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EXHIBIT 10.8
[LETTERHEAD OF FRANKLIN TELECOMMUNICATIONS CORP.]
Crescent International Limited
x/x Xxxxxxxxxx (Xxxxxxxxxxx) XX
00, xx Xxxxx-Xxxxx, X.X. Xxx 000
0000 Xxxxxx, Xxxxxxxx
Xxxxxxxxxxx
Ladies and Gentlemen:
Reference: is made to that certain Stock Purchase Agreement, dated as of August
30, 1999 (the "Agreement"), by and between Crescent International Ltd.
("Crescent") and Franklin Telecommunications Corp. Capitalized terms used in
this letter not otherwise defined have the same meanings as in the Agreement.
During the past several days you and we have had discussions regarding the
Agreement. Upon conclusion of these discussions you and we agreed to increase
the Investment Amount of the Early Put from $1,000,000 to $2,000,000. In
addition, we agreed to amend the Agreement and the Registration Rights Agreement
to extend the date by which the Registrable Securities shall be registered for
resale. Finally, you have agreed to deliver to us for cancellation the Early Put
Warrant issued on the Subscription Date on the condition that we issue to you an
Early Put Warrant in the form attached hereto as Exhibit A. Accordingly, upon
receipt of the Early Put Warrant issued on the Subscription Date, we will
immediately issue to you an Early Put Warrant in the form attached hereto as
Exhibit A.
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Kindly confirm that the foregoing accurately sets forth your understanding of
our agreement on the above-referenced matters by countersigning in the space
provided below.
Very truly yours,
FRANKLIN TELECOMMUNICATIONS CORP.
By: Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
AGREED AND ACCEPTED:
CRESCENT INTERNATIONAL LIMITED
By: /s/ Maxi Brezzi /s/ Xxxx X. Xxx
------------------------------------
Name:
Title:
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EXHIBIT A
FORM OF EARLY PUT WARRANT
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE
HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF THE
COMPANY SET FORTH IN A STOCK PURCHASE AGREEMENT, DATED AS OF AUGUST 30,
1999, BETWEEN FRANKLIN TELECOMMUNICATIONS CORP. AND CRESCENT INTERNATIONAL
LTD. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM FRANKLIN TELECOMMUNICATIONS CORP.'S
EXECUTIVE OFFICES.
August 30, 1999
Warrant to Purchase Shares of Common Stock of Franklin
Telecommunications Corp. (hereinafter an "Early Put Warrant"), up to a total
number determined in accordance with Section 2(b) hereof.
Franklin Telecommunications Corp., an entity organized and existing
under the laws of the State of California (the "Company"), hereby agrees that
Crescent International Ltd. (the "Investor") or any other Warrant Holder is
entitled, on the terms and conditions set forth below, to purchase from the
Company at any time during the Exercise Period up to a total number, determined
in accordance with Section 2(b) hereof, of fully paid and nonassessable shares
of Common Stock, no par value per share, of the Company (the "Common Stock"), as
the same may be adjusted from time to time pursuant to Section 7 hereof, at the
Exercise Price (hereinafter defined), as the same may be adjusted pursuant to
Section 7 hereof. The resale of the shares of Common Stock or other securities
issuable upon exercise or exchange of this Early Put Warrant is subject to the
provisions of the Registration Rights Agreement (as defined below).
Section 1. Definitions.
"Agreement" shall mean the Stock Purchase Agreement, dated the date hereof,
between the Company and the Investor.
"Capital Shares" shall mean the Common Stock and any shares of any other class
of common stock whether now or hereafter authorized, having the right to
participate in the distribution of earnings and assets of the Company.
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"Exercise Date" shall mean either (i) the date this Early Put Warrant, the
Exercise Notice and the Aggregate Exercise Price are received by the Company or
(ii) the date advanced copy of the Exercise Notice is sent by facsimile to the
Company, provided that this Early Put Warrant, the original Exercise Notice, and
the Aggregate Exercise Price are received by the Company within three (3)
business days thereafter. If this Early Put Warrant, the original Exercise
Notice and the Aggregate Exercise Price are not received within three (3)
business days in accordance with clause (ii) above, the Exercise Date shall be
the date this Incentive Warrant, the original Exercise Notice and the Aggregate
Exercise Price are received by the Company.
