EXHIBIT 10-20
NEITHER THIS WARRANT NOR THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (the "Act"). NEITHER THIS WARRANT NOR SUCH
SHARES MAY BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT AS PROVIDED IN SECTION 4 OF THE
WARRANT TO PURCHASE COMMON STOCK OF THE COMPANY
EXPIRING FEBRUARY 1, 2001, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICE OF THE COMPANY.
Issued as of Void after February 1, 2001
February 1, 1996
WARRANT TO PURCHASE 25,000 SHARES
OF COMMON STOCK
OF
EXECUTONE INFORMATION SYSTEM, INC.
(incorporated under the Laws of the
Commonwealth of Virginia)
THIS IS TO CERTIFY THAT, XXXXX X. XXXXXXX ("Xxxxxxx")
or his permitted registered assigns (Seslowe and such assigns
sometimes hereinafter being referred to as the "Holder"), is entitled,
subject to the terms and conditions set forth herein, and further subject to
an adjustment as hereinafter provided, to purchase from EXECUTONE
INFORMATION SYSTEMS, INC., a Virginia corporation (the "Company"),
an aggregate of Twenty-Five Thousand (25,000) fully paid and
nonassessable shares (the "Underlying Shares") of the common stock of
the Company, $0.01 par value ("Common Stock"), upon payment of the
purchase price of SIXTY-FIVE THOUSAND SEVEN HUNDRED FIFTY
DOLLARS ($65,750.00) or TWO DOLLARS AND SIXTY-THREE CENTS
($2.63) per Underlying Share (the "Purchase Price"), and also is entitled
to exercise the other appurtenant rights, powers and privileges
hereinafter set forth at any time from and after 9:00 a.m. (Eastern
Standard Time) February 1, 1996 and on or before 5:00 p.m. (Eastern
Standard Time), on February 1, 2001.
This Warrant (the "Warrant") entitles the Holder hereof to
purchase up to an aggregate of 25,000 shares of Common Stock, which
right shall vest ratably over a period of three (3) years, one-third on
February 1, 1997, one-third on February 1, 1998 and one-third on
February 1, 1999; provided, however, that if Seslowe ceases to be a
director of the Company, either voluntarily or because he has not been
reelected by the Shareholders of the Company, then Seslowe's vesting of
rights shall terminate as of the date he is no longer a director of the
Company.
THE EXERCISE AND TRANSFER OF THIS WARRANT ARE
RESTRICTED BY THE PROVISIONS OF SECTION 4 HEREOF
1. Exercise of Warrant.
This Warrant may be exercised in whole or in part by the Holder
hereof, by delivery to the Company at its principal office at 000 Xxxxxxxx
Xxxxx Xxxx, Xxxxxxx, XX 00000 of (a) a written notice to the Holder, in
substantially the form of the Subscription Notice attached hereto as
Exhibit "A", of such Holder's election to exercise this Warrant, which
notice shall specify the number of Underlying Shares to be purchased, (b)
a check payable to the Company in an amount equal to the aggregate
Current Price (as defined below) of the number of shares of Common
Stock being purchased and (c) this Warrant. The Company shall, as
soon as reasonably practicable, execute and deliver or cause to be
delivered to Holder, in accordance with such notice, one or more
certificates representing the aggregate number of shares of Common
Stock specified in such notice. The stock certificate(s) so delivered shall
be issued in the name of the Holder or such other name as shall be
designated in such notice. Such certificate(s) shall be deemed to have
been issued and the Holder or any other person so designated to be
named therein shall be deemed for all purposes to have become a
Holder of record of such Underlying Shares as of the date such notice is
received by the Company. If this Warrant shall have been exercised only
in part, the Company shall, at the time of delivery of said certificate(s),
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the remaining shares of Common Stock called for by this
Warrant (stated in Shares), which new Warrant shall in all other respects
be identical to this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant and the same returned to the
Holder.
2. Fractional Shares.
This Warrant is only exercisable with respect to whole Underlying
Shares and not fractions thereof unless the Company otherwise agrees.
Accordingly, the Company shall not be required to issue certificates
representing fractions of Underlying Shares upon any exercise of this
Warrant; provided, however, in respect of any final fraction of a share it
may, at its sole option, in lieu of delivering a fractional share, make a
payment in cash based upon the then fair market value of such fraction
of the Underlying Shares.
3. Transfer, Division and Combination.
No Warrant granted under this Agreement shall be transferable
by Seslowe otherwise than by Will or the laws of descent and distribution
and, during the lifetime of Seslowe, shall not be exercisable by any other
person, but only by him. The Company agrees to maintain at its principal
office in Milford, Connecticut, books for the registration and transfer of
the Warrants and, subject to the provisions of this paragraph and Section
4 hereof, this Warrant and all rights hereunder are transferable ONLY
with respect to (i) Seslowe's heirs and devisees, or (ii) Seslowe's Estate
in whole or in part, on such books upon surrender of this Warrant at such
office, together with a written assignment of this Warrant duly executed
by the Holder hereof or his agent or attorney, and with funds sufficient to
pay any stock transfer taxes payable upon the making of such transfer.
