EXHIBIT 10.13
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT. THE WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
WARRANT TO PURCHASE
Up to _______ SHARES
INTELECT COMMUNICATIONS, INC.
(a Delaware corporation)
FORM OF
WARRANT FOR THE PURCHASE OF
Common Stock, $.01 Par Value per Share
THIS WARRANT WILL BE VOID
AFTER 6:00 P.M. CENTRAL STANDARD TIME ON________________
This amended and restated warrant (the "Warrant") certifies that, for
value received, AJC, Inc., (hereafter "AJC" or the "Holder") is entitled, at any
time and from time to time on or after April 1, 1999 (the "Beginning Date"), and
at any time prior to 6:00 p.m. Central Standard Time on December 31, ______ (the
"Expiration Time"), to purchase from Intelect Communications, Inc., a Delaware
corporation (the "Company"), up to the number of shares shown above (the
"Warrant Shares") of common stock, par value $.01, of the Company (the "Common
Stock") by surrendering this Warrant with the purchase form attached hereto,
duly executed, at the principal office of the Company at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxx 00000, and by paying in full and in lawful money of the United
States of America, by cash or cashiers' check, the purchase price of the Warrant
Shares as to which this Warrant is exercised, on all the terms and conditions
hereinafter set forth. This Warrant is issued in connection with that certain
Advisory Services Agreement dated effective September 1, 1998, as amended April
1, 1999 (the "Agreement"), by and between the Company and AJC and replaces and
supersedes the amended and restated warrant issued to AJC and dated September 1,
1999
1. The purchase price at which the Warrant Shares are purchasable (the
"Warrant Price") shall be____________ shares at an exercise price of $2.00 per
share.
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2. On the exercise of all or any portion of this Warrant in the manner
provided above, the person exercising the same shall be deemed to have become a
holder of record of Common Stock (or of the other securities or properties to
which he or it is entitled on such exercise) for all purposes, and certificates
for the securities so purchased shall be delivered to the purchaser within a
reasonable time after the Warrant shall have been exercised as set forth above.
If this Warrant shall be exercised with respect to only a portion of the Warrant
Shares covered hereby, the holder shall be entitled to receive a similar warrant
of like tenor and date covering the number of Warrant Shares with respect to
which this Warrant shall not have been exercised.
3. The Company covenants and agrees that the Warrant Shares which may be
issued on the exercise of the rights represented by this Warrant will, upon
receipt of the Warrant Price, be fully paid and nonassessable, and free from all
taxes, liens, and charges with respect to the issue thereof. The Company further
covenants and agrees that, during the period within which the rights represented
by this Warrant may be exercised, the Company will have authorized and reserved
a sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant.
4. The Warrant Price and number of Warrant Shares purchasable pursuant to
this Warrant may be subject to adjustment from time to time as follows:
(a) If the Company issues any stock dividends, the Warrant Price in
effect immediately prior to the record date for such stock dividend shall
be proportionately decreased or, at the holder's option, the number of
Warrant Shares exercisable hereunder shall be proportionately increased,
such adjustment to become effective immediately after the opening of
business on the day following such record date.
(b) If the Company shall subdivide the outstanding shares of Common
Stock into a greater number of shares, combine the outstanding shares of
Common Stock into a smaller number of shares, or issue by reclassification
any of its shares, the Warrant Price and the number of Warrant Shares in
effect immediately prior thereto shall be adjusted so that the holder of
this Warrant shall be entitled to receive, after the occurrence of any of
the events described, the number of Warrant Shares to which the holder
would have been entitled had this Warrant been exercised immediately prior
to the occurrence of such event. Such adjustment shall become effective
immediately after the opening of business on the day following the date on
which such subdivision, combination, or reclassification, as the case may
be, becomes effective.
