EXHIBIT 10.7
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT
UNDER THE ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE ACT
AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED
IN CONNECTION WITH SUCH PROPOSED TRANSFER.
Warrant No. S-1
STOCK PURCHASE WARRANT
This Warrant is issued this 26th day of February, 1998, by
TELTRONICS, INC., a Delaware corporation (the "Company"), to
SIRROM CAPITAL CORPORATION d/b/a TANDEM CAPITAL, a Tennessee
corporation ("Tandem" which, together with any subsequent
assignee or transferee hereof is hereinafter referred to
collectively as "Holder" or "Holders").
AGREEMENT:
1. Issuance of Warrant; Term. For and in consideration of
Tandem purchasing from the Company its 12% Subordinated Debenture
due February 13, 2002, in the initial principal amount of One
Million, Seven Hundred Fifty Thousand Dollars ($1,750,000) (the
"Debenture") pursuant to the terms of a Debenture Purchase
Agreement, dated February 25, 1998, between the Company and
Tandem (the "Debenture Purchase Agreement"), and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company hereby grants to Holder the
right to purchase Five Hundred Twenty-Five Thousand (525,000)
shares of the Company's common stock, par value $.001 per share
(the "Common Stock"). The shares of Common Stock issuable upon
exercise of this Warrant are hereinafter referred to as the
"Shares." The number of such shares and the Exercise Price (as
defined below) are subject to adjustment as provided herein. As
used herein, the term "Warrant" includes this Warrant and any
warrants delivered in exchange therefor as provided herein, and
the term "Warrant Issue Date" shall mean February 26, 1998. This
Warrant shall be exercisable at any time and from time to time
during the term commencing on the date hereof and ending at 5:00
p.m. Eastern time on February 26, 2003.
2. Exercise Price. The exercise price (the "Exercise
Price") per share for which all or any of the Shares may be
purchased pursuant to the terms of this Warrant shall be Two
Dollars and Seventy-Five Cents ($2.75), as adjusted from time to
time pursuant to Section 7 hereof.
3. Exercise.
(a) Manner of Exercise. This Warrant may be exercised
by the Holder hereof (but only on the conditions hereinafter set
forth) as to all or any increment or increments of one thousand
(1,000) Shares (or the balance of the Shares if less than 1,000),
upon delivery to the Company at the following address: 0000
Xxxxxxxxx Xxxxxxxxxx Xxx, Xxxxxxxx, Xxxxxxx 00000 or such other
address as the Company shall designate in a written notice to the
Holder hereof, of the Notice of Exercise in the form of Annex A
hereto, duly completed and executed on behalf of the Holder,
together with this Warrant and payment to the Company of the
aggregate Exercise Price of the Shares so purchased. The
Exercise Price shall be payable, at the option of the Holder, (i)
by certified or bank check, (ii) by the surrender by the Holder
for cancellation of Debentures or any portion thereof having an
outstanding principal balance at least equal to the aggregate
Exercise Price, or (iii) by a combination of (i) and (ii) above.
Upon exercise of this Warrant as aforesaid, the Company shall as
promptly as practicable, and in any event within ten (10) days
thereafter, execute and deliver to the Holder of this Warrant a
certificate or certificates for the total number of whole Shares
for which this Warrant is being exercised in such names and
denominations as are requested by such Holder. If this Warrant
shall be exercised with respect to less than all of the Shares,
the Holder shall be entitled to receive a new Warrant covering
the number of Shares in respect of which this Warrant shall not
have been exercised, which new Warrant shall in all other
respects be identical to this Warrant. The Company covenants and
agrees that it will pay when due any and all state and federal
issue taxes which may be payable in respect of the issuance of
this Warrant or the issuance of any Shares upon exercise of this
Warrant.
