFG Shares on Form SB-2 to be filed with the SEC by June 15, 2002. If the SB-2 is not filed by June 30, 2002, then the Company agreed to issue an additional two hundred thousand (200,000) shares to GFG with such shares to be registered in the SB-2 Registration Statement. For each additional 30 days that the SB-2 is not filed with the SEC, GFG will receive an additional two hundred thousand (200,000) shares that will be registered in the SB-2 Registration Statement. If the SB-2 is not approved by the SEC and deemed effective within 365 days of filing, through any fault or neglect of the Company, then GFG will receive an additional two hundred thousand (200,000) shares. For each additional sixty (60) days that the SB-2 is not thereafter deemed effective for the same reasons, GFG will receive an additional two hundred thousand (200,000) shares. The Company issued 1,250,000 shares each to Randal Letcavage and Rosemary Nguyen, principals of iCapital Corporation, pursuant to a Financial Consulting Services Agreement dated April 17, 2002, between the Company and Randal Letcavage and Rosemary Nguyen (the "Consulting Agreement"). These 2,500,000 shares are included in the S-8 registration statement filed May 8, 2002. A copy of the Consulting Agreement attached as Exhibit 4.1 to the S-8. Item 6. Exhibits and reports on Form 8-K Exhibits. Exhibits required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits on page 22 of this Form 10-QSB, and are incorporated herein by this reference. Reports on Form 8-K. The Company filed one report on Form 8-K during the quarter for which this report is filed: On March 22, 2002, the Company filed a Form 8-K disclosing the subscription of 40,000,000 shares of the Company's common stock by CGI International Holdings, Inc. II-3 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this 10-QSB report to be signed on its behalf by the undersigned thereunto duly authorized. Precom Technology, Inc., a Florida corporation By: /s/ Robert J. Hipple - ------------------------- Robert J. Hipple President and CEO DATED: May 20, 2002 II-4 EX-99 3 f10qsb32002index_precom.txt INDEX TO EXHIBITS INDEX TO EXHIBITS
EXHIBIT NO. PAGE NO. DESCRIPTION 3.1 * Articles of Incorporation, as amended, incorporated by reference to the Registrant's Form 8-K12g3, filed on September 12, 2000. 3.2 * Bylaws, as amended, incorporated by reference to the Registrant's Form 8-K12g3, filed on September 12, 2000. 10.1 23 Warrant Agreement with Greenwich Financial Group effective May 8, 2002. 10.2 42 Registration and Lock-up Agreement between the Company and Greenwich Financial Group, effective May 8, 2002. 13.1 * Form 10-KSB filed April 15, 2002. 13.2 * Form S-8 filed May 8, 2002.
* Previously filed as indicated and incorporated herein by reference from the referenced filings previously made by the Company. EX-10.1 4 warrantagr_precom.txt WARRANT AGREEMENT W/FORMS WARRANT AGREEMENT WARRANT AGREEMENT dated as of April 16, 2002 between Precom Technology, Inc., a Florida corporation (the "Company"), and Greenwich Financial Group, a , (hereinafter referred to as "GFG"). - ------------ ----------- W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company proposes to issue to GFG warrants (the "Warrants") to purchase up to 1,000,000 (as such number may be adjusted from time to time pursuant to Article 7 of this Agreement) shares (the "Shares") of common stock, par value $.001 per share (the "Common Stock"), of the Company; NOW, THEREFORE, in consideration of the premises, the agreements herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Grant GFG and/or its designees are hereby granted the right to purchase, pursuant to the terms and conditions of this Warrant Agreement, at any time from April 16, 2002 until 5:00 p.m., Eastern time, on April 16, 2005, which date may be extended as set forth in Section 11 (the "Warrant Exercise Term"), up to 1,000,000 fully-paid and non-assessable Shares at an initial exercise price (subject to adjustment as provided in Article 7 hereof) of $2.00 per Share. 2. Warrant Certificates. The warrant certificates delivered and to be delivered pursuant to this Agreement (the "Warrant Certificates") shall be in the form set forth in Exhibit A attached hereto and made a part hereof, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Agreement. 3. Exercise of Warrant. 3.1. Vesting and Exercise. The Warrants granted herein shall vest in GFG and shall become exercisable immediately on the issuance of this Warrant Agreement. The Warrants initially are exercisable at a price of $2.00 per Share, and payable by wire transfer in immediately available funds to the Company, subject to adjustment as provided in Article 7 hereof. Upon surrender of the Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Exercise Price (as hereinafter defined) for the Shares purchased (as hereafter defined), at the Company's principal offices, the registered holder of a Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a stock certificate or certificates for the Shares so purchased. The purchase rights represented by each Warrant Certificate are exercisable at the option of the Holder thereof, in whole or in part (but not as to fractional Shares). In the case of the purchase of less than all the Shares purchasable under any 1 Warrant Certificate, the Company shall cancel said Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Shares purchasable thereunder and for the balance of the Warrant Exercise Term. 4. Issuance of Certificates. (a) Upon the exercise of the Warrants, the issuance of stock certificates for the Shares purchased shall be made forthwith without charge to the Holder thereof including, without limitation, any excise or transfer tax which may be payable in respect of the issuance thereof, and such certificates shall (subject to the provisions of Article 5 hereof) be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Warrant Certificates and the certificates representing the Shares shall be executed on behalf of the Company by the manual or facsimile signature of the present or any future Chairman or Vice Chairman of the Board of Directors, Chief Executive Officer or resident or Vice President of the Company under its corporate seal reproduced thereon, attested to by the manual or facsimile signature of the present or any future Secretary or Assistant Secretary of the company, or in such other manner as is then authorized for the Company. Warrant Certificates shall be dated the date of execution by the Company upon initial issuance, division, exchange, substitution or transfer. Upon exercise, in part or in whole, of the Warrants, certificates representing the Shares shall bear a legend (which legend shall be removed by the Company pursuant to Section 6.3(b)) substantially similar to the following: "The securities represented by this certificate have not been registered for purposes of public distribution under the Securities act of 1933, as amended (the "Act"), and may not be offered or sold except (i) pursuant to an effective registration statement under the Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) upon the delivery by the holder to the Company of an opinion of counsel, reasonably satisfactory to counsel to the Company, stating that an exemption from registration under such Act is available." (b) The Holder hereby covenants and agrees that from and after the date hereof the Holder may, after five business day prior written notice to the Company of the Holder's intention thereto, directly or indirectly, sell, offer or contract to sell, pledge or otherwise dispose or transfer (collectively, a "transfer") the Warrant to a transferee who expressly and in writing 2 agrees with the Holder and the Company at the time of such transfer, to assume all of the obligations of, and comply with all the provisions applicable to, the Holder under this Agreement and under the Warrant. 