(c) If any capital reorganization or reclassification of Common
Stock, or consolidation or merger of the Company with another corporation
or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities, or assets with respect to
or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful
adequate provisions shall be made
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whereby the holder of this Warrant shall thereafter have the right to
acquire and receive on exercise hereof such shares of stock, securities,
or assets as would have been issuable or payable (as part of such
reorganization, reclassification, consolidation, merger or sale) with
respect to or in exchange for such number of outstanding shares of Common
Stock as would have been received on exercise of this Warrant immediately
before such reorganization, reclassification, consolidation, merger or
sale. In any such case, appropriate provision shall be made with respect
to the rights and interests of the holder of this Warrant to the end that
the provisions hereof shall thereafter be applicable in relation to any
shares of stock, securities, or assets thereafter deliverable on the
exercise of this Warrant. In the event of a merger or consolidation of the
Company with or into another corporation or the sale of all or
substantially all of its assets as a result of which a number of shares of
common stock of the surviving or purchasing corporation greater or less
than the number of shares of Common Stock outstanding immediately prior to
such merger, consolidation, or purchase are issuable to holders of Common
Stock, then the Warrant Price in effect immediately prior to such merger,
consolidation, or purchase shall be adjusted in the same manner as though
there were a subdivision or combination of the outstanding shares of
Common Stock. The Company will not effect any such consolidation, merger,
or sale unless prior to the consummation thereof the successor corporation
resulting from such consolidation or merger or the corporation purchasing
such assets shall assume, by written instrument mailed or delivered to the
holder hereof at its last address appearing on the books of the Company,
the obligation to deliver to such holder such shares of stock, securities,
or assets as, in accordance with the foregoing provisions, such holder may
be entitled to acquire on exercise of this Warrant.
(d) No fraction of a share shall be issued on exercise hereof, but,
in lieu thereof, the Company, notwithstanding any other provision hereof,
may pay therefor in cash at the fair value of any such fractional share at
the time of exercise.
(e) Neither the purchase or other acquisition by the Company of any
shares of Common Stock nor the sale or other disposition by the Company of
any shares of Common Stock shall affect any adjustment of the Warrant
Price or be taken into account in computing any subsequent adjustment of
the Warrant Price.
5. This Warrant shall not be transferable or assignable.
6. Notwithstanding any other provisions contained in this Warrant, the
Holder hereof understands and agrees that the following restrictions and
limitations shall be applicable to all Warrant Shares and to all resales or
other transfers thereof pursuant to the Securities Act, and that as a condition
to the exercise of such warrant that the following are and will be true and
correct:
(A) The Holder hereof agrees that the Warrant Shares shall not be
sold or otherwise transferred unless the Warrant Shares are registered
under the Securities Act and applicable state securities or blue sky laws
or are exempt therefrom.
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(B) A legend in substantially the following form will be placed on
the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY OTHER APPLICABLE SECURITIES LAWS."
(C) Stop transfer instructions will be imposed with respect to the
Warrant Shares so as to restrict resale or other transfer thereof, subject
to this Section 6.
(D) The Holder is an "accredited investor" within the meaning of
Rule 501 of Regulation D as promulgated under the Securities Act of 1933,
and will be so as a condition of purchasing any of the Warrant Shares. The
Holder will acquire the Warrant Shares for its own account for investment
purposes and not with a view towards distribution. The Holder must bear
the economic risk of the investment for an indefinite period of time
because the Warrant Shares have not been registered under the Securities
Act and therefore cannot be sold unless they are subsequently registered
under the Securities Act or an exemption from such registration is
available. The Holder has received and carefully reviewed copies of all
documents filed by the Company as of the time of each exercise with the
Securities and Exchange Commission. No representations or warranties have
been made to the Holder by the Company, the officers or directors of the
Company, or any agent, employee or affiliate of any of them. The Holder is
aware that the purchase of the Warrant Shares involves a high degree of
risk and that it may sustain, and has the financial ability to sustain,
the loss of its entire investment. The Holder has had the opportunity to
ask questions of, and receive answers, satisfactory to it from the
Company's management regarding the Company. The Holder understands that no
Federal or State governmental authority has made any finding or
determination relating to the fairness of an investment in the Warrant
Shares and that no Federal or State governmental authority has recommended
or endorsed, or will recommend or endorse, the investment herein. The
Holder, in making the decision to purchase the Warrant Shares subscribed
for, has relied upon independent investigations made by it and has not
relied on any information or representations made by third parties. The
Holder has significant assets, and upon consummation of the purchase of
the Warrant Shares, will continue to have significant assets exclusive of
the Warrant Shares. The Holder understands that the Warrant Shares are
being offered and sold to it in reliance on specific provisions of Federal
and State securities laws and that the Company is relying upon the truth
and accuracy of the
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representations, warranties, agreements, acknowledgments and
understandings of the Holder set forth herein in order to determine the
applicability of such provisions. The Holder, in making the decision to
purchase the Warrant Shares subscribed for, has relied upon independent
investigations made by it and has not relied on any information or
representations made by third parties.