(b) Conversion Rights. In lieu of exercising this
Warrant pursuant to Section 3(a) above, the Holder shall have the
right to require the Company to convert this Warrant, in whole or
in part and at any time or times into Shares (the "Conversion
Right"), upon delivery to the Company at its address in Section
3(a) or such other address as the Company shall designate in a
written notice to the Holder hereof, of the Notice of Exercise,
with the election to convert duly completed and executed on
behalf of the Holder, together with this Warrant. Upon exercise
of the Conversion Right, the Company shall deliver to the Holder
(without payment by the Holder of any Exercise Price) that number
of Shares which is equal to the quotient obtained by dividing (x)
the net value of the number of Shares into which this Warrant is
being converted at the time the Conversion Right is exercised
(determined by subtracting the aggregate Exercise Price for the
Shares into which this Warrant is being converted immediately
prior to the exercise of the Conversion Right from a number equal
to the product of (i) the Fair Market Value (as such term is
defined in Section 7(e)) per share as at such time, multiplied by
(ii) that number of Shares purchasable upon exercise of this
Warrant (or portion hereof that is being converted at the time
the Conversion Right is exercised) immediately prior to the
exercise of the Conversion Right (taking into account all
applicable adjustments pursuant to Section 7)), by (y) the Fair
Market Value per share. Any references in any Warrants to the
"exercise" of this Warrant, and the use of the term exercise
herein, shall be deemed to include (without limitation) any
exercise of the Conversion Right.
4. Covenants and Conditions. The above provisions are
subject to the following:
(a) Securities Laws Compliance. Neither this Warrant
nor the Shares have been registered under the Securities Act of
1933, as amended ("Securities Act") or any state securities laws
("Blue Sky Laws"). This Warrant has been acquired for investment
purposes and not with a view to distribution or resale in
violation of the registration provisions of the Securities Act;
except for the transfer of the Warrant to one or more wholly-
owned subsidiaries of Sirrom Capital Corporation, which
subsidiary(s) shall be an "accredited investor," as defined in
Rule 501(a) under the Securities Act, this Warrant may not be
sold or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act
and such applicable Blue Sky Laws, or (ii) an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under
the Securities Act or under any applicable Blue Sky Laws (the
Company hereby acknowledges that Xxxxxxxx & Xxx, PLC is
acceptable counsel). Transfer of the Shares issued upon the
exercise of this Warrant shall be restricted in the same manner
and to the same extent as the Warrant and the certificates
representing such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT
UNDER THE ACT AND SUCH APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (II) IN THE OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH
ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other
documents and instruments as counsel for the Company reasonably
deems necessary to effect the compliance of the issuance of this
Warrant and any Shares of Common Stock issued upon exercise
hereof with applicable federal and state securities laws,
including, if requested, completing and executing a
representation letter in the form attached hereto as Annex C.
(b) Covenants of the Company. The Company covenants
and agrees that all shares of Common Stock which may be issued
upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully
paid and nonassessable, free from all taxes, liens, charges with
respect to the issuance thereof. The Company further covenants
that it shall at all times during the term of this Warrant
reserve and keep available for issuance upon the exercise of this
Warrant such number of authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of
this Warrant and, from time to time, will take all steps
necessary to amend its Certificate of Incorporation to provide
sufficient reserves of shares of its Common Stock for issuance
upon exercise of the Warrant.
5. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a
warrant register containing the names and address of the Holder
or Holders. Any Holder of this Warrant or any portion thereof
may change its address as shown on the warrant register by
written notice to the Company requesting such change. Any notice
or written communication required or permitted to be given to the
Holder may be delivered or given by registered or certified mail
to such Holder as shown on the warrant register and at the
address shown on the warrant register. Until this Warrant is
transferred on the warrant register of the Company, the Company
may treat the Holder as shown on the warrant register as the
absolute owner of this Warrant for all purposes, notwithstanding
any notice to the contrary.
(b) Transferability. Subject to compliance with the
provisions of Section 4(a) hereof, this Warrant may be
transferred, in whole or in part, to any person, by presentation
of the Warrant to the Company together with the Notice of
Assignment in the form of Annex B hereto, duly endorsed for
transfer. Upon such presentation for transfer, the Company shall
promptly execute and deliver a new Warrant or Warrants in the
form hereof in the name of the assignee(s) and in the
denominations specified in such instructions in the Assignment
Form. The Company shall pay all expenses incurred by it in
connection with the preparation, issuance and delivery of new
Warrants under this Section 5.