Upon surrender and payment, the Company shall execute and deliver a
new Warrant(s) in the name of the assignee of Holder and in the
denominations specified in such instrument of assignment, and this
Warrant shall be canceled promptly. If and when this Warrant is
assigned in blank, the Company may, but shall not be obligated to, treat
the bearer hereof as the absolute owner of this Warrant for all purposes
and the Company shall not be affected by any notice to the contrary. A
warrant may be exercised by a Holder for the purchase of shares of
Common Stock without having a new Warrant issued.
The Company shall pay all expenses, taxes (other than stock
transfer taxes and any of Holder's income taxes, if any, incurred as a
result of the transfer) and other charges payable in connection with the
preparation, issue and delivery of Warrants hereunder.
4. Restriction on Exercise and Transfer of Warrants and Transfer of
Warrants and Common Stock.
Except as otherwise provided herein, this Warrant and the
certificates representing the Underlying Shares shall be stamped or
otherwise imprinted with a legend substantially in the following form:
"Neither this Warrant nor the shares of Common Stock
issuable upon exercise of this Warrant have been registered
under the Securities Act of 1933, as amended (the "Act").
Neither this Warrant nor such Shares may be sold, transferred,
pledged or hypothecated except as provided in Section 4 of the
Warrant to purchase Common Stock of the Company expiring
February 1, 2001, a copy of which is on file at the principal office
of the Company."
This Warrant shall be exercisable (1) only if the issue of
Underlying Shares issuable upon exercise is exempt from the
requirements of registration under the Securities Act of 1933, as
amended (the "Act") (or any similar statute then in effect) and any
applicable state securities law or (2) upon registration of such Underlying
Shares in compliance therewith. This Warrant shall be transferable only
(i) with the prior written consent of the Company, or (ii) by will or the laws
of descent and distribution, and in either event only if the Warrant is
registered or the transfer is exempt from the requirements of registration
under the Act (or any similar statute then in effect) and any applicable
state securities law.
5. Acknowledgment by the Holder of Restrictions.
The Holder of this Warrant and certificates representing the
Underlying Shares, by acceptance hereof and thereof, acknowledges and
agrees that: (a) the Warrant and the Underlying Shares have not been
registered under the Act in reliance upon exemptions from the
registration provisions of the Act set forth therein, or in the rules and
regulations promulgated thereunder (and there is no obligation on the
part of the Company to register the Warrant or the Underlying Shares
under the Act); and (b) the Warrant and the Underlying Shares will not be
freely tradeable. The Holder represents that he fully understands the
restrictions on his ability to transfer this Warrant and the Underlying
Shares. Without limiting the foregoing and by way of illustration only, the
Holder understands that if he presently desired to sell Underlying Shares
pursuant to the exemption from the registration provisions of the Act
contained in Rule 144 (the "Rule") promulgated under the Act, as
presently constituted, such Underlying Shares might be sold by him
pursuant to the Rule only after a minimum holding period of two (2) years
(computed in accordance with the Rule) and, thereafter, only in the
limited amounts, in the manner and under the limited circumstances
prescribed by the Rule.
6. Change in Control.
The Warrant that is outstanding on a Control Change Date, as
hereinafter defined, shall be exercisable in whole or in part on that date
and thereafter during the remainder of the Warrant period stated in this
Warrant Agreement (the "Agreement"). A Change in Control occurs if,
after the date of this Agreement, (i) any person, including a
"group" as defined in Section 13(d)(3) of the Securities and Exchange Act
of 1934 (the "Exchange Act"), becomes the owner or beneficial owner of
Company securities having twenty percent (20%) or more of the
combined voting power of the then outstanding Company securities that
may be cast for the election of the Company's directors (other than as a
result of an issuance of securities initiated by the Company, or open
market purchases approved in advance by the board, as long as the
majority at the time the purchases are made are directors who were
members of the Board immediately prior to the purchases being made
and approved such purchases); or (ii) as the direct or indirect result of, or
in connection with, a cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested election, or any
combination of these transactions, the persons who were directors of the
Company before such transactions cease to constitute a majority of the
Company's Board, or any successor's board, within two (2) years of the
last of such transactions. For purposes of this Agreement, the Control
Change Date is the date on which an event described in (i) or (ii) occurs.
If a Change in Control occurs on account of a series of transactions, the
Control Change Date is the date of the last of such transactions.
