EXHIBIT 10-21
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (the "Act"). NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PROVIDED IN SECTION 4 OF THE
WARRANT TO PURCHASE COMMON STOCK OF THE COMPANY EXPIRING NOVEMBER 18, 2003,
A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
Issued as of
Void after November 18, 2003
November 18, 1998
WARRANT TO PURCHASE 25,000 SHARES
OF COMMON STOCK
OF
EXECUTONE INFORMATION SYSTEM, INC.
(incorporated under the Laws of the
Commonwealth of Virginia)
THIS IS TO CERTIFY THAT, XXXX X. XXXXXX ("Xxxxxx") or his permitted
registered assigns (Hectus and such assigns sometimes hereinafter being referred
to as the "Holder"), is entitled, subject to the terms and conditions set forth
herein, and further subject to an adjustment as hereinafter provided, to
purchase from EXECUTONE INFORMATION SYSTEMS, INC., a Virginia corporation (the
"Company"), an aggregate of Twenty-Five Thousand (25,000) fully paid and
nonassessable shares (the "Underlying Shares") of the common stock of the
Company, $0.01 par value ("Common Stock"), upon payment of the purchase price of
THIRTY ONE THOUSAND TWO HUNDRED FIFTY DOLLARS ($31,250) or ONE and 25/100
DOLLARS ($1.25) per Underlying Share (the "Purchase Price"), and also is
entitled to exercise the other appurtenant rights, powers and privileges
hereinafter set forth at any time from and after 9:00 a.m. (Eastern Standard
Time) November 18, 1998 and on or before 5:00 p.m. (Eastern Standard Time), on
November 18, 2003.
This Warrant (the "Warrant") entitles the Holder hereof to purchase up
to an aggregate of 25,000 shares of Common Stock, which right shall vest ratably
over a period of three (3) years, one-third on November 18, 1999, one-third on
November 18, 2000 and one-third on November 18, 2001; provided, however, that if
Hectus ceases to be a director of the Company, either voluntarily or because he
has not been reelected by the Shareholders of the Company, then Hectus's vesting
of rights shall terminate as of the date he is no longer a director of the
Company.
THE EXERCISE AND TRANSFER OF THIS WARRANT ARE RESTRICTED
BY THE PROVISIONS OF SECTION 4 HEREOF.
1. Exercise of Warrant.
This Warrant may be exercised in whole or in part by the Holder
hereof, by delivery to the
Company at its principal office at 000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxx, XX 00000
of (a) a written notice to the Holder, in substantially the form of the
Subscription Notice attached hereto as Exhibit "A", of such Holder's election to
exercise this Warrant, which notice shall specify the number of Underlying
Shares to be purchased, (b) a check payable to the Company in an amount equal to
the aggregate Current Price (as defined below) of the number of shares of Common
Stock being purchased and (c) this Warrant. The Company shall, as soon as
reasonably practicable, execute and deliver or cause to be delivered to Holder,
in accordance with such notice, one or more certificates representing the
aggregate number of shares of Common Stock specified in such notice. The stock
certificate(s) so delivered shall be issued in the name of the Holder or such
other name as shall be designated in such notice. Such certificate(s) shall be
deemed to have been issued and the Holder or any other person so designated to
be named therein shall be deemed for all purposes to have become a Holder of
record of such Underlying Shares as of the date such notice is received by the
Company. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of said certificate(s), deliver to the Holder a
new Warrant evidencing the rights of the Holder to purchase the remaining shares
of Common Stock called for by this Warrant (stated in Shares), which new Warrant
shall in all other respects be identical to this Warrant, or, at the request of
the Holder, appropriate notation may be made on this Warrant and the same
returned to the Holder.
2. Fractional Shares.
This Warrant is only exercisable with respect to whole Underlying
Shares and not fractions thereof unless the Company otherwise agrees.
Accordingly, the Company shall not be required to issue certificates
representing fractions of Underlying Shares upon any exercise of this Warrant;
provided, however, in respect of any final fraction of a share it may, at its
sole option, in lieu of delivering a fractional share, make a payment in cash
based upon the then fair market value of such fraction of the Underlying Shares.
