EXHIBIT 1
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT, COPIES OF WHICH WILL
BE MADE AVAILABLE UPON REQUEST.
GENERAL DATACOMM INDUSTRIES, INC.
COMMON STOCK PURCHASE WARRANT
Xx. X-0 Xxxxx 00, 0000
Xxxxxxx to Purchase
Shares of Common Stock
GENERAL DATACOMM INDUSTRIES, INC., a Delaware corporation (the
"Corporation"), for value received, hereby certifies that XXXXXX X. XXXXXX, or
his registered assigns (the "Holder"), is entitled to purchase from the
Corporation Nine Hundred Nine Thousand Ninety (909,090) (the "Warrant Quantity")
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock, par value $0.01 per share, of the Corporation (the "Common Stock"), at a
purchase price of $0.275 per share (the "Warrant"), at any time or from time to
time on and after the date hereof but prior to 5:00 P.M., New York City time, on
April 19, 2013 (the "Expiration Date"), subject to the terms, conditions and
adjustments set forth below in this Warrant.
1. DEFINITIONS. As used herein, unless the context otherwise requires, the
following terms shall have the meanings indicated:
"Business Day" shall mean any day other than a Saturday or a Sunday or any
day on which national banks are authorized or required by law to close. Any
reference to "days" (unless Business Days are specified) shall mean calendar
days.
"Common Stock" shall have the meaning assigned to it in the introduction
to this Warrant, such term to include any stock into which such Common Stock
shall have been changed or any stock resulting from any reclassification of such
Common Stock
"Corporation" shall have the meaning assigned to it in the introduction to
this Warrant, such term to include any corporation or other entity which shall
succeed to or assume the obligations of the Corporation hereunder in compliance
with Section 4.
"Current Market Price" shall mean, on any date specified herein, the
average of the daily Market Price during the 10 consecutive trading days
commencing 15 trading days before such date, except that, if on any such date
the shares of Common Stock are not listed or admitted for trading on any
national securities exchange or quoted in the over-the-counter market, the
Current Market Price shall be the Market Price on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations thereunder, or any successor
statute.
"Expiration Date" shall have the meaning assigned to it in the
introduction to this Warrant.
"Fair Value" shall mean, on any date specified herein (i) in the case of
cash, the dollar amount thereof, (ii) in the case of a security, the Current
Market Price, and (iii) in all other cases, the fair value thereof (as of a date
which is within 20 days of the date as of which the determination is to be made)
determined jointly by the Corporation and the Holder; provided, however, that if
such parties are unable to reach agreement within a reasonable period of time,
the Fair Value shall be determined in good faith, by an independent investment
banking firm selected jointly by the Corporation and the Holder or, if that
selection cannot be made within ten days, by an independent investment banking
firm selected by the American Arbitration Association in accordance with its
rules, and provided further, that the Corporation shall pay all of the fees and
expenses of any third parties incurred in connection with determining the Fair
Value.
"Holder" shall have the meaning assigned to it in the introduction to this
Warrant.
"Market Price" shall mean, on any date specified herein, the amount per
share of the Common Stock, equal to (i) the last reported sale price of such
Common Stock, regular way, on such date or, in case no such sale takes place on
such date, the average of the closing bid and asked prices thereof regular way
on such date, in either case as officially reported on the principal national
securities exchange on which such Common Stock is then listed or admitted for
trading, (ii) if such Common Stock is not then listed or admitted for trading on
any national securities exchange but is designated as a national market system
security by the NASD, the last reported trading price of the Common Stock on
such date, (iii) if there shall have been no trading on such date or if the
Common Stock is not so designated, the average of the closing bid and asked
prices of the Common Stock on such date as shown by the NASD automated quotation
system, or (iv) if such Common Stock is not then listed or admitted for trading
on any national exchange or quoted in the over-the-counter market, the fair
value thereof (as of a date which is within 20 days of the date as of which the
determination is to be made) determined jointly by the Corporation and the
Holder; provided, however, if such parties are unable to reach agreement within
a reasonable period of time, the fair value shall be determined in good faith by
an independent investment banking firm selected jointly by the Corporation and
the Holder or, if that selection cannot be made within ten days, by an
independent investment banking firm selected by the American Arbitration
Association in accordance with its rules, and provided further, that the
Corporation shall pay all of the fees and expenses of any third parties incurred
in connection with determining the Market Price.