7. Change in Management.
Notwithstanding any specified vesting or applicable early
exercise Warrant prices, if this Warrant is outstanding on the date
Seslowe's directorship with the Company is terminated or constructively
terminated (as described herein) as a direct or indirect result of the
occurrence of one of the events specified in subsections (i) or (ii) of this
paragraph, this Warrant shall be exercisable, in whole or in part, at the
lowest Warrant price available during the term of the Warrant, on that
date and thereafter during the remainder of the Warrant period stated
herein. Such exercisability will occur if after the date of the Agreement,
(i) any person, including a "group" as defined in Section 13(d)(3) of the
Exchange Act, becomes the owner or beneficial owner of Company
securities having twenty percent (20%) or more of the combined voting
power of the then outstanding Company securities that may be cast for
the election of the Company's directors (other than as a result of an
issuance of securities initiated by the Company); or (ii) the Company is
the subject of a successful cash tender or exchange offer, is a party to a
merger or other business combination, sells a substantial portion of its
assets, experiences a change in management brought about by a
contested election or participates in any combination of these
transactions. For purposes of this paragraph, the Transaction Date is the
date on which an event described in subsections (i) or (ii) hereof occurs.
The date upon which Seslowe is no longer a member of the Board of
Directors of the Company either through resignation, a majority of the
shareholders of the Company not voting for Seslowe as a director or
voting for his earlier removal with or without cause or through his removal
by a majority of the members of the Board of Directors shall constitute a
constructive termination of Seslowe's directorship with the Company
within the meaning of this paragraph.
In the event Seslowe's service as a director of the Company
terminates for any other reason or due to any other cause, including
death, or a resignation or removal that is not a direct or indirect result of
the events described above, then this Warrant shall be exercisable, to the
same extent it was exercisable at the date of termination, for a period of
seven months following the date of termination, provided that in no event
shall this Warrant be exercisable after February 1, 2001.
8. Current Price: Adjustments.
As used in this Warrant, "Current Price" (per share of Underlying
Stock) at any date shall mean the amount equal to the quotient resulting
from dividing (i) the purchase
price per Share provided herein by (ii) the
number of shares (including any fractional share) of Underlying Shares
comprising a Share on such date. A "Share" shall consist initially of one
share of Common Stock of the Company as such stock is constituted on
the date of this Agreement. The Purchase Price of a Share shall be Two
Dollars and Sixty-Three Cents ($2.63).
In the event that the outstanding Common Stock of the Company
is hereafter changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of Shares,
stock dividends or the like, an appropriate adjustment shall be made by
the Board of Directors in the aggregate number of Underlying Shares
available under this Warrant and in the number of Underlying Shares and
price per Underlying Share subject to outstanding Warrants. If the
Company shall be reorganized, consolidated or merged with another
corporation, or if all or substantially all of the assets of the Company shall
be sold or exchanged, the Holder of the Warrant shall, at the time of
issuance of the stock under such corporate event, be entitled to receive
upon the exercise of the Holder's Warrant the same number and kind of
shares of stock or the same amount of property, cash or securities as the
Holder would have been entitled to receive upon the happening of any
such corporate event as if the Holder had been, immediately prior to such
event, the Holder of the number of Underlying Shares covered by the
Holder's Warrant.
Any adjustment in the number of Underlying Shares shall apply
proportionately to only the unexercised portion of the Warrant granted
hereunder. If a fraction of a share would result from any such
adjustment, the adjustment shall be revised to the next lower whole
number of Underlying Shares.
9. Reservation of Shares.
The Company covenants and agrees that (a) so long as this
Warrant is outstanding, it has or will reserve and keep available out of its
authorized but unissued Common Stock, solely for the purpose of issuing
Underlying Shares from time to time upon the exercise of this Warrant,
an adequate number of Shares of Common Stock for delivery at the
times and in the manner provided herein upon exercise of this Warrant;
(b) the Underlying Shares delivered upon exercise of this Warrant shall
be validly issued and outstanding and fully paid and nonassessable
shares of Common Stock, free from any preemptive rights; and (c) it will
pay when due any and all Federal and state original issue taxes which
may be payable with respect to the issuance of the Warrant or of any
Shares of Common Stock upon exercise of the Warrant. The Company
shall not, however, be required (i) to pay any transfer tax which may be
payable with respect to any transfer of the Warrant, the issuance of
certificates of Common Stock in a name other than that of the Holder or
any transfer of Underlying Shares or (ii) to pay any Federal or state
income taxes of Holder which may occur as a result of the exercise of the
Warrant or (iii) to issue or deliver the Warrant or any certificate for
Underlying Shares until any such taxes shall have been paid by the
Holder.