3. Transfer, Division and Combination.
No Warrant granted under this Agreement shall be transferable by
Hectus otherwise than by Will or the laws of descent and distribution and,
during the lifetime of Hectus, shall not be exercisable by any other person, but
only by him. The Company agrees to maintain at its principal office in Milford,
Connecticut, books for the registration and transfer of the Warrants and,
subject to the provisions of this paragraph and Section 4 hereof, this Warrant
and all rights hereunder are transferable ONLY with respect to (i) Hectus' heirs
and devisees, or (ii) Hectus' Estate in whole or in part, on such books upon
surrender of this Warrant at such office, together with a written assignment of
this Warrant duly executed by the Holder hereof or his agent or attorney, and
with funds sufficient to pay any stock transfer taxes payable upon the making of
such transfer. Upon surrender and payment, the Company shall execute and deliver
a new Warrant(s) in the name of the assignee of Holder and in the denominations
specified in such instrument of assignment, and this Warrant shall be canceled
promptly. If and when this Warrant is assigned in blank, the Company may, but
shall not be obligated to, treat the bearer hereof as the absolute owner of this
Warrant for all purposes and the Company shall not be affected by any notice to
the contrary. A warrant may be exercised by a Holder for the purchase of shares
of Common Stock without having a new Warrant issued.
The Company shall pay all expenses, taxes (other than stock
transfer taxes and any of Holder's income taxes, if any, incurred as a result of
the transfer) and other charges payable in connection with the preparation,
issue and delivery of Warrants hereunder.
4. Restriction on Exercise and Transfer of Warrants and Transfer of
Warrants and Common Stock.
Except as otherwise provided herein, this Warrant and the
certificates representing the
Underlying Shares shall be stamped or otherwise imprinted with a legend
substantially in the following form:
"Neither this Warrant nor the shares of Common Stock issuable upon
exercise of this Warrant have been registered under the Securities Act
of 1933, as amended (the "Act"). Neither this Warrant not such Shares
may be sold, transferred, pledged or hypothecated except as provided
in Section 4 of the Warrant to purchase Common Stock of the Company
expiring November 18, 2003, a copy of which is on file at the
principal office of the Company."
This Warrant shall be exercisable (1) only if the issue of
Underlying Shares issuable upon exercise is exempt from the requirements of
registration under the Securities Act of 1933, as amended (the "Act") (or any
similar statute then in effect) and any applicable state securities law or (2)
upon registration of such Underlying Shares in compliance therewith. This
Warrant shall be transferable only (i) with the prior written consent of the
Company, or (ii) by will or the laws of descent and distribution, and in either
event only if the Warrant is registered or the transfer is exempt from the
requirements of registration under the Act (or any similar statute then in
effect) and any applicable state securities law.
5. Acknowledgment by the Holder of Restrictions.
The Holder of this Warrant and certificates representing the
Underlying Shares, by acceptance hereof and thereof, acknowledges and agrees
that: (a) the Warrant and the Underlying Shares have not been registered under
the Act in reliance upon exemptions from the registration provisions of the Act
set forth therein, or in the rules and regulations promulgated thereunder (and
there is no obligation on the part of the Company to register the Warrant or the
Underlying Shares under the Act); and (b) the Warrant and the Underlying Shares
will not be freely tradeable. The Holder represents that he fully understands
the restrictions on his ability to transfer this Warrant and the Underlying
Shares. Without limiting the foregoing and by way of illustration only, the
Holder understands that if he presently desired to sell Underlying Shares
pursuant to the exemption from the registration provisions of the Act contained
in Rule 144 (the "Rule") promulgated under the Act, as presently constituted,
such Underlying Shares might be sold by him pursuant to the Rule only after a
minimum holding period of two (2) years (computed in accordance with the Rule)
and, thereafter, only in the limited amounts, in the manner and under the
limited circumstances prescribed by the Rule.
6. Change in Control.
The Warrant that is outstanding on a Control Change Date, as
hereinafter defined, shall be exercisable in whole or in part on that date and
thereafter during the remainder of the Warrant period stated in this Warrant
Agreement (the "Agreement"). A Change in Control occurs if, after the date of
this Agreement, (i) any person, including a "group" as defined in Section
13(d)(3) of the Securities and Exchange Act of 1934 (the "Exchange Act"),
becomes the owner or beneficial owner of Company securities having twenty
percent (20%) or more of the combined voting power of the then outstanding
Company securities that may be cast for the election of the Company's directors
(other than as a result of an issuance of securities initiated by the Company,
or open market purchases approved in advance by the board, as long as the
majority at the time the purchases are made are directors who were members of
the Board immediately prior to the purchases being made and approved such
purchases); or (ii) as the direct or indirect result of, or in connection with,
a cash tender or exchange offer, a merger or other business combination, a sale
of assets, a contested election, or any combination of these transactions, the
persons who were directors of the Company before such transactions cease to
constitute a majority of the Company's Board, or any successor's board, within
two (2) years of the last of such transactions. For purposes of this Agreement,
the Control Change Date is the date on which an event described in (i) or (ii)
occurs. If a Change in Control occurs on account of a series of transactions,
the Control Change Date is the date of the last of such transactions.