6. Warrant Holder Not Shareholder; Rights Offering.
Except as otherwise provided herein, this Warrant does not confer
upon the Holder, as such, any right whatsoever as a shareholder
of the Company. Notwithstanding the foregoing, if the Company
should offer to all of the Company's shareholders the right to
purchase any securities of the Company, then all Shares of Common
Stock that are subject to this Warrant shall be deemed to be
outstanding and owned by the Holder and the Holder shall be
entitled to participate in such rights offering.
7. Adjustment of Exercise Price and Number of Shares
Issuable. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time
as follows:
(a) Stock Splits, Recapitalization, Etc. If all or
any portion of this Warrant shall be exercised subsequent to any
stock split, stock dividend, recapitalization, combination of
shares of the Company, or other similar event occurring after the
date hereof, then the Holder exercising this Warrant shall
receive, for the aggregate price paid upon such exercise, the
aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to
the record date for such stock split, stock dividend,
recapitalization, combination of shares, or other similar event.
(b) Merger, Etc. If the Company at any time merges or
consolidates with or into any other corporation or enters into a
similar transaction (other than a merger in which the Company is
the surviving corporation and in connection with which there is
no reclassification or other change in the Common Stock or other
securities of the Company or any issuance of stock, securities or
property to the holders of its outstanding shares of Common
Stock), then the Company shall notify the Holder of any such
event and, effective upon the record or other date of
determination of persons affected by such merger, consolidation
or similar transaction, the securities which the Holder would be
entitled to receive on the exercise hereof shall include the kind
and amount of securities, cash and property that would have been
held by the Holder if on such determination date the Holder had
been the holder of record of the securities, cash and properties
issuable upon exercise of the Warrant on such determination date
(or the right thereto prior to the effective date thereof). In
the event of any merger, consolidation or similar transaction
referred to above in this Section 7(b), the Company shall, and
shall cause any successor corporation as a condition precedent to
such transaction to, execute and deliver to each Holder a new
Warrant (i) providing that the owner of such Warrant, upon
exercise thereof, shall have the right to purchase the securities
as adjusted as described above, and (ii) containing provisions
for subsequent adjustments in a manner and on terms as nearly
equivalent as may be practicable to the adjustments provided for
in this Section 7(b).
(c) Adjustment on Certain Dilutive Issues.
(i) Definitions. For purposes of this Section
7(c), the following definitions apply:
(1) "Options" shall mean rights,
options, or warrants to subscribe for, purchase or
otherwise acquire either Common Stock or Convertible
Securities (as defined below), except for (A) currently
exercisable options to purchase an aggregate of 4,000
shares of Common Stock outstanding on the Original
Warrant Issue Date (the "Outstanding Options"); (B)
rights or options to acquire up to an aggregate of
1,250,000 shares of Common Stock which may be granted
to employees, directors or consultants to the Company
pursuant to the Company's 1995 Incentive Stock Option
Plan, provided that the exercise price for all options
granted after the Warrant Issue Date shall be no less
than the Fair Market Value (as defined in Section 7(e)
below) on the date of grant (the "Plan Options"); and
(C) warrants to purchase an aggregate of 890,000 shares
of Common Stock granted and reserved for issuance on
the Original Issue Date (the "Current Warrants").
(2) "Convertible Securities" shall mean
any evidences of indebtedness, shares of stock (other
than Common Stock and the Company's Series B
Convertible Preferred Stock (the "Series B Preferred"))
or other securities convertible into or exchangeable
for Common Stock.
(3) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or deemed
to be issued pursuant to Section 7(c)(iii)) by the
Corporation after Warrant Issue Date, other than shares
of Common Stock issued or issuable upon (i) conversion
of shares of Series B Preferred Stock or as a dividend
or distribution on Series B Preferred Stock; (ii) the
exercise of the Outstanding Options; (iii) the exercise
of any Plan Options; (iv) the conversion of any of the
1,000,000 shares of Non-Voting Common Stock into no
more than 1,000,000 shares of Common Stock pursuant to
the Agreement of Sale, dated March 27, 1996, among
Interactive Solutions, LLC, its members and ISL, Inc.
as amended; or (v) the exercise of the Current
Warrants.