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"NASD" shall mean the National Association of Securities Dealers, Inc.
"Other Securities" shall mean any stock (other than Common Stock) and
other securities of the Corporation or any other Person (corporate or otherwise)
which the holders of this Warrant at any time shall be entitled to receive, or
shall have received, upon the exercise of this Warrant, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.
"Partial Exercise" shall mean any exercise of this Warrant for less than
the Warrant Quantity on the date of such exercise.
"Person" shall mean any individual, firm, partnership, corporation, trust,
joint venture, association, joint stock company, limited liability company,
unincorporated organization or any other entity or organization, including a
government or agency or political subdivision thereof, and shall include any
successor (by merger or otherwise) of such entity.
"Purchase Price" shall mean $0.275 per share.
"Restricted Securities" shall mean (i) any warrants bearing the applicable
legend set forth in Section 10.1, (ii) any shares of Common Stock (or Other
Securities) issued or issuable upon the exercise of this Warrant which are (or,
upon issuance, will be) evidenced by a certificate or certificates bearing the
applicable legend set forth in such Section, and (iii) any shares of Common
Stock (or Other Securities) issued subsequent to the exercise of this Warrant as
a dividend or other distribution with respect to, or resulting from a
subdivision of the outstanding shares of Common Stock (or Other Securities) into
a greater number of shares by reclassification, stock splits or otherwise, or in
exchange for or in replacement of the Common Stock (or Other Securities) issued
upon such exercise, which are evidenced by a certificate or certificates bearing
the applicable legend set forth in such Section.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time, and the rules and regulations thereunder, or any successor
statute.
"Warrant" shall have the meaning assigned to it in the introduction to
this Warrant.
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"Warrant Quantity" shall have the meaning assigned to it in the
introduction to this Warrant.
2. EXERCISE OF WARRANT.
2.1. Manner of Exercise; Payment of the Purchase Price; Adjustment for
Partial Exercise. (a) This Warrant may be exercised by the Holder hereof, in
whole or in part, at any time or from time to time through the Expiration Date,
by surrendering to the Corporation at its principal office this Warrant, with
the form of Election to Purchase Shares attached hereto as Exhibit A (or a
reasonable facsimile thereof) duly executed by the Holder and accompanied by
payment of the Purchase Price for the number of shares of Common Stock specified
in such form.
(b) Payment of the Purchase Price may be made as follows (or by any
combination of the following): (i) in United States currency by cash or delivery
of a certified check or bank draft payable to the order of the Corporation or by
wire transfer to the Corporation, (ii) by cancellation of such number of the
shares of Common Stock otherwise issuable to the Holder upon such exercise as
shall be specified in such Election to Purchase Shares, such that the excess of
the aggregate Current Market Price of such specified number of shares on the
date of exercise over the portion of the Purchase Price attributable to such
shares shall equal the Purchase Price attributable to the shares of Common Stock
to be issued upon such exercise, in which case such amount shall be deemed to
have been paid to the Corporation and the number of shares issuable upon such
exercise shall be reduced by such specified number, or (iii) by surrender to the
Corporation for cancellation certificates representing shares of Common Stock of
the Corporation owned by the Holder (properly endorsed for transfer in blank)
having a Current Market Price on the date of Warrant exercise equal to the
Purchase Price.