"Exercise Notice" shall mean the exercise form attached hereto as Exhibit A duly
executed by the Warrant Holder.
"Exercise Period" shall mean the period beginning on the Effective Date
applicable to the Put Closing and continuing until the two-year period
thereafter; provided that such period shall be extended one day for each day
after the applicable Effective Date, that the Registration Statement covering
(i) shares purchased by the Investor through the applicable Put and (ii) the
Early Put Warrant Shares related to such Put and purchasable by exercise of this
Early Put Warrant, is not effective during the period such Registration
Statement is required to be effective pursuant to the Registration Rights
Agreement.
"Exercise Price" as of the date hereof shall mean $0.01 per share of Common
Stock, subject to the adjustments provided for in Section 7 of this Early Put
Warrant.
"Per Share Early Put Warrant Value" shall mean the difference resulting from
subtracting the Exercise Price from the Bid Price of one share of Common Stock
on the Trading Day immediately preceding the Exercise Date.
"Put Closing" shall mean the closing of the purchase and sale of 966,184 shares
of Common Stock for an investment amount equal to $1,000,000 which occurred on
August 30, 1999, and the closing of the purchase and sale of 966,184 shares of
Common Stock for an investment amount equal to $1,000,000 which occurred on
September 14, 1999, for a total Investment Amount of $2,000,000.
"Registration Rights Agreement" shall mean the registration rights agreement,
dated the date hereof between the Company and the Investor.
"Subscription Date" shall mean the date on which the Agreement is executed and
delivered by the parties hereto.
"Warrant Holder" shall mean the Investor or any assignee or transferee of all or
any portion of this Early Put Warrant; and other capitalized terms used but not
defined herein shall have their respective meanings set
forth in the Agreement.
Section 2. Exercisability.
a. Timing. If the Purchase Price on the Effective Date applicable
to the Put Closing is lower than the Purchase Price on the Subscription Date
with respect to such Put, this Early Put Warrant shall become immediately
exercisable, subject to clause c. below.
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b. Number of Shares. The number of shares of Common Stock for
which this Early Put Warrant is exercisable (the "Early Put Warrant Shares")
shall be determined by subtracting (x) the Investment Amount divided by the
Purchase Price on the Subscription Date from (y) the Investment Amount divided
by the Purchase Price on the Effective Date applicable to the Put Closing.
c. Cash Payment in Lieu of Exercise. In the event that the
Investor gives notice of exercise of this Early Put Warrant (in whole or in
part) in accordance with Section 3 hereof, then the Company may, in lieu of
issuance of shares of Common Stock pursuant to such exercise, pay to the
Investor the Cash-Out Price (as defined below) for any or all of the shares of
Common Stock purchasable by the Investor through the exercise of this Early Put
Warrant. In the event that the Investor gives notice of exercise of this Early
Put Warrant (in whole or in part) in accordance with Section 3 hereof and the
number of Early Put Warrant Shares related to the Put Closing to be purchased
pursuant to such exercise exceeds the number of shares registered pursuant to
Section 1.1a. of the Registration Rights Agreement (the "Excess Shares"), then
the Company may, in lieu of issuance of shares of Common Stock pursuant to such
exercise, pay to the Investor the Cash-Out Price (as defined below) for any or
all of the Excess Shares.
d. Notice of Cash Payment in Lieu of Exercise. In the event that
the Company elects to pay cash in lieu of exercise for any Early Put Warrant
Shares or any Excess Shares in accordance with Section 2c. (the "Cash-Out
Option"), the Company shall promptly give notice to the Investor of such
election which notice shall be given no later than one business day following
notice of the Investor's intention to exercise this Early Put Warrant and which
notice shall set forth the number of shares of Common Stock for which the
Company elects the Cash-Out Option.
e. Method of Cash-Out; Effect of Cash-Out. In the event that the
Company chooses the Cash-Out Option, then in lieu of delivering stock
certificates as provided in Section 5 hereof, the Company shall deliver by wire
transfer of immediately available funds to an account designated by the Investor
as soon as practicable after the exercise of this Early Put Warrant (in full or
in part), and in any event within three (3) Trading Days thereafter, the
Cash-Out Price (as defined below) for any and all shares of Common Stock for
which the Company elects the Cash-Out Option.