5. Price. 5.1. Initial and Adjusted Exercise Price. The initial exercise price of each Warrant shall be $2.00 per Share. The adjusted exercise price per Share shall be the price which shall result from time to time from any and all adjustments of the initial exercise price per Share in accordance with the provisions of Article 8 hereof. 5.2. Exercise Price. The term "Exercise Price" herein shall mean the initial exercise price until such price has been adjusted, in which case thereafter the term Exercise Price shall mean the adjusted exercise price. 6. Registration Rights. 6.1. Registration Under the Securities Act of 1933. None of the Warrants or Shares have been registered for purposes of public distribution under the Securities Act of 1933, as amended (the "Act"). 6.2. Registrable Securities. As used herein the term "Registrable Security" means each of the Warrants, the Shares and any shares of Common Stock issued upon any stock split or stock dividend in respect of such Shares; provided, however, that with respect to any particular Registrable Security, such security shall cease to be a Registrable Security when, as of the date of determination, (i) it has been effectively registered under the Act and disposed of pursuant thereto, (ii) The Registrable Securities could be sold by the Holder in a single transaction pursuant to Rule 144 under the Securities Act and the Company has agreed to remove the legend in Section 4(a) hereof; or (iii) it has ceased to be outstanding. The term "Registrable Securities" means any and/or all of the securities falling within the foregoing definition of a "Registrable Security." In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be made in the definition of "Registrable Security" as is appropriate in order to prevent any dilution or enlargement of the rights granted pursuant to this Article 6. 6.3 Mandatory Registration. (a) At any time after one (1) year from the date of this agreement any holder of Registrable Securities may demand in writing that the Company commence the process of preparing and filing with the U.S. Securities & Exchange Commission (the "Commission"), on one occasion, at the sole expense of the Company (except as provided in Section 6.4 (b) hereof), a Registration Statement and such other documents, including a prospectus, as may be necessary (in the opinion of counsel for the Company), in order to comply with the provisions of the Act, so as to permit a public offering and sale of all the Registrable Securities by the holders thereof. The Company shall commence the process of preparing and filing the Registration Statement within sixty (60) days after receipt of such written demand. Until the Registration Statement is effective, the Company shall use its best efforts to cause the Registration Statement to become effective under the Act, so as to permit a public offering and 3 sale of the Registrable Securities by the holders thereof and will re-file the Registration Statement at the earliest possible opportunity if not declared effective. Once effective, the Company will use its best efforts to (a) maintain the effectiveness of the Registration Statement until the earlier of (i) the date that all of the Registrable Securities have been sold or (ii) the date that the holders of the Registrable Securities receive an opinion of counsel to the Company that all of the Registrable Securities may be freely traded (without registration under the Act) in a single transaction under Rule 144 (k) promulgated under the Act or otherwise and the Company has removed the legend referred to in Section 4(a); and (b) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to sales of the Registrable Securities pursuant to the Registration Statement. The Company's obligations described in this paragraph shall not apply to any issued or issuable Registrable Securities that are eligible for immediate resale pursuant to Rule 144, without regard to volume limitations. (b) Notice. The Company covenants and agrees to give written notice of the effectiveness of any such Registration Statement to all holders of the Registrable Securities within ten (10) business days from the date of the Company's receipt of notice of such effectiveness. (c) Piggy-back Registration. If at any time after the ninety (90) days from the date of this Agreement, the Company determines to proceed with the preparation and filing of a registration statement under the Securities Act in connection with its securities, the Company will give written notice of its determination to all record holders of the Registrable Securities. Upon written request by a holder, the Company will include the Registrable Securities issued or issuable to such holder in that registration statement (other than a registration statement filed on either Form S-8 or Form S-4) subject to customary limitations as imposed by the underwriter for any such public offering. If requested by the Company, the holders of the Registrable Securities will agree to be bound by such additional restrictions on the sale or transfer of the Registrable Securities as may be required in order to comply with the requirements of, any applicable securities exchange in which the Company's Securities are listed or quoted or the SEC in connection with the public offering which agreement will be self-executing without the need for execution of additional instruments. The Company's obligations described in this paragraph shall not apply to any issued or issuable Registrable Securities that are eligible for immediate resale pursuant to Rule 144, without regard to volume limitations. The Company shall pay the expenses for any registration statement except for underwriting discounts and commissions and legal fees of the holders of the Registrable Securities. 6.4. Covenants of the Company With Respect to Registration. The Company covenants and agrees as follows: (a) In connection with any registration under Section 6.3 hereof, the Company shall file the Registration Statement as expeditiously as possible, and until such Registration Statement is declared effective, shall use its best efforts to have any such Registration Statement declared effective at the earliest possible time, and shall furnish each holder of Registrable Securities such number of prospectuses as shall reasonably be requested. 