(c) In the event of any Partial Exercise of this Warrant, the Warrant
Quantity shall be reduced, effective as of the effective date of such Partial
Exercise, by such number of shares of Common Stock equal to the difference
between (i) the Warrant Quantity on the date of such Partial Exercise and (ii)
the number of shares of Common Stock, purchased by the Holder in connection with
such Partial Exercise.
2.2. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to, and the
Purchase Price shall have been received by, the Corporation as provided in
Section 2.1, and at such time the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in Section 2.3 shall be deemed
to have become the holder or holders of record thereof for all purposes.
2.3. Delivery of Stock Certificates, etc.; Charges, Taxes and Expenses.
(a) As soon as practicable after each exercise of this Warrant, in whole or in
part, and in any event within five (5) Business Days thereafter, the Corporation
shall cause to be issued in the name of and delivered to the Holder hereof or,
subject to Section 10, as the Holder may direct,
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(i) a certificate or certificates for the number of shares of Common
Stock (or Other Securities) to which the Holder shall be entitled upon
such exercise plus, in lieu of issuance of any fractional share to which
the Holder would otherwise be entitled, if any, a check for the amount of
cash equal to the same fraction multiplied by the Current Market Price per
share on the date of Warrant exercise, and
(ii) in case such exercise is a Partial Exercise, a new Warrant or
Warrants of like tenor, for the balance of the Warrant Quantity, as
adjusted pursuant to Section 2.1(c).
(b) Issuance of certificates for shares of Common Stock upon the exercise
of this Warrant shall be made without charge to the Holder hereof for any issue
or other incidental expense, in respect of the issuance of such certificates,
all of which such taxes and expenses shall be paid by the Corporation.
2.4. Corporation to Reaffirm Obligations. The Corporation shall, at the
time of each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if the Holder of this
Warrant shall fail to make any such request, such failure shall not affect the
continuing obligation of the Corporation to afford such rights to the Holder.
3. DIVIDENDS AND DISTRIBUTIONS.
3.1. General; Warrant Quantity. This Warrant evidences the right to
purchase a number of shares of Common Stock equal to the Warrant Quantity,
subject to adjustment as provided in Section 2.1(c).
3.2. Extraordinary Dividends and Distributions. In case the Corporation at
any time or from time to time after the date hereof shall declare, order, pay or
make a dividend or other distribution (including, without limitation, (i) any
distribution of other or additional stock, (ii) other securities or property or
(iii) rights, options or warrants to subscribe for purchase or otherwise acquire
either shares of Common Stock or securities convertible into or exchangeable for
shares of Common Stock, by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Stock other
than (a) a dividend payable in shares of Common Stock, then, in each such case,
the Corporation shall make proper provision to pay to the Holder of this
Warrant, at the time of the exercise of this Warrant such dividend or
distribution paid to the holders of the Common Stock, an amount equal to the
product of (i) the Warrant Quantity and (ii) the Fair Value of such dividend or
distribution, at the time of such dividend or distribution, applicable to one
share of Common Stock.
4. CONSOLIDATION, MERGER, ETC.
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4.1. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Corporation after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, (b) shall permit any
other Person to consolidate with or merge into the Corporation and the
Corporation shall be the continuing or surviving Person but, in connection with
such consolidation or merger, the Common Stock or Other Securities shall be
changed into or exchanged for stock or other securities of any other Person or
cash or any other property, (c) shall transfer all or substantially all of its
properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or Other Securities,
then, and in the case of each such transaction, proper provision shall be made
so that, upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant, upon the exercise hereof at any time after
the consummation of such transaction, shall be entitled to receive (at the
aggregate Purchase Price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately prior
to such consummation), in lieu of the Common Stock or Other Securities issuable
upon such exercise prior to such consummation, the highest amount of securities,
cash or other property to which such Holder would actually have been entitled as
a stockholder upon such consummation if such Holder had exercised this Warrant
immediately prior thereto, subject to adjustments (subsequent to such
consummation) as nearly equivalent as possible to the adjustments provided for
in this Warrant. If additional shares of Common Stock are issued by the
Corporation pursuant to a stock split or stock dividend in excess of 5% in any
one fiscal year of the Corporation, the number of shares of Common Stock then
issuable on exercise shall be increased proportionately with no increase in the
total purchase price of the shares of Common Stock then covered herein. In the
event that the shares of Common Stock of the Corporation are reduced at any time
by a combination of shares, the number of shares of Common Stock then issuable
on exercise herein shall be reduced proportionately with no reduction in the
total purchase price of the shares of Common Stock then covered herein.