"Cash-Out Price" shall mean the product of (x) the Bid
Price of one share of Common Stock on the Trading Day immediately preceding the
Exercise Date multiplied by (y) the number of shares of Common Stock for which
the Company proposes to pay cash in lieu of exercise pursuant to Section 2c.
Section 3. Exercise; Cashless Exercise.
a. Method of Exercise. This Early Put Warrant may be exercised in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time during the Exercise Period, by the Warrant Holder by (i)
the surrender of this Early Put Warrant, the Exercise Notice and the Aggregate
Exercise Price to the Company at the address set forth in Section 14 hereof or
(ii) the delivery by facsimile of an executed and completed Exercise Notice to
the Company and delivery to the Company within three (3) business days
thereafter of this Early Put Warrant, the original Exercise Notice and the
Aggregate Exercise Price.
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b. Payment of Aggregate Exercise Price. Subject to paragraph (c)
below, payment of the Aggregate Exercise Price shall be made by check or bank
draft payable to the order of the Company or by wire transfer to an account
designated by the Company. If the amount of the payment received by the Company
is less than the Aggregate Exercise Price, the Warrant Holder will be notified
of the deficiency and shall make payment in that amount within five (5) business
days of such notice. In the event the payment exceeds the Aggregate Exercise
Price, the Company will refund the excess to the Warrant Holder within three (3)
business days of both the receipt of such payment and the knowledge of such
excess.
c. Cashless Exercise. As an alternative to payment of the
Aggregate Exercise Price in accordance with Section 3b. above, the Warrant
Holder may elect to effect a cashless exercise by so indicating on the Exercise
Notice and including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, the Warrant Holder shall
surrender this Early Put Warrant for that number of shares of Common Stock
determined by (i) multiplying the number of Early Put Warrant Shares for which
this Early Put Warrant is being exercised by the Per Share Early Put Warrant
Value and (ii) dividing the product by the Bid Price of one share of the Common
Stock on the Trading Day immediately preceding the Exercise Date.
d. Replacement Early Put Warrant. In the event that the Early Put
Warrant is not exercised in full, the number of Early Put Warrant Shares shall
be reduced by the number of such Early Put Warrant Shares for which this Early
Put Warrant is exercised, and the Company, at its expense, shall forthwith issue
and deliver to the Warrant Holder a new Early Put Warrant of like tenor in the
name of the Warrant Holder or as the Warrant Holder may request, reflecting such
adjusted number of Early Put Warrant Shares.
Section 4. Five Percent Limitation. The Warrant Holder may not exercise
this Early Put Warrant such that the number of Early Put Warrant Shares to be
received pursuant to such exercise aggregated with all other shares of Common
Stock then owned by the Warrant Holder beneficially or deemed beneficially owned
by the Warrant Holder would result in the Warrant Holder owning more than 4.9%
of all of such Common Stock as would be outstanding on such Exercise Date, as
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. As of any date prior to the Exercise
Date, the aggregate number of shares of Common Stock into which this Early Put
Warrant is exercisable, together with all other shares of Common Stock then
beneficially owned (as such term is defined in Rule 13(d) under the Exchange
Act) by such Warrant Holder and its affiliates, shall not exceed 4.9% of the
total outstanding shares of Common Stock as of such date.