4 (b) The Company shall pay all costs, fees and expenses (other than underwriting fees, discounts and non-accountable expense allowance applicable to the Registrable Securities and the fees and expenses of counsel retained by the holders of Registrable Securities) in connection with all Registration Statements filed pursuant to Section 6.3 (a) hereof including, without limitation, the Company's legal and accounting fees, printing expenses, registration expenses, and blue sky fees and expenses. (c) The Company will take all necessary action which may be required in qualifying or registering the Registrable Securities included in the Registration Statement for offering and sale under the securities or blue sky laws of such states as are reasonably requested by the holders of such Registrable Securities. (d) The Company shall indemnify and hold harmless each Holder, within the meaning of the Act, who may purchase from or sell for a Holder, any Registrable Securities, from and against any and all losses, claims, damages and liabilities caused by any untrue statement of a material fact contained in the Registration Statement, any other registration statement filed by the Company under the any post-effective amendment to or supplement thereto such registration statements, or any prospectus included therein required to be filed or furnished by reason of this Agreement or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, exceptions so far as such losses, claims, damages or liabilities are caused by any such untrue statement or omission based upon information furnished or required to be furnished in writing to the Company by such Holder within the meaning of the Act and each officer, director, employee and agent of the Holder; provided, however, that the indemnification in this paragraph (c) with respect to any prospectus shall not inure to the benefit of a Holder (or to the benefit of any person controlling such holder) on account of any such loss, claim, damage or liability arising from the sale of Registrable Shares by such Holder, if a copy of a subsequent prospectus correcting the untrue statement or omission in such earlier prospectus was provided to such Holder by the Company prior to the subject sale and the subsequent Prospectus was not delivered or sent by such Holder to the purchaser prior to such sale. (e) Each Holder, as the case may be, shall indemnify the Company, its directors, each officer signing the Registration Statement and each person, if any, who controls the Company within the meaning of the Act, from and against any and all losses, claims, damages and liabilities caused by any untrue statement of a material fact contained in the Registration Statement, any registration statement or any prospectus required to be filed or furnished by reason of this Agreement or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission based upon information furnished in writing to the Company by such Holder expressly for use therein. (f) Promptly after receipt of notice of the commencement of any action in respect of which indemnity may be sought against any indemnifying party under this Section 6.4, the indemnified party will notify the indemnifying party in writing of the commencement thereof, and the indemnifying party will, subject to the provisions hereinafter stated, assume the defense of such action (including the employment of counsel satisfactory to the indemnified party and the 5 payment of expenses) insofar as such action relates to an alleged liability in respect of which indemnity may be sought against the indemnifying party. After notice from the indemnifying party of its election to assume the defense of such claim or action, the indemnifying party shall no longer be liable to the indemnified party under this Section 6.4 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that if, in the reasonable judgment of the indemnified party or parties, it is advisable for the indemnified party or parties to be represented by separate counsel, the indemnified party or parties shall have the right to employ a single counsel to represent the indemnified parties who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified parties thereof against the indemnifying party, in which event the fees and expenses of such separate counsel shall be borne by the indemnifying party. Any party against whom indemnification may be sought under this Section 6 shall not be liable to indemnify any person that might otherwise be indemnified pursuant hereto for any settlement of any action effected without such indemnifying party's consent, which consent shall not be unreasonably withheld. (g) If for any reason the indemnification provided for in Section 6.4 (d) or (e) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. (h) Nothing contained in this Agreement shall be construed as requiring any Holder to exercise the Warrants held by such Holder prior to the initial filing of any registration statement or the effectiveness thereof. (i) If the Company shall fail to comply with the provisions of this Article 6, the Company shall, in addition to any other equitable or other relief available to the holders of Registrable Securities, be liable only for any direct consequential damages sustained by the holders of Registrable Securities, resulting from the Company's failure to register the Registrable Securities. (j) The Company shall promptly deliver copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the Registration Statement to each holder of Registrable Securities included for such registration in such Registration Statement pursuant to Section 6.3 hereof requesting such correspondence and memoranda and to the managing underwriter, if any, of the offering in connection with which such Holder's Registrable Securities are being registered and shall permit each holder of Registrable Securities and such underwriter to do such reasonable investigation, upon reasonable advance notice, with respect to information contained in or omitted from the Registration Statement as it deems reasonably necessary to comply with applicable securities laws or rules of the National Association of Securities Dealers, Inc. Such investigation shall include access to books, records and properties and opportunities to 6 discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as any such holder of Registrable Securities or underwriter shall reasonably request. 7. Adjustments of Exercise Price and Number of Shares. 7.1. Computation of Adjusted Price. Except as hereinafter provided, in case the Company shall at any time after the date hereof issue or sell any shares of Common stock, including shares held in the Company's treasury and shares of Common Stock issued upon the exercise of any options, rights or warrants to subscribe for shares of Common stock (other than the issuances or sales of Common Stock pursuant to rights to subscribe for such Common Stock distributed to all the shareholders of the Company and Holders of Warrants pursuant to Section 7.8 hereof, and except for shares issued as the result of options granted under any employee stock option of the Company as approved from time to time by shareholders of the Company) and shares of Common Stock issued upon the direct or indirect conversion or exchange of securities for shares of Common Stock, for a consideration per share less than the Exercise Price in effect immediately prior to the issuance or sale of such shares or without consideration, then forthwith upon such issuance or sale, the Exercise Price shall (until another such issuance or sale) be reduced to the price (calculated to the nearest full cent) equal to the quotient derived by dividing (A) an amount equal to the sum of (X) the product of the total number of shares of Common Stock outstanding immediately prior to such issuance or sale, multiplied by (b) the Exercise Price in effect immediately prior to such issuance or sale plus, (Y) the aggregate of the amount of all consideration, if any, received by the Company upon such issuance or sale, by (B) the total number of shares of Common Stock outstanding immediately after such issuance or sale; provided, however, that in no event shall the Exercise Price be adjusted pursuant to this computation to an amount in excess