(ii) Adjustment of Exercise Price. In the
event that the consideration per share (determined pursuant to
Section 7(c)(v) hereof) for an Additional Share of Common Stock
issued or deemed to be issued by the Company is less than the
Fair Market Value (as defined in Section 7(e) hereof) on the date
of the issue of such Additional Share of Common Stock, then the
Exercise Price and the number of shares shall be adjusted as
provided herein.
(iii) Issue of Options and Convertible
Securities. In the event the Company at any time or from time
to time after the Warrant Issue Date shall issue any Options or
Convertible Securities or shall fix a record date for the
determination of holders of any class of securities then entitled
to receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of
such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of
business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 7(c)(v)
hereof) of such Additional Shares of Common Stock would be less
than the Fair Market Value (as defined in Section 7(e) hereof) on
the date of such issue, or such record date, as the case may be,
and provided that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(1) no further adjustments in the
Exercise Price shall be made upon the subsequent issue
of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of
time or otherwise, for any increase or decrease in the
consideration payable to the Company, or decrease or
increase in the number of shares of Common Stock
issuable upon the exercise, conversion or exchange
thereof, the Exercise Price computed upon the original
issue thereof (or upon the occurrence of a record date
with respect thereto), and any subsequent adjustments
based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under
such Convertible Securities, provided, however, that no
such adjustment of the Exercise Price shall affect
Common Stock previously issued upon exercise or
conversion of this Warrant;
(3) upon the expiration of any such
Options or any rights of conversion or exchange under
such Convertible Securities that shall not have been
exercised, the Exercise Price computed upon the
original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration,
be recomputed as if:
(a) in the case of Convertible
Securities or Options for Common Stock, the only
Additional Shares of Common Stock issued were the
shares of Common Stock, if any, actually issued upon
the exercise of such Options or the conversion or
exchange of such Convertible Securities and the
consideration received therefor was the consideration
actually received by the Company for the issue of all
such Options, whether or not exercised, plus the
consideration actually received by the Company upon
such exercise, or for the issue of all such Convertible
Securities that were actually converted or exchanged,
plus the additional consideration, if any, actually
received by the Company upon such conversion or
exchange, and
(b) in the case of Options for
Convertible Securities, only the Convertible
Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such
Options, and the consideration received by the Company
for the Additional Shares of Common Stock deemed to
have been then issued was the consideration actually
received by the Company for the issue of all such
Options, whether or not exercised, plus the
consideration deemed to have been received by the
Company (determined pursuant to Section 7(c)(v)) upon
the issue of the Convertible Securities with respect to
which such Options were actually exercised;
(4) no readjustment pursuant to Section
7(c)(iii)(2) or (3) above shall have the effect of
increasing the Exercise Price to an amount which
exceeds the lower of (a) the Exercise Price prior to
the initial adjustment to which the readjustment
applies, or (b) the Exercise Price that would have
resulted from any issuance of Additional Shares of
Common Stock between the date of the initial adjustment
date and such readjustment date; and
(5) in the event of any change in the
number of shares of Common Stock issuable upon the
exercise, conversion or exchange of any Option or
Convertible Security, including, but not limited to, a
change resulting from the antidilution provisions
thereof, the Exercise Price then in effect shall
forthwith be readjusted to such Exercise Price as would
have been obtained had the adjustment which was
initially made upon the issuance of such unexercised
Option or unconverted Convertible Security, been made
upon the basis of such subsequent change, but no
further adjustment shall be made for the actual
issuance of Common Stock upon the exercise or
conversion of any such Option or Convertible Security.
(iv) Adjustment of Exercise Price Upon Issuance of
Additional Shares of Common Stock. In the event the Company at
any time after the Warrant Issue Date shall issue Additional
Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 7(c)(iii)), without
consideration or for a consideration per share less than the Fair
Market Value (as defined in Section 7(e) below) on the date of
such issue, then and in such event, the Conversion Price shall be
reduced to a price (calculated to the nearest cent) equal to
either (A) the per share consideration for such Additional Shares
of Common Stock (or deemed Additional Shares of Common Stock)
pursuant to Section 5(e)(iii), or (B) in the case of Additional
Shares of Common Stock issued (or deemed to have been issued)
without consideration, the par value of the Common Stock.