Section 5. Delivery of Stock Certificates.
a. Subject to the terms and conditions of this Early Put Warrant,
as soon as practicable after the exercise of this Early Put Warrant in full or
in part, and in any event within five (5) Trading Days thereafter, the Company
at its expense (including, without limitation, the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Warrant Holder, or as the Warrant Holder may lawfully direct, a certificate
or certificates for the number of validly issued, fully paid and non-assessable
Early Put Warrant Shares to
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which the Warrant Holder shall be entitled on such exercise, together with any
other stock or other securities or property (including cash, where applicable)
to which the Warrant Holder is entitled upon such exercise in accordance with
the provisions hereof; provided, however, that any such delivery to a location
outside of the United States shall also be made within five (5) Trading Days
after the exercise of this Early Put Warrant in full or in part.
b. This Early Put Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this Early Put
Warrant, in full or in part, would result in the issuance of any fractional
share of Common Stock, then in such event the Warrant Holder shall receive in
cash an amount equal to the Bid Price of such fractional share within five (5)
Trading Days.
Section 6. Representations, Additional Warranties and Covenants of the
Company.
a. The Company shall take all necessary action and proceedings as
may be required and permitted by applicable law, rule and regulation for the
legal and valid issuance of this Early Put Warrant and the Early Put Warrant
Shares to the Warrant Holder.
b. At all times during the Exercise Period, the Company shall
take all steps reasonably necessary and within its control to insure that the
Common Stock remains listed or quoted on the Principal Market.
c. The Early Put Warrant Shares, when issued in accordance with
the terms hereof, will be duly authorized and, when paid for or issued in
accordance with the terms hereof, shall be validly issued, fully paid and
non-assessable.
d. The Company has authorized and reserved for issuance to the
Warrant Holder the requisite number of shares of Common Stock to be issued
pursuant to this Early Put Warrant. The Company shall at all times reserve and
keep available, solely for issuance and delivery as Early Put Warrant Shares
hereunder, such shares of Common Stock as shall from time to time be issuable as
Early Put Warrant Shares.
Section 7. Adjustment of the Exercise Price. The Exercise Price and,
accordingly, the number of Early Put Warrant Shares issuable upon exercise of
the Early Put Warrant, shall be subject to adjustment from time to time upon the
happening of certain events as follows:
a. Reclassification, Consolidation, Merger or Mandatory Share
Exchange. If the Company, at any time (a) between the Subscription Date and the
Effective Date applicable to the Early Put or (b) between each subsequent
issuance of a Put Notice by the Company and the applicable Effective Date
therefor (i) reclassifies or changes its Outstanding Capital Shares or (ii)
consolidates, merges or effects a mandatory share exchange with or into another
corporation (other than a merger or mandatory share exchange with another
corporation in which the Company is a continuing corporation and that does not
result in any reclassification or change, or as a result of a subdivision or
combination of Outstanding Capital Shares issuable upon exercise of this Early
Put Warrant), then in any such event the Company, or such successor or
purchasing corporation, as the case may be, shall, without payment of any
additional consideration therefore, amend this Early Put Warrant or issue a new
warrant providing that the Warrant Holder shall have rights not less favorable
to the holder than those then applicable to this Early Put Warrant
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and to receive upon exercise under such amendment of this Early Put Warrant or
new warrant, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Early Put Warrant hereunder, the kind and amount of shares of
stock, other securities, money or property receivable upon such
reclassification, change, consolidation, merger, mandatory share exchange, sale
or transfer by the holder of one share of Common Stock issuable upon exercise of
this Early Put Warrant had this Early Put Warrant been exercised immediately
prior to such reclassification, change, consolidation, merger, mandatory share
exchange or sale or transfer. Such amended warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 7. The provisions of this Section 7a. shall
similarly apply to successive reclassifications, changes, consolidations,
mergers, mandatory share exchanges and sales and transfers.
b. Subdivision or Combination of Shares. If the Company, at any
time (a) between the Subscription Date and the Effective Date applicable to the
first Put or (b) between each subsequent issuance of a Put Notice by the Company
and the applicable Effective Date therefor, shall subdivide its Common Stock,
the number of shares of Common Stock issuable to the Investor hereunder shall be
proportionately increased as of the effective date of such subdivision, or, if
the Company shall take a record of holders of its Common Stock for the purpose
of so subdividing, as of such record date, whichever is earlier. If the Company,
at any time (a) between the Subscription Date and the Effective Date applicable
to the first Put or (b) between each subsequent issuance of a Put Notice by the
Company and the applicable Effective Date therefor, shall combine its Common
Stock, the number of shares of Common Stock issuable to the Investor hereunder
shall be proportionately decreased as of the effective date of such combination,
or, if the Company shall take a record of holders of its Common Stock for the
purpose of so combining, as of such record date, whichever is earlier.
c. Stock Dividends. If the Company, at any time while this Early
Put Warrant is unexpired and not exercised in full, shall pay a dividend in its
Capital Shares, or make any other distribution of its Capital Shares, then the
Exercise Price shall be adjusted, as of the date the Company shall take a record
of the holders of its Capital Shares for the purpose of receiving such dividend
or other distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying the
Exercise Price in effect immediately prior to such payment or other distribution
by a fraction:
(i) the numerator of which shall be the total number of
Outstanding Capital Shares immediately prior to such dividend or distribution,
and
(ii) the denominator of which shall be the total number of
Outstanding Capital Shares immediately after such dividend or distribution. The
provisions of this subsection c. shall not apply under any of the circumstances
for which an adjustment is provided in subsections a. or b.
d. Adjustment of Number of Shares. Upon each adjustment of the
Exercise Price pursuant to any provisions of this Section 7, the number of Early
Put Warrant Shares issuable hereunder at the option of the Warrant Holder shall
be calculated, to the nearest one hundredth of a whole share, multiplying the
number of Early Put Warrant Shares issuable prior to an adjustment by a
fraction:
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(i) the numerator of which shall be the Exercise Price
before any adjustment pursuant to this Section 7; and
(ii) the denominator of which shall be the Exercise Price
after such adjustment.
e. Liquidating Dividends, Etc. If the Company, at any time while
this Early Put Warrant is unexpired and not exercised in full, makes a
distribution of its assets or evidences of indebtedness to the holders of its
Capital Shares as a dividend in liquidation or by way of return of capital or
other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing subsections a.
through g.) while an exercise is pending, then the Warrant Holder shall be
entitled to receive upon such exercise of the Early Put Warrant in addition to
the Early Put Warrant Shares receivable in connection therewith, and without
payment of any consideration other than the Exercise Price, an amount in cash
equal to the value of such distribution per Capital Share multiplied by the
number of Early Put Warrant Shares that, on the record date for such
distribution, are issuable upon such exercise of the Early Put Warrant (with no
further adjustment being made following any event which causes a subsequent
adjustment in the number of Early Put Warrant Shares issuable), and an
appropriate provision therefor shall be made a part of any such distribution.
The value of a distribution that is paid in other than cash shall be determined
in good faith by the Board of Directors of the Company.
f. Other Provisions Applicable to Adjustments Under this Section.
The following provisions will be applicable to the making of adjustments in any
Exercise Price hereinabove provided in this Section 7:
(i) Other Action Affecting Capital Shares. In case after
the date hereof the Company shall take any action affecting the number of
Outstanding Capital Shares, other than an action described in any of the
foregoing subsections a. through e. hereof, inclusive, which in the opinion of
the Company's Board of Directors would have a materially adverse effect upon the
rights of the Warrant Holder at the time of exercise of the Early Put Warrant,
the Exercise Price shall be adjusted in such manner and at such time as the
Board of Directors on the advice of the Company's independent public accountants
may in good faith determine to be equitable in the circumstances.
(ii) Notice of Certain Actions. In the event the Company
shall, at a time while the Incentive Warrant is unexpired and outstanding, take
any action which pursuant to subsections a. through e. of this Section 7 may
result in an adjustment of the Exercise Price, the Company shall give to the
Warrant Holder at its last address known to the Company written notice of such
action ten (10) days in advance of its effective date in order to afford to the
Warrant Holder an opportunity to exercise the Incentive Warrant prior to such
action becoming effective.