of the Exercise Price in effect immediately prior to such computation, except in the case of a combination of outstanding shares of Common Stock, as provided by Section 7.3 hereof. For the purposes of any computation to be made in accordance with this Section 7.1, the following provisions shall be applicable: (a) In case of the issuance or sale of shares of Common Stock for a consideration part or all of which shall be cash, the amount of the cash consideration therefore shall be deemed to be the amount of cash received by the Company for such shares (or, if shares of Common Stock are offered by the Company for subscription, the subscription price, or, if such securities shall be sold to underwriters or dealers for public offering without a subscription offering, the public offering price) before deducting from any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services, or any expenses incurred in connection therewith. (b) In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Company) of shares of Common Stock for a consideration part or all of which shall be other than cash, the amount of the consideration therefore other than cash shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors of the Company. For such purposes, Common Stock issued by the Company as a 7 matching contribution to Company sponsored 401(k) benefit plans shall be valued at the same price used in determining the matching contribution amount under the plan. (c) Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of shareholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration. (d) The reclassification of securities of the Company other than shares of Common Stock into securities including shares of Common Stock shall be deemed to involve the issuance of such shares of Common Stock for a consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of Common Stock shall be determined as provided in subsection (b) of this Section 7.1. (e) The number of shares of Common Stock at any one time outstanding shall include the aggregate number of shares issued or issuable upon the exercise of options, rights, vested warrants and upon the conversion or exchange of convertible or exchangeable securities. (f) No adjustment shall be made for any issuance or sale of Common Stock by the Company for a consideration per share equal to or greater than the Exercise Price at the time of such issuance or sale 7.2. Options, Rights, Warrants and Convertible and Exchangeable Securities. Except in the case of the Company issuing rights to subscribe for shares of Common Stock distributed to all the Shareholders of the Company and Holders of Warrants pursuant to Section 7.8 hereof, and except in the case of employee stock options issued under existing or future shareholder approved Company stock option plans, if the Company shall at any time after the date hereof issue options, rights or warrants to subscribe for shares of Common Stock, or issue any securities convertible into or exchangeable for shares of Common Stock, (i) for a consideration per share less than the Exercise Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, or (ii) without consideration, the Exercise Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, as the case may be, shall be reduced to a price determined by making a computation n accordance with the provisions of Section 7.1 hereof, provided that: (a) The aggregate maximum number of shares of Common Stock, as the case may be, issuable under all the outstanding options, rights or warrants shall be deemed to be issued and outstanding at the time all the outstanding options, rights or warrants were issued, and for a consideration equal to the minimum purchase price per share provided for in the options, rights or warrants at the time of issuance, plus the consideration (determined in the same manner as consideration received on the issue or sale of shares in accordance with the terms of Warrants), if any, received by the Company for the options, rights or warrants, and if no minimum price is provided in the options, right or warrants, then the consideration shall be equal to zero; provided, 8 however, that upon the expiration or other termination of the options, rights or warrants, if any thereof shall not have been exercised, the number of shares of Common Stock deemed to be issued and outstanding pursuant to this subsection (a) (and for the purposes of subsection (e) of Section 7.1 hereof) shall be reduced by such number of shares as to which options, warrants and/or rights shall not have vested or shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be issued and outstanding, and the Exercise Price then in effect shall forthwith be readjusted and thereafter be the price which it would have been had adjustment been made on the basis of the issuance only of shares actually issued or issuable upon the exercise of those options, rights or warrants as to which the exercise rights shall be vested or shall not have expired or terminated unexercised. (b) The aggregate maximum number of shares of Common Stock issuable upon conversion or exchange of any convertible or exchangeable securities shall be deemed to be issued and outstanding at the time of issuance of such securities, and for a consideration equal to the consideration (determined in the same manner as consideration received on the issue or sale of shares of Common Stock in accordance with the terms of the Warrants) received by the Company for such securities, plus the minimum consideration, if any, receivable by the Company upon the conversion or exchange thereof; provided, however, that upon the termination of the right to convert or exchange such convertible or exchangeable securities (whether by reason of redemption or otherwise), the number of shares deemed to be issued and outstanding pursuant to this subsection (b) (and for the purpose of subsection (e) of Section 7.1 hereof) shall be reduced by such number of shares as to which the conversion or exchange rights shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be issued and outstanding and the Exercise Price then in effect shall forthwith be readjusted and thereafter be the price which it would have been had adjustment been made on the basis of the issuance only of the shares actually issued or issuable upon the conversion or exchange of those convertible or exchangeable securities as to which the conversion or exchange rights shall not have expired or terminated unexercised. (c) If any change shall occur in the price per share provided for in any of the options, rights or warrants referred to in subsection (a) of this Section 7.2, or in the price per share at which the securities referred to in subsection (b) of this Section 7.2 are convertible or exchangeable, the options, rights or warrants or conversion or exchange rights, as the case may be, shall be deemed to have expired or terminated on the date when such price change became effective in respect of shares not theretofore issued pursuant to the exercise or conversion or exchange thereof, and the Company shall be deemed to have issued upon such date new options, rights or warrants or convertible or exchangeable securities at the new price in respect of the number of shares issuable upon the exercise of such options, rights or warrants or the conversion or exchange of such convertible or exchangeable securities. 7.3. Subdivision and Combination. In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination. 7.4. Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Article 7, the number of Shares issuable upon the exercise of 9 each Warrant shall be adjusted to the nearest full number by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Shares issuable upon exercise of the Warrants immediately prior to such adjustment and dividing the product so determined by the adjusted Exercise Price. 7.5. Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of the property of the Company as an entirety, the Holders shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Holders were the owners of the shares of Common Stock underlying the Warrants immediately prior to any such events at a price equal to the product of (x) the number of shares of Common Stock issuable upon exercise of the Holder's Warrants and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Holders had exercised the Warrants. 7.6. Determination of Outstanding Shares of Common Stock. The number of shares of Common Stock at any one time outstanding shall include the aggregate number of shares of Common Stock issued and the aggregate number of shares of Common Stock issuable upon the exercise of options, rights, vested warrants and upon the conversion or exchange of convertible or exchangeable securities. 7.7. Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants make any distribution of its assets to holders of its Common Stock as a liquidating or a partial liquidating dividend, then the holder of Warrants who exercises its Warrants after the record date for the determination of those holders of Common Stock entitled to such distribution of assets as a liquidating or partial liquidating dividend shall be entitled to receive for the Warrant Price per Warrant, in addition to each share of Common Stock, the amount of such distribution (or, at the option of the Company, a sum equal to the value of any such assets at the time of such distribution as determined by the Board of Directors of the Company in good faith) which would have been payable to such holder had he been the holder of record of the Common Stock receivable upon exercise of his Warrant on the record date for the determination of those entitled to such distribution. At the time of any such dividend or distribution, the Company shall make the appropriate reserves to ensure the timely performance of the provisions of this Subsection 7.7. 7.8 Subscription Rights for Shares of Common Stock or Other Securities. In the case that the Company shall at any time after the date hereof and prior to the exercise of all the Warrants issue any rights, warrants or options to subscribe for shares of Common Stock or any other 10 securities of the Company to all the shareholders of the Company, the Holders of unexercised vested Warrants on the record date set by the Company shall be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise of the Warrants, to receive such rights, warrants or options that such Holders would have been entitled to receive had they been, on such record date, the holders of record of the number of whole shares of Common Stock then issuable upon exercise of their outstanding Warrants (assuming for purposes of this Section 7.8 that the exercise of the Warrants is permissible immediately upon issuance). 7.9. Adjustment for Dividends of Common Stock, etc. In the Event that the Company at any time or from time to time after the issuance of this Warrant shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock or in any right to acquire Common Stock for no consideration, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or in the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the exercise price in effect immediately prior to such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. In the event that the Company shall declare or pay, without consideration, any dividend on the Common Stock payable in any right to acquire Common Stock for no consideration, then the Company shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock. Upon each adjustment of the exercise price pursuant to this Section 7.9 the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares of Common Stock obtained by multiplying the exercise price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the exercise price resulting from such adjustment. 8. Exchange and Replacement of Warrant Certificate. 8.1. Each Warrant Certificate is exchangeable without expense, upon the surrender thereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of securities in such denominations as shall be designated by the Holder thereof at the time of such surrender. 8.2 Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate, and, in case of loss, theft or destruction, receipt of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrant Certificate, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor, in lieu thereof. 11 9. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares pay cash to the Holder in lieu of fractional interests equal to such fraction multiplied by the market price of the Common Stock (the market price determined, for any date, as the average of the closing prices of the Common Stock on such principal securities exchange or automated quotation system upon which the Common Stock may then be listed for public trading) for the five immediately preceding trading days on such exchange). 10. Reservation and Listing of Securities. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon the exercise of the Warrants, such number of shares of Common Stock as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefore, all Shares issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any shareholder. As long as the Warrants shall be outstanding, the Company shall use its best efforts to cause all shares of Common Stock issuable upon the exercise of the Warrants to be listed on or quoted by a national securities exchange. 11. Governmental Approvals. (a.) The Company and the Holder hereby acknowledge that exercise of this Warrant by the Holder is subject to receipt of all necessary governmental consents and approvals and may subject the Company and/or the Holder to the filing requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and that the Holder may be prevented from acquiring shares of Common Stock upon exercise of this Warrant until receipt of all necessary governmental consents and approvals and the expiration or early termination of all waiting periods imposed by the HSR Act ("Governmental Approvals"). Promptly following the Holder's notice of exercise or other written request from the Holder, the Company and the Holder will use their respective reasonable best efforts to make all filings necessary to obtain all required Governmental Approvals (the "HSR Filing"). Notwithstanding the foregoing, neither the Company nor the Holder of this Warrant shall be obligated to take any action to obtain any Governmental Approvals, if the taking of such action could have the direct or indirect effect of restricting, limiting or otherwise subjecting to penalty either the Company or the Holder of this Warrant in the ownership of their respective assets or the conduct of their respective business (including, without limitation, requiring that the Holder of this Warrant sell, divest or otherwise dispose of any of its assets or business). Subject to clause b) below, if the Holder and, to the extent applicable, the Company are not able to obtain all such Governmental Approvals on or before the Expiration Date, this Warrant will expire on the