4.2. Assumption of Obligations. Notwithstanding anything contained in this
Warrant to the contrary, the Corporation shall not effect any of the
transactions described in clauses (a) through (d) of Section 4.1 unless, prior
to the consummation thereof, each Person (other than the Corporation) which may
be required to deliver any stock, securities, cash or property upon the exercise
of this Warrant as provided herein shall assume, by written instrument delivered
to, and reasonably satisfactory to, the Holder of this Warrant, (a) the
obligations of the Corporation under this Warrant (and if the Corporation shall
survive the consummation of such transaction, such assumption shall be in
addition to, and shall not release the Corporation from, any continuing
obligations of the Corporation under this Warrant), and (b) the obligation to
deliver to the Holder such shares of stock, securities, cash or property as, in
accordance with the foregoing provisions of this Section 4, the Holder may be
entitled to receive and such Person shall have similarly delivered to the Holder
an opinion of counsel for such Person, which counsel shall be reasonably
satisfactory to the Holder, stating that this Warrant shall thereafter continue
in full force and effect and the terms hereof (including, without limitation,
all of the provisions of this Section 4) shall be applicable to the stock,
securities, cash or property which such Person may be required to deliver upon
any exercise of this Warrant or the exercise of any rights pursuant hereto.
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5. OTHER DILUTIVE EVENTS. In case any event shall occur as to which, the
provisions of Section 3 or Section 4 hereof are not strictly applicable or if
strictly applicable would not fairly protect the purchase rights of the Holder
in accordance with the essential intent and principles of such Sections, then,
in each such case, the Board of Directors of the Corporation shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to preserve, without dilution, the
purchase rights represented by this Warrant.
6. NO DILUTION OR IMPAIRMENT. The Corporation shall not, by amendment of
its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, 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 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 Holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Corporation (a) shall not permit the par value
of any shares of stock receivable upon the exercise of this Warrant to exceed
the amount payable therefor upon such exercise, (b) shall take all such action
as may be necessary or appropriate in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of stock, free from all taxes,
liens, security interests, encumbrances, preemptive rights and charges on the
exercise of this Warrant from time to time outstanding, (c) shall not take any
action which results in any adjustment of the Warrant Quantity if the total
number of shares of Common Stock (or Other Securities) issuable after the action
upon the exercise of all of this Warrant would exceed the total number of shares
of Common Stock (or Other Securities) then authorized by the Corporation's
certificate of incorporation and available for the purpose of issue upon such
exercise, and (d) shall not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par value or a
sum determined by reference to a formula based on a published index of interest
rates, an interest rate publicly announced by a financial institution or a
similar indicator of interest rates in respect of participation in dividends and
to a fixed sum or percentage of par value in any such distribution of assets.
7. NOTICES OF CORPORATE ACTION. In the event of:
(a) any taking by the Corporation 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 or other distribution, or 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, or
(b) any capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any consolidation or
merger involving the Corporation and any other Person, any transaction or series
of transactions by the Corporation in which more than 50% of the voting
securities of the Corporation are transferred to another Person, or any
transfer, sale or other disposition of all or substantially all the assets of
the Corporation to any other Person, or
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(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Corporation, the Corporation shall mail to each holder of a Warrant a notice
specifying (i) the date or expected 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, and (ii) the date or expected
date on which any such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, sale, disposition, dissolution, liquidation or
winding-up is to take place and the time, if any such time is to be fixed, as of
which the holders of record of Common Stock (or Other Securities) shall be
entitled to exchange their shares of Common Stock (or Other Securities) for the
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 30
days prior to the date therein specified.