10. No Rights of Shareholders; Limitation of Liability.
No Holder shall, based on being a holder of this Warrant, be
entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other security of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issue of
stock, reclassification of
stock, change to or of par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been
exercised in accordance with Section 1 hereof. No provisions hereof, in
the absence of affirmative action by the Holder hereof to purchase shares
of Common Stock, and no mere enumeration herein of rights or
privileges of the Holder hereof, shall give rise to any liability of such
Holder for the purchase price or as a shareholder of the Company,
whether such liability is asserted by the Company, creditors of the
Company or others.
11. Replacement of Securities.
Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of any certificates evidencing
ownership of this Warrant and in the event of any such loss, theft or
destruction upon delivery of an indemnity agreement or, if the Holder so
elects, a surety bond reasonably satisfactory to the Company or, in the
case of any such mutilation, upon surrender and cancellation of any such
certificate, the Company shall forthwith execute and deliver in lieu thereof
a new Warrant of like tenor.
12. Negotiability.
Every Holder of this Warrant, by accepting the same, consents
and agrees with the Company that (a) this Warrant is transferable, in
whole or in part, only upon compliance with the conditions set forth herein
by the registered holder hereof in person or by an attorney duly
authorized in writing by the Holder at the office of the Company as
provided herein; (b) this Warrant may be transferred by the Holder only
with respect to that portion of the Warrant to which the Holder is vested at
the time of such transfer; and (c) the Company may deem and treat the
person in whose name this Warrant is registered as the absolute, true
and lawful owner for all purposes whatsoever, and the Company shall not
be affected by any notice to the contrary.
13. Change; Waiver; Applicable Law.
This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against whom enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with the laws of the Commonwealth of Virginia.
14. Notices.
Any notice to be given to the Company under the terms hereof
shall be addressed to the Company in care of its President at 000
Xxxxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000, and any notice to the
Holder shall be addressed to his address as reflected on the records of
the Company, or at such other address as the Company, the Holder and
his successors or assigns may hereafter designate in writing to the other.
Any such notice shall have been deemed given upon personal delivery
or on the third business day after being enclosed in a properly sealed
envelope or wrapper properly addressed, registered or certified and
deposited (postage and registry or certification fee prepaid) in post office
or branch post office regularly maintained by the United States
Government.
15. Forms of Election to Exercise or Transfer Warrant.
The form to be used in the event the Holder hereof desires to
exercise or transfer the Warrant is attached hereto as Exhibit "A".
IN WITNESS WHEREOF, the Company has caused this
Warrant to be signed in its name by its President or a duly authorized
Vice President.
DATED this______ day of ___________, 19___
COMPANY:
EXECUTONE INFORMATION SYSTEMS, INC.,
a Virginia corporation
By________________________
Xxxx Xxxxxxx
Its President
[CORPORATE SEAL]
ATTEST:
____________________________________
Xxxxxxx X. Xxxxxxxx
Vice President, General Counsel and Secretary
HOLDER:
By __________________________
Xxxxx X. Xxxxxxx
EXHIBIT "A"
SUBSCRIPTION NOTICE
The undersigned, the Holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by such Warrant for, and to
purchase thereunder,______________________________________
(_____________________) shares of the Common Stock covered by
such Warrant and herewith makes payment in full therefor in the amount
of __________________________ Dollars ($________________) in
cash or check made payable to the Company, and requests that one or
more certificates for such shares (and any securities or property
deliverable upon such exercise) be issued in the name of and delivered
to _______________________________________________________,
whose address is ___________________________________________.
The undersigned agrees that, in the absence of an effective registration
statement with respect to Common Stock issued upon this exercise, the
undersigned is acquiring such Common Stock for investment and not
with a view to distribution thereof and that the certificate or certificates
representing such Common Stock may bear a legend substantially as
follows: "Neither this Warrant nor the Shares of Common Stock issuable
upon exercise of this Warrant have been registered under the Securities
Act of 1933, as amended (the "Act"). Neither this Warrant nor such
Shares may be sold, transferred, pledged or hypothecated in the absence
of an effective registration statement for the shares under the Act or
otherwise in compliance with the Act." The undersigned further agrees
that the shares represented by this Warrant may not be transferred
except as provided in Sections 3 and 4 of the Warrant to purchase
Common Stock of the Company expiring February 1, 2001, a copy of
which is on file at the principal office of the Company.
DATED:_______________ __________________________
Xxxxx X. Xxxxxxx
Address:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ___________________________________________, the
rights represented by the foregoing Warrant of EXECUTONE Information
Systems, Inc. and appoints ____________________________________,
attorney to transfer said rights on the books of said corporation, with full
power of substitution in the premises.
DATED:____________________ ________________________
Xxxxx X. Xxxxxxx
NOTICE: The signature to this assignment must correspond with
the name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change whatsoever.