Expiration Date. (b) Notwithstanding anything to the contrary contained within this subsection (b), if the Holder has requested that the Company and the Holder use their respective reasonable best efforts to make all filings necessary to obtain all required Governmental Approvals (the "Governmental Approval Procedure") at least six months prior to the Expiration Date, and the 12 necessary Governmental Approvals have not been obtained prior to the Expiration Date (despite the Holder's and Company's respective reasonable best efforts to obtain such Governmental Approvals), the Exercise Period shall be extended for a period not to exceed six months following the Expiration Date (the "Post Expiration Period") in order to allow for receipt of the necessary Governmental Approvals. During the Post Expiration Period, the Holder may transfer this Warrant notwithstanding the transfer restrictions contained herein provided that, concurrent with such transfer, the transferee exercises this Warrant in full and tenders to the Company the full Purchase Price for all shares of Common Stock issuable pursuant to this Warrant and the issuance of the shares of Common Stock issuable pursuant to this Warrant and the issuance of the shares of Common Stock to such transferee hereunder is not subject to receipt of any governmental consent or approval or the expiration or termination of the waiting period under the HSR Act. If the Governmental approvals are obtained with the Post Expiration Period but the Holder does not deliver notice to the Company of the exercise of this Warrant and tender the Purchase Price for the shares of Common Stock underlying the Warrant in accordance herewith within ten business days following the Holder's receipt of notice of the receipt of such Governmental Approval, then (1) this Warrant shall expire as of the close of business on such tenth business day following the Holder's receipt of notice of the receipt of such Governmental Approval, and (2) the Holder shall reimburse the Company for all (a) filing fees and (b) all other costs and expenses (including, without limitation, all legal expenses) incurred in connection with the required Governmental Approval with respect solely to this Warrant. 12. Notices to Warrant Holders. Nothing contained in this Agreement shall be construed as conferring upon the Holder or Holders the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the following events shall occur: (a) the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or (b) the Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefore; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed; or (d) reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), consolidation of the Company with, or merger of the Company 13 into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or a sale or conveyance to another corporation of the property of the Company as an entirety is proposed; or (e) the Company shall propose to issue any rights to subscribe for shares of Common Stock or any other securities of the Company to all the shareholders of the Company; then in any one or more of said events, the Company shall give written notice to the Holder or Holders of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, options or warrants, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, options or warrants, or any proposed dissolution, liquidation, winding up or sale. 13. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mail, return receipt requested: (a) If to a registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or (b) If to the Company, to the address of the Company's principal offices or to such other address as the Company may designate by notice to the Holders 14. Supplements and Amendments. The Company may from time to time supplement or amend this Agreement without the approval of any Holders of Warrant Certificates in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provisions herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company may deem not to adversely affect the interests of the Holders of Warrant Certificates. 15. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company and the Holders inure to the benefit of their respective successors and assigns hereunder. 14 16. Termination. This Agreement shall terminate at the close of business at 5:00 p.m. eastern time on April 16, 2005 subject to Section 11 adjustment, if any. Notwithstanding the foregoing, this Agreement will terminate on any earlier date when all Warrants have been exercised and all the Shares issuable upon exercise of the Warrants have been either resold to the public or have become free trading shares. 17. Governing Law. This Agreement and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Florida and for all purposes shall be construed in accordance with the laws of said State. 18. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company and any registered Holder or Holders of the Warrant Certificates, Warrants or the Shares any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company and any Holder or Holders of the Warrant Certificates, Warrants or the Shares. 19. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. Precom Technology, Inc. Greenwich Financial Group By: /s/ Robert J. Hipple By: /s/ Nicholas M. Calapa --------------------------- --------------------------- Robert J. Hipple Nicholas M. Calapa Chairman Vice President 15 THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITES ISSUEDABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED FOR PURPOSED OF PUBLIC DISTRIBUTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPTE (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICASBLE, PRUSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN. EXERCISABLE ON OR BEFORE 5:00 P.M., EASTERN TIME, April 16, 2005 No. (W-2002-01) 1,000,000 Warrants WARRANT CERTIFICATE This Warrant Certificate certifies that Greenwich Financial Group or registered assigns, (the "Holder") is the registered holder of 500,000 Warrants to purchase, at any time from April 16, 2002, until 5:00 P.M. Eastern time on April 16, 2005, subject to extension of such date pursuant to Section 11 of the Warrant Agreement ("Expiration Date"), up to 1,000,000 fully-paid and non-assessable shares ("Shares") of common stock, par value $.001 per share (the "Common Stock"), of CGI Holdings, Inc., a Florida Corporation (the "Company"), at the initial exercise price, subject to adjustment in certain events (the "Exercise Price"), of $2.00 per Share upon surrender of this Warrant Certificate and payment of the Exercise Price at an office or agency of the Company, but subject to the conditions set forth herein and in the Warrant Agreement dated as of April 16, 2002 between the Company and Greenwich Financial Group (the "Warrant Agreement"). Payment of the Exercise Price may be made in cash, or by wire transfer payable to the order of the Company, or any combination thereof. No Warrant may be exercised after 5:00 P.M., Eastern Time, on the Expiration Date, at which time all Warrants evidenced hereby, unless exercised prior thereto or extended as provided in the Warrant Agreement, shall thereafter be void. The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby 16 incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the Holder (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. The Warrant Agreement provides that upon the occurrence of certain events, the Exercise Price and type and/or number of the Company's