8. REGISTRATION OF COMMON STOCK. If any shares of Common Stock required to
be reserved for purposes of exercise of this Warrant require registration with
or approval of any governmental authority under any federal or state law (other
than the Securities Act) before such shares may be issued upon exercise, the
Corporation shall, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. At any such time as Common Stock is listed on any national securities
exchange, the Corporation shall, at its expense, obtain promptly and maintain
the approval for listing on each such exchange, upon official notice of
issuance, the shares of Common Stock issuable upon exercise of the then
outstanding warrants and maintain the listing of such shares after their
issuance; and the Corporation shall also list on such national securities
exchange, shall register under the Exchange Act and shall maintain such listing
of, any Other Securities that at any time are issuable upon exercise of the
Warrants, if and at the time that any securities of the same class shall be
listed on such national securities exchange by the Corporation.
9. RESTRICTIONS ON TRANSFER.
9.1. Restrictive Legends. Except as otherwise permitted by this Section 9,
each Warrant (including each Warrant issued upon the transfer of any Warrant)
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THIS WARRANT, COPIES OF WHICH WILL BE MADE
AVAILABLE UPON REQUEST."
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Except as otherwise permitted by this Section 9, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. SUCH SECURITIES
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH THE CONDITIONS SPECIFIED IN THE COMMON STOCK PURCHASE WARRANT ISSUED
BY GENERAL DATACOMM INDUSTRIES, INC., A COMPLETE AND CORRECT COPY OF WHICH
IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER HEREOF
AND WILL BE FURNISHED TO THE HOLDER OF SUCH SECURITIES UPON WRITTEN
REQUEST AND WITHOUT CHARGE."
9.2. Transfer to Comply With the Securities Act. Restricted Securities may
not be sold, assigned, pledged, hypothecated, encumbered or in any manner
transferred or disposed of, in whole or in part, except pursuant to (i) an
effective registration statement under the Securities Act and/or applicable
state securities or Blue Sky laws or (ii) an exemption from registration under
the Securities Act which is available.
9.3. Termination of Restrictions. The restrictions imposed by this Section
9 on the transferability of Restricted Securities shall cease and terminate as
to any particular Restricted Securities (a) when a registration statement with
respect to the sale of such securities shall have been declared effective under
the Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (b) when such securities are sold pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act, or
(c) when, in the opinion of both counsel for the Holder and counsel for the
Corporation, such restrictions are no longer required or necessary in order to
protect the Corporation against a violation of the Securities Act upon any sale
or other disposition of such securities without registration thereunder.
Whenever such restrictions shall cease and terminate as to any Restricted
Securities, the Holder shall be entitled to receive from the Corporation,
without expense, new securities of like tenor not bearing the applicable legends
required by Section 9.1.
10. REPRESENTATIONS OF THE CORPORATION.
10.1. Organization and Qualification. The Corporation is a corporation
duly organized and validly existing in good standing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
to own its properties and to carry on its business as now being conducted. The
Corporation is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary.
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10.2 Authorization; Enforcement; Compliance with Other Instruments. (i)
The Corporation has the requisite corporate power and authority to enter into
and perform its obligations under this Warrant and to issue the shares of Common
Stock issuable upon exercise of this Warrant, (the "Warrant Shares") upon the
exercise of this Warrant, in accordance with the terms hereof, (ii) the
execution and delivery of this Warrant by the Corporation and the consummation
by it of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of this Warrant and the reservation for issuance and
the issuance of the Warrant Shares, upon exercise of this Warrant, have been
duly authorized by the Corporation's Board of Directors and no further consent
or authorization is required by the Corporation, its Board of Directors or its
stockholders, (iii) this Warrant has been duly executed and delivered by the
Corporation, and (iv) this Warrant constitutes valid and binding obligations of
the Corporation enforceable against the Corporation in accordance with its
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies.