7. The Company agrees to register or qualify the Warrant Shares (but not
this Warrant) for sale as follows:
(a) If, at any time after the date hereof and during the period in
which the rights represented by this Warrant are exercisable or the holder
hereof owns the Warrant Shares, the Company proposes to file a
registration statement or notification under the Securities Act for the
primary or secondary sale of any debt or equity security, it will give
written notice at least 30 days prior to the filing of such registration
statement or notification to the holders of this Warrant and the Warrant
Shares of its intention to do so. The Company agrees that, after receiving
written notice from the warrant holder of his desire to include his
Warrant Shares in such proposed registration statement or notification,
the Company shall afford the holders of this Warrant and the Warrant
Shares the opportunity to have their Warrant Shares included therein.
Notwithstanding the provisions of this paragraph 7(a), the Company shall
have the right, at any time after it shall have given written notice
pursuant to this paragraph (whether or not a written request for inclusion
of the Warrant Shares shall be made) to elect not to file any such
proposed registration statement or notification or to withdraw the same
after the filing but prior to the effective date thereof. In no event
shall the Company be obligated to include the Warrant Shares in any
registration statement or notification under this paragraph 7(a) if: (i)
in the written opinion of the underwriter, the inclusion of the Warrant
Shares in such registration statement or notification would be materially
detrimental to the proposed offering of debt or equity securities pursuant
to which the Company gave notice to the holders under this paragraph; (ii)
in the opinion of counsel for the Company, concurred in by counsel for the
holder hereof, that the Warrant Shares are not considered "restricted
securities" within the meaning of Rule 144 promulgated under the
Securities Act and that registration under the Securities Act is therefore
not required, or (iii) such Warrant Shares are subject to a previously
filed registration statement.
(b) In connection with the filing of a registration statement,
notification, or post-effective amendment under this section, the Company
covenants and agrees:
(i) to pay all expenses of such registration statement,
notification, or post-effective amendment, including, without
limitation, printing charges, legal fees and disbursements of
counsel for the Company, blue sky expenses, accounting fees and
filing fees, but not including legal fees and disbursements of
counsel to the holders and any sales commissions on Warrant Shares
offered and sold;
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(ii) to take all necessary action which may reasonably be
required in qualifying or registering the Warrant Shares included in
a registration statement, notification or post-effective amendment
for the offer and sale under the securities or blue sky laws of such
states as requested by the holders; PROVIDED that the Company shall
not be obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction; and
(iii) to utilize its best efforts to keep the same effective
for a period of not less than 90 nor more than 120 days.
(c) INDEMNIFICATION; CONTRIBUTION.
(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless the holders from and against any and all
losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in any such registration statement or prospectus contained
therein or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by the holders or on
the holders' behalf expressly for use therein.
(ii) INDEMNIFICATION BY HOLDERS. Each holder agrees to
indemnify and hold harmless, severally and not jointly, the Company,
its directors and officers and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to the holders, but only with
respect to information furnished in writing by a holder or on a
holder's behalf expressly for use in any such registration statement
or prospectus relating to the Warrant Shares, any amendment or
supplement thereto or any preliminary prospectus, and only in an
amount not to exceed the proceeds of any Warrant Shares sold by any
such holder thereunder. In case any action or proceeding shall be
brought against the Company or its directors or officers, or any
such controlling person, in respect of which indemnity may be sought
against the holders, the holders shall have the rights and duties
given to the Company, and the Company or its directors or officers
or such controlling person shall have the rights and duties given to
the holders, by the preceding subsection hereof.
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(iii) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action or
proceeding (including any governmental investigation) shall be
brought or asserted against any person entitled to indemnification
under subsections (i) or (ii) above (an "Indemnified Party") in
respect of which indemnity may be sought from any party who has
agreed to provide such indemnification (an "Indemnifying Party"),
the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such
Indemnified Party, and shall assume the payment of all expenses.
Such Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (A) the Indemnifying Party
has agreed to pay such fees and expenses or (B) the named parties to
any such action or proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and
such Indemnified Party shall have been advised by counsel that there
is a conflict of interest on the part of counsel employed by the
Indemnifying Party to represent such Indemnified Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of
the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action or proceeding on behalf
of such Indemnified Party; it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action
or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (together
with appropriate local counsel) at any time for all such Indemnified
Parties, which firm shall be designated in writing by such
Indemnified Parties). The Indemnifying Party shall not be liable for
any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party shall indemnify and hold harmless
such Indemnified Parties from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment.
(iv) CONTRIBUTION. If the indemnification provided for in this
Section 7(c) is unavailable to the Indemnified Parties in respect of
any losses, claims, damages, liabilities or judgments referred to
herein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages,
liabilities and judgments in the following manner as between the
Company on the one hand and each holder on the other, in such
proportion as is appropriate to reflect the relative fault of the
Company on the one hand and each holder on the other in connection
with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative fault of the Company
on the one hand and of the
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holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the party's
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of subsection 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(v) SURVIVAL. The indemnity and contribution agreements
contained in this 7(c) shall remain operative and in full force and
effect regardless of (A) any termination of this Agreement, (B) any
investigation made by or on behalf of any Indemnified Party or by or
on behalf of the Company and (C) the consummation of the sale or
successive resale of the Warrant Shares.
8. As used herein, the term "Common Stock" shall mean and include the
Common Stock authorized on the date of the original issue of this Warrant, and
shall also include any capital stock of any class of the Company thereafter
authorized that shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends and in the
distribution of assets on the voluntary or involuntary liquidation, dissolution,
or winding up of the Company; PROVIDED that the Warrant Shares purchasable
pursuant to this Warrant shall include only shares of the class designated in
the Company's Certificate of Incorporation as Common Stock on the date of the
original issue of this Warrant or, in the case of any reorganization,
reclassification, consolidation, merger, or sale of assets of the character
referred to in paragraph 4(c) hereof, the stocks, securities, or assets provided
for in such paragraph.
9. This agreement shall be construed under and be governed by the laws of
the State of Texas.
10. Any notices required or permitted hereunder shall be sufficiently
given if delivered by hand or sent by registered or certified mail, postage
prepaid, addressed as follows:
If to AJC, Inc., to:
00 Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
If to the Company, to:
Intelect Communications, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Chairman and Chief Executive Officer
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With copy to:
Xxxxxx X. Sudan, Jr.
Xxxx & Sudan, LLP
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
or such other address as shall be furnished in writing by any party to the
other, and any such notice or communication shall be deemed to have been given
as of the date delivered by hand or three days after being so deposited in the
mails.
Executed effective as of April 1, 1999.
INTELECT COMMUNICATIONS, INC.
By:____________________________________
Xxxxxx X. Xxxxxxxx,
Chairman of the Board, Chief
Executive Officer
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Form of Purchase
(to be signed only upon exercise of warrant)
TO: INTELECT COMMUNICATIONS, INC.
The undersigned, the owner of the attached warrant, hereby irrevocable
elects to exercise the purchase rights represented by the warrant for, and to
purchase thereunder, _____ shares of common stock of Intelect Communications
Systems Limited, and herewith makes payment of $______ therefor, and requests
that the certificate(s) for such shares be delivered to _____ _________, at
____________________________________________, and if such shall not be all of
the shares purchasable hereunder, that a new warrant of like tenor for the
balance of the shares purchasable under the attached warrant be delivered to the
undersigned.
Dated this _____ day of _____________, 199__.
______________________________________
Signature
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