(iii) Notice of Adjustments. Whenever the Exercise Price
or number of Incentive Warrant Shares shall be adjusted pursuant to Section 7
hereof, the Company shall promptly make a certificate signed by its President or
a Vice President and by its Treasurer or
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Assistant Treasurer or its Secretary or Assistant Secretary, setting forth in
reasonable detail the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Company's Board of Directors made any
determination hereunder), and the Exercise Price and number of Incentive Warrant
Shares purchasable at that Exercise Price after giving effect to such
adjustment, and shall promptly cause copies of such certificate to be mailed (by
first class and postage prepaid) to the Holder of the Incentive Warrant.
Section 8. No Impairment. The Company will not, by amendment of its
Articles of Incorporation or By-Laws or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Early Put Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Warrant Holder against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Early Put
Warrant Shares above the amount payable therefor on such exercise, and (b) will
take all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Early Put
Warrant Shares on the exercise of this Early Put Warrant.
Section 9. Rights As Stockholder. Prior to exercise of this Early Put
Warrant, the Warrant Holder shall not be entitled to any rights as a stockholder
of the Company with respect to the Early Put Warrant Shares, including (without
limitation) the right to vote such shares, receive dividends or other
distributions thereon or be notified of stockholder meetings. However, in the
event of any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend) or other distribution, any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, the
Company shall mail to each Warrant Holder, at least ten (10) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
Section 10. Replacement of Early Put Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Early Put Warrant and, in the case of any such loss, theft or
destruction of the Early Put Warrant, upon delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of such Early Put
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Early Put Warrant of like tenor.
Section 11. Choice of Law. This Agreement shall be construed under the
laws of the State of New York, without giving effect to conflict of law
provisions.
Section 12. Entire Agreement; Amendments. This Early Put Warrant, the
Incentive Warrant, the Registration Rights Agreement, and the Agreement contain
the entire understanding of the parties with respect to the matters covered
hereby and thereby. No provision of this Early
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Put Warrant may be waived or amended other than by a written instrument signed
by the party against whom enforcement of any such amendment or waiver is sought.
Section 13. Restricted Securities.
a. Registration or Exemption Required. This Early Put Warrant has
been issued in a transaction exempt from the registration requirements of the
Securities Act in reliance upon the provisions of Section 4(2) promulgated by
the SEC under the Securities Act. This Early Put Warrant and the Early Put
Warrant Shares issuable upon exercise of this Early Put Warrant may not be
resold except pursuant to an effective registration statement or an exemption to
the registration requirements of the Securities Act and applicable state laws.
b. Legend. Any replacement Early Put Warrants issued pursuant to
Section 2 hereof and any Early Put Warrant Shares issued upon exercise hereof,
shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE
HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF THE COMPANY SET FORTH IN A STOCK PURCHASE
AGREEMENT, DATED AS OF August 30, 1999, BETWEEN FRANKLIN
TELECOMMUNICATIONS CORP. AND CRESCENT INTERNATIONAL LTD. A COPY
OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE FRANKLIN TELECOMMUNICATIONS
CORP.'S EXECUTIVE OFFICES."
Removal of such legend shall be in accordance with the legend removal
provisions in the Agreement.
c. No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 13b. has been or shall be placed on the
share certificates representing the Early Put Warrant Shares and no instructions
or "stop transfer orders," so called, "stock transfer restrictions" or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Section 13.
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d. Assignment. Assuming the conditions of Section 13a. above
regarding registration or exemption have been satisfied, the Warrant Holder may
sell, transfer, assign, pledge or otherwise dispose of this Early Put Warrant,
in whole or in part. The Warrant Holder shall deliver a written notice to the
Company substantially in the form of the assignment form attached hereto as
Exhibit B (the "Assignment Notice"), indicating the person or persons to whom
this Early Put Warrant shall be assigned and the respective number of warrants
to be assigned to each assignee. The Company shall effect the assignment within
ten (10) days of receipt of such Assignment Notice, and shall deliver to the
assignee(s) designated by the Warrant Holder a Early Put Warrant or Early Put
Warrants of like tenor and terms for the specified number of shares.
e. Investor's Compliance. Nothing in this Section 13 shall affect
in any way the Investor's obligations under any agreement to comply with all
applicable securities laws upon resale of the Common Stock.