10.3 Issuance of Warrant and Warrant Shares. This Warrant is duly
authorized and shall not be subject to preemptive rights or other similar rights
of stockholders of the Corporation. The Warrant Shares have been duly authorized
and reserved for issuance upon exercise of this Warrant, and upon such exercise,
will be validly issued, fully paid and non-assessable, free from all taxes,
liens and charges with respect to the issue thereof, and will not be subject to
preemptive rights or other similar rights of stockholders of the Corporation.
10.4 No Conflicts. The execution, delivery and performance of this Warrant
by the Corporation, and the consummation by the Corporation of the transactions
contemplated hereby (including, without limitation, the issuance of the Warrant
Shares) will not (i) result in a violation of any organizational documents
governing the Corporation or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture or instrument to which the Corporation or any of
its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree applicable to the Corporation or any of
its subsidiaries or by which any property or asset of the Corporation or any of
its subsidiaries is bound or affected. The Corporation is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental or regulatory or self-regulatory agency in order for
it to execute, deliver or perform any of its obligations under or contemplated
by this Warrant in accordance with the terms hereof. All consents,
authorizations, orders, filings and registrations which the Corporation is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.
10.5. Investment Company Status. The Corporation is not and, upon issuance
of this Warrant or the Warrant Shares, will not be an "investment company," a
company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
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11. RESERVATION OF STOCK, ETC. The Corporation shall at all times reserve
and keep available, solely for issuance and delivery upon exercise of this
Warrant and any other warrants outstanding, the number of shares of Common Stock
(or Other Securities) from time to time issuable upon exercise of this Warrant
and any other warrants then outstanding. All shares of Common Stock (or Other
Securities) issuable upon exercise of this Warrant shall be duly authorized and,
when issued upon such exercise, shall be validly issued and, in the case of
shares, fully paid and nonassessable, with no liability on the part of the
holders thereof, and, in the case of all securities, shall be free from all
taxes, liens, security interests, encumbrances, preemptive rights and charges.
The transfer agent for the Common Stock, which may be the Corporation ("Transfer
Agent"), and every subsequent Transfer Agent for any shares of the Corporation's
capital stock issuable upon the exercise of any of the purchase rights
represented by this Warrant, are hereby irrevocably authorized and directed at
all times until the Expiration Date to reserve such number of authorized and
unissued shares as shall be requisite for such purpose. The Corporation shall
keep copies of this Warrant on file with the Transfer Agent for the Common Stock
and with every subsequent Transfer Agent for any shares of the Corporation's
capital stock issuable upon the exercise of the rights of purchase represented
by this Warrant. The Corporation shall supply such Transfer Agent with duly
executed stock certificates for such purpose.
12. REGISTRATION AND TRANSFER OF WARRANTS, ETC.
12.1. Warrant Register; Ownership of Warrants. Each Warrant issued by the
Corporation shall be numbered and shall be registered in a warrant register (the
"Warrant Register") as it is issued and transferred, which Warrant Register
shall be maintained by the Corporation at its principal office or, at the
Corporation's election and expense, by a Warrant Agent or the Transfer Agent.
The Corporation shall be entitled to treat the registered holder of any Warrant
on the Warrant Register as the owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrant on the part of any other Person, and shall not be affected by any notice
to the contrary, except that, if and when any Warrant is properly assigned in
blank, the Corporation may (but shall not be obligated to) treat the bearer
thereof as the owner of such Warrant for all purposes. Subject to Section 9, a
Warrant, if properly assigned, may be exercised by a new holder without a new
Warrant first having been issued.