securities issuable thereupon may, subject to certain conditions, be adjusted. In such event, the Company will, at the request of the holder, issue a new Warrant Certificate evidencing the adjustment in the Exercise Price and the number and/or type of securities issuable upon the exercise of the Warrants; provided, however, that the failure of the Company to issue such new Warrant Certificates shall not in any way change, alter, or otherwise impair, the rights of the Holder as set forth in the Warrant Agreement. Upon due presentment for registration of transfer of this Warrant Certificate at an office or agency of the Company, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) for the remainder of the Warrant Exercise Term in exchange for this Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax, or other governmental charge imposed in connection therewith. Upon the exercise of less than all of the Warrants evidenced by this Certificate, the Company shall forthwith issue to the Holder hereof a new Warrant Certificate representing such number of unexercised Warrants. The Company may deem and treat the registered holder(s) hereof as the absolute owner (s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary. All terms used in this Warrant Certificate which are defined in the Warrant Agreement shall have the meanings assigned to them in the Warrant Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its corporate seal. Dated: April 16, 2002 Precom Technology, Inc. [SEAL] By: /s/ Robert J. Hipple ------------------------------------- Robert J. Hipple Chairman 17 [FORM OF ELECTION TO PURCHASE] The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase shares of Common --------- Stock and herewith tenders in payment for such securities cash or a wire transfer to the order of Precom Technology, Inc. in the amount of $ , all in accordance with the terms hereof. The undersigned --------------- requests that a certificate for such securities be registered in the name of , whose address is - ---------------------------- and that such Certificate be delivered to , whose -------------------------- address is . --------------- Dated: Signature: /s/ ------------------- ----------------------------- (Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) (Insert Social Security or Other Identifying Number of Holder): ---------------- 18 [FORM OF ASSIGNMENT] (To be executed by the registered holder if such holder desires to transfer the Warrant Certificate.) FOR VALUE RECEIVED --------------------------------------------- hereby sells, assigns and transfers unto -------------------------------------- at (Please print name and address of transferee) ------------------------------ this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint , -------------------- Attorney, to transfer the within Warrant Certificate on the books of the within-named Company, with full power of substitution. Dated: Signature: /s/ ------------------------------------ Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) (Insert Social Security or Other Identifying Number of Holder): ---------------- 19 EX-10.2 5 reglockupagr_precom.txt REGISTRATION AND LOCK-UP AGREEMENT REGISTRATION AND LOCK-UP AGREEMENT THIS REGISTRATION AND LOCK-UP AGREEMENT (this "Agreement") is made effective the 8th day of May, 2002, by and between Precom Technology, Inc., a Florida corporation, (the "Company"), and Greenwich Financial Group, a(n) (the "Stockholder"). - ------------------------- RECITALS WHEREAS, the Company and the Stockholder were parties to that certain Share Exchange Agreement dated February 21, 2002, between the Company and the Stockholder (the "Exchange Agreement"); WHEREAS, pursuant to the Exchange Agreement the Company agreed to issue to the Stockholder one million three hundred fifty thousand (1,350,000) shares of restricted common stock, par value $.001 per share, of the Company (the "Common Stock"); and WHEREAS, also pursuant to the Exchange Agreement, the Stockholder would have certain rights with respect to the registration of such shares of the Common Stock for sale under the Securities Act, and certain restrictions on the transfer by the holders of such shares of Common Stock would have existed; WHEREAS, on April 9, 2002, the Exchange Agreement was rescinded and the parties entered into a Subscription Agreement; and WHEREAS, the Company has agreed to honor and complete certain agreements and conditions that were contemplated under the rescinded Exchange Agreement and enter into this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and promises contained in the Exchange Agreement and in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Stockholder agree as follows: 1. Certain Definitions. As used in this Section 1 and elsewhere in this Agreement, the following terms shall have the following respective meanings: a. "Commission" means the Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act. b. "Effective Period" has the meaning set forth in Section 3(a). c. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 1 d. "Exchange Shares" means (a) the shares of Common Stock issuable to the Stockholder pursuant to the Exchange Agreement and (b) any other shares of Common Stock of the Company issued in respect of such shares (because of stock splits, stock dividends, reclassifications, recapitalizations or similar events); provided, however, that shares of Common Stock held by the Stockholder which are Exchange Shares shall cease to be Exchange Shares upon any sale by the Stockholder pursuant to the Resale Registration Statement or pursuant to the provisions of Rule 144. e. "Registration Expenses" means the expenses described in Section 4. f. "Registration Statement" means a registration statement filed by the Company with the Commission under the Act for a public offering and sale of securities of the Company. g. "Rule 144" means Rule 144 of the Commission promulgated under the Securities Act. h. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. i. "Subject Shares" means the one million three hundred and fifty thousand (1,350,000) shares of the Exchange Shares with respect to the Company will file a Registration Statement, pursuant to the Exchange Agreement. Other terms used herein and not otherwise defined shall have the respective meanings ascribed to them in the Exchange Agreement. 2. Resale Registration Statement. On or prior to June 15, 2002, the Company shall use its best efforts to file a Registration Statement on Form SB-2 or other suitable form (the "Resale Registration Statement") registering, among other shares issued, the Subject Shares and shall use its best efforts to cause the Resale Registration Statement to become effective promptly following the filing thereof and to remain effective during the Effective Period. 3. Registration Procedures. In connection with the registration of the Subject Shares under the Securities Act, the Company shall as expeditiously as possible: a. prepare and file with the Commission any amendments and supplements to the Resale Registration Statement as may be necessary to keep the Resale Registration Statement effective for a period ending on the earliest of (i) April 16, 2004, (ii) the date on which all Exchange Shares registered under such Resale Registration Statement have been sold and (iii) within 90 days of the date all Exchange Shares may be sold under Rule 144 (the "Effective Period"); b. furnish to the Stockholder such documents as the Stockholder may reasonably request in order to facilitate the public sale or other disposition of the Subject Shares owned by the Stockholder; 2 c. use its best efforts to do any and all acts and things that may reasonably be necessary or desirable to enable the Stockholder to consummate the public sale of the Subject Shares owned by the Stockholder; provided, however, that the Company shall not be required in connection with this subparagraph (c) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction; and d. upon the occurrence of any event of the kind described in Section 6(c)(i)-(iii) below, use its best efforts to promptly rectify, or take such reasonable action with respect to, such event so the Stockholder is entitled to resume the disposition of the Exchange Shares in accordance with the terms of this Agreement. 4. Allocation of Expenses. The Company will pay all Registration Expenses relating to the Resale Registration Statement. For purposes of this Section 4, the term "Registration Expenses" shall mean all reasonable expenses incurred by the Company in complying with this Agreement, including all registration and filing fees, listing fees, printing expenses, and fees and disbursements of counsel for the Company, provided, however, that except as expressly set forth herein, in no event shall Registration Expenses include any underwriting fees, discounts, commissions or fees attributable to the sale of the Subject Shares or any counsel, accounting or other persons retained by the Stockholder in connection with the consummation of the transactions contemplated by this Agreement. 5. Stockholder Covenants. The Stockholder hereby covenants and agrees that: a. it will not sell any Subject Shares under the Resale Registration Statement until it receives notice from the Company that the Resale Registration Statement has become effective. b. the Stockholder shall furnish to the Company information regarding the Stockholder and the distribution of the Subject Shares as is required by law to be disclosed in the Resale Registration Statement and is different from the information concerning the Stockholder and the plan distribution contained in the Resale Registration Statement. 6. Restrictions on Transfer. a. The Stockholder shall not transfer any of the Subject Shares following registration except that the Stockholder may transfer up to 15% per month of the Subject Shares after the Subject Shares become free trading. b. In order to enforce the restrictions contained in this Section 6, the Company may place a legend on the certificates for the Exchange Shares and impose stop-transfer instructions with respect to the Exchange Shares until after April 16, 2003. c. The provisions of this Section 6 shall terminate upon the earliest of: (i) the closing of a sale, transfer or other disposition to any person of more than 80% of the shares of the capital stock then outstanding of the Company; (ii) the closing of a sale, transfer or other disposition of all or substantially all of the assets of the Company; or (iii) the 3 merger or consolidation of the Company with or into another corporation, other than a merger or consolidation of the Company in which the holders of shares of the Company's voting capital stock outstanding immediately before such merger or consolidation hold greater than fifty percent (50%) of the surviving entity's voting capital stock after such consolidation or merger. 7. Transfers Pursuant to Rule 144 or Resale Registration Statement. Upon the Stockholder's compliance with this Agreement and the applicable provisions of Rule 144 or prospectus delivery requirements under the Securities Act, as the case may be, the Company will take such action as may be required to cause its transfer agent to effectuate any transfer of Exchange Shares properly requested by such Stockholder, in accordance with the terms and conditions of Rule 144 or any sale under the Resale Registration Statement. 8. No Assignment. The rights granted pursuant to this Agreement may not be transferred or assigned by the Stockholder. 9. Amendments and Waivers. The provisions of this Agreement may be modified or amended only by an agreement or consent in writing executed by the Company and the. No waiver of any default with respect to any provision, condition or requirement of this Stockholder Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. 10. Notices. All notices, requests, consents and other communications required to be given pursuant to this Agreement shall be in writing and shall be given by personal delivery, facsimile with confirmation of receipt or by certified or registered mail, postage prepaid, return receipt requested. Notices shall be deemed effective when personally delivered or so received by facsimile or three days after being so mailed, as the case may be, to the parties at the following respective addresses or at such other address of which either party shall notify the other in accordance with this Section 10: The Company: Precom Technology, Inc. c/o Concilium Group, Inc. 2755 East Cottonwood Parkway, Suite 600 Salt Lake City, Utah 84121 The Stockholder: Greenwich Financial Group 2001 West Main Street, Suite 208 Stamford, Connecticut 06902 11. Entire Agreement; Governing Law. This Agreement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of Florida, without giving effect to any of the conflicts of laws provisions thereof that would require the application of the substantive laws of any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR 4 COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF. This Agreement embodies the entire agreement and understanding between the parties, and supersedes all prior agreements and understandings relating to the subject matter hereof. 12. Remedies. In the event of a breach by the Company or by the Stockholder, of any of their respective obligations under this Agreement, the Stockholder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and the Stockholder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. Each of the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. In any action at law or suit in equity to enforce this Agreement or the rights of any of the parties hereunder, the prevailing party in such action or suit shall be entitled to receive a reasonable sum for its attorneys' fees and all other reasonable costs and expenses incurred in such action or suit, if in such action or suit the principal claim or defense of the non-prevailing party is held to be without merit because it was not reasonably supported by laws or material and relevant facts. 13. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the portion of such provision that is found to be unenforceable shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 15. Interpretation. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) "including" has the inclusive meaning frequently identified with the phrase "but not limited to" and (d) references to "hereunder" or "herein" relate to this Agreement. The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation thereof in any respect. Section references are to this Agreement unless otherwise specified. IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written. 5 THE COMPANY: THE STOCKHOLDER: PRECOM TECHNOLOGY, INC. GREENWICH FINANCIAL GROUP /s/ Robert J. Hipple /s/ Nicholas M. Calapa ------------------------------ -------------------------- Robert J. Hipple, President By: Nicholas M. Calapa Its: Vice President 6 -----END PRIVACY-ENHANCED MESSAGE-----