7. Change in Management.
Notwithstanding any specified vesting or applicable early exercise
Warrant prices, if this Warrant is outstanding on the date Hectus' directorship
with the Company is terminated or constructively terminated (as described
herein) as a direct or indirect result of the occurrence of one of the events
specified in subsections (i) or (ii) of this paragraph, this Warrant shall be
exercisable, in whole or in part, at the lowest Warrant price available during
the term of the Warrant, on that date and thereafter during the remainder of the
Warrant period stated herein. Such exercisability will occur if after the date
of the Agreement, (i) any person, including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the owner or beneficial owner of Company
securities having twenty percent (20%) or more of the combined voting power of
the then outstanding Company securities that may be cast for the election of the
Company's directors (other than as a result of an issuance of securities
initiated by the Company); or (ii) the Company is the subject of a successful
cash tender or exchange offer, is a party to a merger or other business
combination, sells a substantial portion of its assets, experiences a change in
management brought about by a contested election or participates in any
combination of these transactions. For purposes of this paragraph, the
Transaction Date is the date on which an event described in subsections (i) or
(ii) hereof occurs. The date upon which Hectus is no longer a member of the
Board of Directors of the Company either through resignation, a majority of the
shareholders of the Company not voting for Hectus as a director or voting for
his earlier removal with or without cause or through his removal by a majority
of the members of the Board of Directors shall constitute a constructive
termination of Hectus' directorship with the Company within the meaning of this
paragraph.
In the event Hectus' service as a director of the Company
terminates for any other reason or due to any other cause, including death, or a
resignation or removal that is not a direct or indirect result of the events
described above, then this Warrant shall be exercisable, to the same extent it
was exercisable at the date of termination, for a period of seven months
following the date of termination, provided that in no event shall this Warrant
be exercisable after November 18, 2003.
8. Current Price: Adjustments.
As used in this Warrant, "Current Price" (per share of Underlying
Stock) at any date shall mean the amount equal to the quotient resulting from
dividing (i) the purchase price per Share provided herein by (ii) the number of
shares (including any fractional share) of Underlying Shares comprising a Share
on such date. A "Share" shall consist initially of one share of Common Stock of
the Company as such stock is constituted on the date of this Agreement. The
Purchase Price of a Share shall be One and 25/100 Dollars ($1.25).
In the event that the outstanding Common Stock of the Company is
hereafter changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of Shares, stock
dividends or the like, an appropriate adjustment shall be made by the Board of
Directors in the aggregate number of Underlying Shares available under this
Warrant and in the number of Underlying Shares and price per Underlying Share
subject to outstanding Warrants. If the Company shall be reorganized,
consolidated or merged with another corporation, or if all or substantially all
of the assets of the Company shall be sold or exchanged, the Holder of the
Warrant shall, at the time of issuance of the stock under such corporate event,
be entitled to receive upon the exercise of the Holder's Warrant the same number
and kind of shares of stock or the same amount of property, cash or securities
as the Holder would have been entitled to receive upon the happening of any such
corporate event as if the Holder had been, immediately prior to such event, the
Holder of the number of Underlying Shares covered by the Holder's Warrant.
Any adjustment in the number of Underlying Shares shall apply
proportionately to only the unexercised portion of the Warrant granted
hereunder. If a fraction of a share would result from any such adjustment, the
adjustment shall be revised to the next lower whole number of Underlying Shares.
9. Reservation of Shares.
The Company covenants and agrees that (a) so long as this Warrant
is outstanding, it has or will reserve and keep available out of its authorized
but unissued Common Stock, solely for the purpose of issuing Underlying Shares
from time to time upon the exercise of this Warrant, an adequate number of
Shares of Common Stock for delivery at the times and in the manner provided
herein upon exercise of this Warrant; (b) the Underlying Shares delivered upon
exercise of this Warrant shall be validly issued and outstanding and fully paid
and nonassessable shares of Common Stock, free from any preemptive rights; and
(c) it will pay when due any and all Federal and state original issue taxes
which may be payable with respect to the issuance of the Warrant or of any
Shares of Common Stock upon exercise of the Warrant. The Company shall not,
however, be required (i) to pay any transfer tax which may be payable with
respect to any transfer of the Warrant, the issuance of certificates of Common
Stock in a name other than that of the Holder or any transfer of Underlying
Shares or (ii) to pay any Federal or state income taxes of Holder which may
occur as a result of the exercise of the Warrant or (iii) to issue or deliver
the Warrant or any certificate for Underlying Shares until any such taxes shall
have been paid by the Holder.
10. No Rights of Shareholders; Limitation of Liability.
No Holder shall, based on being a holder of this Warrant, be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other security
of the Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
Holder, as such, any of the rights of a shareholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issue of stock,
reclassification of stock, change to or of par value, consolidation, merger,
conveyance or otherwise or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have been
exercised in accordance with Section 1 hereof. No provisions hereof, in the
absence of affirmative action by the Holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of rights or privileges of the Holder
hereof, shall give rise to any liability of such Holder for the purchase price
or as a shareholder of the Company, whether such liability is asserted by the
Company, creditors of the Company or others.
11. Replacement of Securities.
Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of any certificates evidencing
ownership of this Warrant and in the event of any such loss, theft or
destruction upon delivery of an indemnity agreement or, if the Holder so elects,
a surety bond reasonably satisfactory to the Company or, in the case of any such
mutilation, upon surrender and cancellation of any such certificate, the Company
shall forthwith execute and deliver in lieu thereof a new Warrant of like tenor.
12. Negotiability.
Every Holder of this Warrant, by accepting the same, consents and
agrees with the Company that (a) this Warrant is transferable, in whole or in
part, only upon compliance with the conditions set forth herein by the
registered holder hereof in person or by an attorney duly authorized in writing
by the Holder at the office of the Company as provided herein; (b) this Warrant
may be transferred by the Holder only with respect to that portion of the
Warrant to which the Holder is vested at the time of such transfer; and (c) the
Company may deem and treat the person in whose name this Warrant is registered
as the absolute, true and lawful owner for all purposes whatsoever, and the
Company shall not be affected by any notice to the contrary.
13. Change; Waiver; Applicable Law.
This Warrant and any term hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against whom
enforcement of such change, waiver, discharge or termination is sought. This
Warrant shall be construed and enforced in accordance with the laws of the
Commonwealth of Virginia.
14. Notices.
Any notice to be given to the Company under the terms hereof shall
be addressed to the Company in care of its President at 000 Xxxxxxxx Xxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxx 00000, and any notice to the Holder shall be addressed to
his address as reflected on the records of the Company, or at such other address
as the Company, the Holder and his successors or assigns may hereafter designate
in writing to the other. Any such notice shall have been deemed given upon
personal delivery or on the third business day after being enclosed in a
properly sealed envelope or wrapper properly addressed, registered or certified
and deposited (postage and registry or certification fee prepaid) in post office
or branch post office regularly maintained by the United States Government.
15. Forms of Election to Exercise or Transfer Warrant.
The form to be used in the event the Holder hereof desires to
exercise or transfer the Warrant is attached hereto as Exhibit "A".
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed in its name by its President or a duly authorized Vice President.
DATED this______ day of ___________, 19___
COMPANY:
EXECUTONE INFORMATION SYSTEMS, INC., a
Virginia corporation
By________________________________
Xxxxxxx Xxxxxx
Its President and Chief Executive Officer
[CORPORATE SEAL] ATTEST:
____________________________________
Xxxxxxx X. Xxxxxxxx
Vice President, Law and Administration
HOLDER:
By________________________________
Xxxx X. Xxxxxx
EXHIBIT "A"
SUBSCRIPTION NOTICE
The undersigned, the Holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by such Warrant for, and to purchase
thereunder,______________________________________________(_____________________)
shares of the Common Stock covered by such Warrant and herewith makes payment in
full therefor in the amount of __________________________________________Dollars
($________________) in cash or check made payable to the Company, and requests
that one or more certificates for such shares (and any securities or property
deliverable upon such exercise) be issued in the name of and delivered to
____________________________________________________________, whose address is
____________________________________________________________.
The undersigned agrees that, in the absence of an effective registration
statement with respect to Common Stock issued upon this exercise, the
undersigned is acquiring such Common Stock for investment and not with a view to
distribution thereof and that the certificate or certificates representing such
Common Stock may bear a legend substantially as follows: "Neither this Warrant
nor the Shares of Common Stock issuable upon exercise of this Warrant have been
registered under the Securities Act of 1933, as amended (the "Act"). Neither
this Warrant nor such Shares may be sold, transferred, pledged or hypothecated
in the absence of an effective registration statement for the shares under the
Act or otherwise in compliance with the Act." The undersigned further agrees
that the shares represented by this Warrant may not be transferred except as
provided in Sections 3 and 4 of the Warrant to purchase Common Stock of the
Company expiring November 18, 2003, a copy of which is on file at the principal
office of the Company.
DATED:_______________ ____________________________
Xxxx X. Xxxxxx
Address: 00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
___________________________________________, the rights represented by the
foregoing Warrant of EXECUTONE Information Systems, Inc. and appoints
_____________________________________________, attorney to transfer said rights
on the books of said corporation, with full power of substitution in the
premises.
DATED:____________________ ____________________________
Xxxx X. Xxxxxx
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