12.2. Transfer of Warrants. Subject to compliance with Section 9, if
applicable, this Warrant and all rights hereunder are transferable, in whole or
in part, without charge to the Holder hereof, upon surrender of this Warrant
with a properly executed Form of Assignment, attached hereto as Exhibit B, at
the principal office of the Corporation, to any family member of the Holder
and/or any trust, corporation or other affiliate of any such family member. Upon
any partial transfer, the Corporation shall, at its expense, issue and deliver
to the Holder a new Warrant of like tenor, in the name of the Holder, which
shall be exercisable for such number of shares of Common Stock with respect to
which rights under this Warrant were not so transferred. Warrant Shares are
transferable, in whole or in part, without charge to the Holder thereof, to any
family member of the Holder and/or any trust, corporation or other affiliate of
any such family member.
11
12.3. Replacement of Warrants. On receipt by the Corporation of evidence
reasonably satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Corporation or, in the case of any such
mutilation, on surrender of such Warrant to the Corporation at its principal
office and cancellation thereof, the Corporation, at its expense, shall execute
and deliver, in lieu thereof, a new Warrant of like tenor.
12.4. Adjustments To Number of Shares. Notwithstanding the number of
shares of Common Stock purchasable upon exercise of this Warrant, any Warrant
theretofore or thereafter issued may continue to express the same number of
shares of Common Stock as are stated in this Warrant, as initially issued.
12.5. Fractional Shares. Notwithstanding any adjustment in the number of
shares of Common Stock covered by this Warrant or any other provision of this
Warrant, the Corporation shall not be required to issue fractions of shares upon
exercise of this Warrant or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Corporation shall make payment to the
Holder, at the time of exercise of this Warrant as herein provided, in an amount
in cash equal to such fraction (after aggregation of all shares and fractional
shares to be issued upon such exercise) multiplied by the Current Market Price
of a share of Common Stock on the date of Warrant exercise.
13. REMEDIES; SPECIFIC PERFORMANCE. The Corporation stipulates that there
would be no adequate remedy at law to the Holder of this Warrant in the event of
any default or threatened default by the Corporation in the performance of or
compliance with any of the terms of this Warrant and accordingly, the
Corporation agrees that, in addition to any other remedy to which the Holder may
be entitled at law or in equity, the Holder shall be entitled to seek to compel
specific performance of the obligations of the Corporation under this Warrant,
without the posting of any bond, in accordance with the terms and conditions of
this Warrant in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Warrant, the Corporation shall not raise the defense that
there is an adequate remedy at law. Except as otherwise provided by law, a delay
or omission by the Holder hereto in exercising any right or remedy accruing upon
any such breach shall not impair the right or remedy or constitute a waiver of
or acquiescence in any such breach. No remedy shall be exclusive of any other
remedy. All available remedies shall be cumulative.
14. NO LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant shall
be construed as imposing any obligation on the Holder to purchase any securities
or as imposing any liabilities on the Holder as a stockholder of the
Corporation, whether such obligation or liabilities are asserted by the
Corporation or by creditors of the Corporation.
12
15. NOTICES. All notices and other communications (and deliveries)
provided for or permitted hereunder shall be made in writing by hand delivery,
telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Corporation: General DataComm Industries, Inc.
0 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxx,
Chief Financial Officer
Fax No.: (000) 000-0000
with copies to: Xxxxxxx Celler Spett & Xxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Esq.
Fax No: (000) 000-0000
If to Holder: Xxxxxx X. Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No: (000) 000-0000
with copies to: Xxxxxxx Celler Spett & Xxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx, Esq.
Fax No: (000) 000-0000
All such notices and communications (and deliveries) shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
when receipt is acknowledged, if telecopied; on the next Business Day, if timely
delivered to a courier guaranteeing overnight delivery; and five days after
being deposited in the mail, if sent first class registered or certified mail,
return receipt requested, postage prepaid; provided, that, the exercise of any
Warrant shall be effective in the manner provided in Section 2.