Section 14. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile (with accurate confirmation generated by the transmitting facsimile
machine) at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
13
if to the Company:
Franklin Telecommunications Corp.
000 Xxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Zepfel LLP
0000 XxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Investor:
Crescent International Ltd.
c/o GreenLight (Switzerland) SA
84, av Louis-Casai, X.X. Xxx 00
0000 Xxxxxx, Xxxxxxxx
Xxxxxxxxxxx
Attention: Xxxxxx Xxxx/Maxi Brezzi
Telephone: x00 00 000 00 00
Facsimile: x00 00 000 00 00
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx, Esq./Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 14 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.
Section 15. Miscellaneous. This Early Put Warrant and any term hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. The headings in this Early Put Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
14
IN WITNESS WHEREOF, this Early Put Warrant was duly executed by the undersigned,
thereunto duly authorized, as of the date first set forth above.
Franklin Telecommunications Corp.
By:________________________________
Name:
Title:
Attested:
By:________________________________
Name:
Title: Secretary
15
EXHIBIT A TO THE EARLY PUT WARRANT
EXERCISE FORM
Franklin Telecommunications Corp.
The undersigned (the "Registered Holder") hereby irrevocably exercises
the right to purchase __________________ shares of Common Stock of Franklin
Telecommunications Corp., an entity organized and existing under the laws of the
State of California (the "Company"), evidenced by the attached Early Put
Warrant, and herewith makes payment of the Exercise Price with respect to such
shares in full in the form of (check the appropriate box) (i) Ycash or certified
check in the amount of $________; (ii) Ywire transfer to the Company's account
at __________________, _________, _________ (Account No.:_________); or (iii)
Y______ Early Put Warrant Shares, which represent the amount of Early Put
Warrant Shares as provided in the attached Early Put Warrant to be canceled in
connection with such exercise, all in accordance with the conditions and
provisions of said Early Put Warrant.
The undersigned requests that stock certificates for such Early Put
Warrant Shares be issued, and a Early Put Warrant representing any unexercised
portion hereof be issued, pursuant to this Early Put Warrant in the name of the
Registered Holder and delivered to the undersigned at the address set forth
below.
Dated:____________________________________
__________________________________________
Signature of Registered Holder
__________________________________________
Name of Registered Holder (Print)
__________________________________________
Address
16
NOTICE
The signature to the foregoing Exercise Form must correspond to
the name as written upon the face of the attached Early Put Warrant in every
particular, without alteration or enlargement or any change whatsoever.
17
EXHIBIT B TO THE EARLY PUT WARRANT
ASSIGNMENT
(To be executed by the registered Warrant Holder (the "Registered
Holder") desiring to transfer the Early Put Warrant, in whole or in part.)
FOR VALUED RECEIVED, the undersigned Warrant Holder of the
attached Early Put Warrant hereby sells, assigns or transfers unto the person(s)
named below (the "Assignee") the right to purchase ______________ shares of the
Common Stock of Franklin Telecommunications Corp. evidenced by the attached
Early Put Warrant and does hereby irrevocably constitute and appoint
______________________ (attorney) to transfer the number of shares specified of
the said Early Put Warrant on the books of the Company, with full power of
substitution in the premises.
The undersigned requests that such Early Put Warrant be issued,
and a Early Put Warrant representing any unsold, unassigned or non-transferred
portion hereof be issued, pursuant to this Early Put Warrant in the name of the
Registered Holder and delivered to the undersigned at the address set forth
below.
Dated:_________________________________________
_______________________________________________
Signature of Registered Holder
_______________________________________________
Name of Registered Holder (Print)
_______________________________________________
Address of Registered Holder
_______________________________________________
Name of Assignee (Print)
_______________________________________________
Address of Assignee (including zip code number)
18
NOTICE
The signature to the foregoing Assignment must correspond to the
name as written upon the face of the attached Early Put Warrant in every
particular, without alteration or enlargement or any change whatsoever.