The provisions of this Section 7(c)(iv) do not apply if the
provisions of any of Section 7(a) or (b) apply.
(v) Determination of Consideration. The
consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash, Property, and Other
Consideration. Such consideration shall:
(a) insofar as it consists of
cash, be computed as the aggregate amount of cash
received by the Company excluding amounts paid or
payable for accrued interest or accrued dividends;
(b) insofar as it consists of
property, services, or other consideration other than
cash, be computed at the fair value thereof at the time
of such issue, as determined in good faith by the Board
of Directors; and
(c) in the event Additional Shares
of Common Stock are issued together with other shares
or securities or other assets of the Company for
consideration which covers both, be the proportion of
the consideration so received, computed as provided in
clauses (a) and (b) above, as is determined in good
faith by the Board of Directors.
(2) Options and Convertible Securities.
The consideration per share received by the Company for
Additional Shares of Common Stock deemed to have been
issued pursuant to Options and Convertible Securities,
shall be deemed to be the sum of the consideration paid
for such Option or Convertible Security, if any, plus
the lowest consideration per share then payable upon
the exercise of Options, as set forth in the
instruments relating to such Options or Convertible
Securities, without regard to any provision contained
therein designed to protect against dilution. If
Options or Convertible Securities are issued together
with other securities or instruments of the Company,
the Board of Directors shall determine in good faith
the amount of consideration paid for such Option or
Convertible Securities.
(d) Certificate as to Adjustments. In each case of
any adjustment or readjustment pursuant to Section 7(a)-(c) of
the Exercise Price or the number of shares issuable pursuant to
this Warrant, the Company shall forthwith notify the Holder or
Holders of this Warrant of each such adjustment, setting forth in
reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated.
(e) No Fractional Shares; Fair Market Value. If any
adjustment pursuant to Section 7(a) - (c) would create a
fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant
shall be the next higher number of shares, rounding all fractions
upward. "Fair Market Value" per share of Common Stock shall mean
(i) in the case of a security listed or admitted to trading on
any securities exchange, the last reported sale price, regular
way (as determined in accordance with the practices of such
exchange), on such day, or if no sale takes place on such day,
the average of the closing bid and asked prices on such day (and
in the case of a security traded on more than one national
securities exchange, at such price or such average, upon the
exchange on which the volume of trading during the last calendar
year was the greatest), (ii) in the case of a security not then
listed or admitted to trading on any securities exchange, the
last reported sale price on such day, or if no sale takes place
on such day, the average of the closing bid and asked prices on
such day, as reported by a reputable quotation service designated
by the Company, (iii) in the case of a security not then listed
or admitted to trading on any securities exchange and as to which
no such reported sale price or bid and asked prices are
available, the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service,
or the Wall Street Journal, or if there are no bids and asked
prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 30
days prior to the date in question) for which prices have been so
reported, and (iv) in the case of a security determined by the
Company's Board of Directors as not having an active quoted
market or in the case of other property, such fair market value
as shall be determined by the Board of Directors.
8. Certain Notices. In case at any time the Company shall
propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable
in stock or make any special dividend or other distribution to
the holders of its Common Stock;
(c) offer for subscription to the holders of any of
its Common Stock any additional shares of stock in any class or
series or other rights;
(d) reorganize, or reclassify the capital stock of the
Company, or consolidate, merge or otherwise combine with, or sell
of all or substantially all of its assets to, another
corporation;
(e) voluntarily dissolve, liquidate or wind up of the
affairs of the Company; or
(f) redeem or purchase any shares of its capital stock
or securities convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to
the Holder of the Warrant, by certified or registered mail, (i)
at least twenty (20) days' prior written notice of the date on
which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or
for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, and (ii) in the case of
such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, at least twenty
(20) days' prior written notice of the date when the same shall
take place. Any notice required by clause (i) shall also
specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and any notice required by
clause (ii) shall specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.
9. Registration Rights. The shares of Common Stock
issuable upon exercise of this Warrant shall be "Registrable
Securities" under that certain Registration Rights Agreement,
dated February 26, 1998, between the Company and Tandem, and the
Holder of this Warrant shall be entitled to the benefits, and
subject to the obligations, of the Registration Rights Agreement
in accordance with its terms.
10. Governing Law and Amendments. The corporate law of
Delaware shall govern all issues concerning the relative rights
of the Company and the holders of its Common Stock. In all other
matters, this Warrant shall be construed and enforced under the
laws of the State of Tennessee. No amendment or modification
hereof shall be effective except in a writing executed by each of
the Company and the Holder.
11. Equity Participation. This Warrant is issued in
connection with the Debenture Purchase Agreement. It is intended
that this Warrant constitute an equity participation under and
pursuant to T.C.A. Section 00-00-000, et seq. and that equity
participation be permitted under said statutes and not constitute
interest on the Debenture. If under any circumstances
whatsoever, fulfillment of any obligation of this Warrant, the
Debenture Purchase Agreement, or any other agreement or document
executed in connection with the Debenture Purchase Agreement,
shall violate the lawful limit of any applicable usury statute or
any other applicable law with regard to obligations of like
character and amount, then the obligation to be fulfilled shall
be reduced to such lawful limit, such that in no event shall
there occur, under this Warrant, the Debenture Purchase
Agreement, or any other document or instrument executed in
connection with the Debenture Purchase Agreement, any violation
of such lawful limit, but such obligation shall be fulfilled to
the lawful limit. If any sum is collected in excess of the
lawful limit, such excess shall be applied to reduce the
principal amount of the Debenture.
[SIGNATURE PAGE TO STOCK PURCHASE WARRANT (DEBENTURE)]
IN WITNESS WHEREOF, Teltronics, Inc. has caused this Warrant
to be executed by its duly authorized officer as of the date
first above written.
TELTRONICS, INC.
By: Xxxx Xxxxxxx, President
HOLDER:
SIRROM CAPITAL CORPORATION
d/b/a TANDEM CAPITAL
By: Xxxxx Xxxxxx
Its: Vice President
ANNEX A
NOTICE OF EXERCISE
To: TELTRONICS, INC.
(1) The undersigned hereby:
[Initial and complete one]
(a) ___ elects to purchase __________ shares of Common
Stock of TELTRONICS, INC., pursuant to the provisions
of Section 3(a) of the attached Warrant, and tenders
herewith payment of the purchase price in full for
such shares in the amount of $____________; or
(b) ___ elects to exercise this Warrant for the purchase of
__________ shares of Common Stock, pursuant to the
conversion right set forth in Section 3(c) of the
attached Warrant.
(2) In exercising this Warrant, the undersigned hereby
confirms and acknowledges that the shares of Common Stock to
be issued upon conversion thereof are being acquired solely
for the account of the undersigned, and for investment, and
that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any applicable state
securities laws.
(3) Please issue a certificate(s) representing said shares
of Common Stock in the name of the undersigned or in such
other name as is specified below:
_______________________________________
(Name)
_______________________________________
(Name)
(4) Please issue a new Warrant for the unexercised portion
of the attached Warrant in the name of the undersigned or in
such other name as is specified below:
_______________________________________
(Name)
_____________________ _______________________________________
(Date) (Signature)
ANNEX B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee
named below all of the rights of the undersigned under the within
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
TELTRONICS, INC., maintained for the purpose, with full power of
substitution in the premises.
The undersigned also represents that, by assignment hereof,
the Assignee acknowledges that this Warrant and the shares of
stock to be issued upon exercise hereof or conversion thereof are
being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of
stock to be issued upon exercise hereof or conversion thereof
except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Securities Act"),
or any state securities laws. Further, the Assignee has
acknowledged that upon exercise of this Warrant, the Assignee
shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view
toward distribution or resale in violation of the registration
provisions of the Securities Act or any state securities laws.
Dated: _______________________
____________________________________
Signature of Holder