16. AMENDMENTS. This Warrant and any term hereof may not be amended,
modified, supplemented or terminated, and waivers or consents to departures from
the provisions hereof may not be given, except by written instrument duly
executed by the party against which enforcement of such amendment, modification,
supplement, termination or consent to departure is sought.
17. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Warrant otherwise
requires: (1) words of any gender shall be deemed to include each other gender;
(2) words using the singular or plural number shall also include the plural or
singular number, respectively; (3) the words "hereof", "herein" and "hereunder"
and words of similar import when used in this Warrant shall refer to this
Warrant as a whole and not to any particular provision of this Warrant, and
Section and paragraph references are to the Sections and paragraphs of this
Warrant unless otherwise specified; (4) the word "including" and words of
similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.
13
18. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF THIS
WARRANT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE
RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS WARRANT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. THE CORPORATION AND
HOLDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 18.
THE CORPORATION AND HOLDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS WARRANT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE
CORPORATION AND HOLDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS WARRANT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
19. COSTS AND ATTORNEYS' FEES. In the event that any action, suit or other
proceeding is instituted concerning or arising out of this Warrant, the
Corporation agrees and the Holder, by taking and holding this Warrant agrees,
that the prevailing party shall recover from the non-prevailing party all of
such prevailing party's costs and reasonable attorneys' fees incurred in each
and every such action, suit or other proceeding, including any and all appeals
or petitions therefrom.
14
IN WITNESS WHEREOF, the Corporation has executed and delivered this
Warrant as of the date first above written.
GENERAL DATACOMM INDUSTRIES, INC.
By:
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President Finance
and Adminstration
[Signature page to the Warrant]
EXHIBIT A to
Common Stock Purchase Warrant
FORM OF
ELECTION TO PURCHASE SHARES
The undersigned hereby irrevocably elects to exercise the Warrant to
purchase ____ shares of Common Stock, par value $0.01 per share ("Common
Stock"), of GENERAL DATACOMM INDUSTRIES, INC. and hereby [makes payment of
$________ therefor] [or] [makes payment therefor by reduction pursuant to
Section 2.1(b)(iii) of the Warrant of the number of shares of Common Stock
otherwise issuable to the Holder upon Warrant exercise by ___ shares] [or]
[makes payment therefor by delivery of the following Common Stock Certificates
of the Corporation (properly endorsed for transfer in blank) for cancellation by
the Corporation pursuant to Section 2.1(b)(iv) of the Warrant, certificates of
which are attached hereto for cancellation [list certificates by number and
amount]]. The undersigned hereby requests that certificates for such shares be
issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------------------
(NAME)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
--------------------------------------------------------------------------------
(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
DELIVER TO:
---------------------------------------------------------------------
(NAME)
--------------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
If the number of shares of Common Stock purchased (and/or reduced) hereby
is less than the number of shares of Common Stock covered by the Warrant, the
undersigned requests that a new Warrant representing the number of shares of
Common Stock not so purchased (or reduced) be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------------------------
(NAME OF HOLDER)
(ADDRESS, INCLUDING ZIP CODE)
DELIVER TO:
---------------------------------------------------------------------
(NAME OF HOLDER)
(ADDRESS, INCLUDING ZIP CODE)
Dated: _____________, 20__ [NAME OF HOLDER]
By
----------------------------
Name:
Title:
EXHIBIT B to
Common Stock Purchase Warrant
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto the Assignee named below all of the rights of the undersigned to purchase
Common Stock, par value $0.01 per share ("Common Stock") of GENERAL DATACOMM
INDUSTRIES, INC. represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:
Name of Assignee Address No. of Shares
---------------- ------- -------------
and does hereby irrevocably constitute and appoint ________ Attorney to make
such transfer on the books of the Corporation maintained for that purpose, with
full power of substitution in the premises.
Dated: _______________, 20__ [NAME OF HOLDER]
----------------------------
Name:
Title:
