STOCK WARRANT AGREEMENT
Agreement made as of the _____ day of ___________ , 19__ by and
between TII Industries, Inc., a Delaware corporation (hereinafter called the
"Company") and (hereinafter called "Holder").
W I T N E S S E T H:
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WHEREAS, the Company has engaged Xxxxxx & Xxxxxxx, Inc.
(hereinafter called "Xxxxxx") to provide financial advisory and certain other
services to the Company pursuant to a letter agreement dated July 16, 1996 (the
"Letter Agreement") and such Letter Agreement provides for certain transfers
thereof; and
WHEREAS, pursuant to the Letter Agreement, the Company has agreed
to transfer a protion Warrant to purchase __________ shares of the Company's
Common Stock, $.01 par value ("Common Stock") to Holder (this "Warrant");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, it is hereby agreed:
1. Grant of Warrant. The Company hereby grants to Holder the
right to purchase from the Company, upon and subject to the terms and conditions
hereinafter set forth, all or any part of an aggregate of up to _________ shares
of Common Stock (the "Shares") at an exercise price of $6.15 per share.
2. Term of Warrant. The term of this Warrant is for five years
and shall commence on the date hereof and shall expire at 5: 00 p.m., New York
time, on July 15, 2001 ("Expiration Date").
3. Method of Warrant Exercise. Subject to the terms and
conditions of this Agreement, this Warrant may be exercised by Holder at any
time during its term, by giving written notice to the Company at 0000 Xxxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxx, President. Such
notice shall state the election to exercise this Warrant and the number of
shares in respect of which it is being exercised, shall be signed on behalf of
Holder by a duly authorized signatory thereof and shall be accompanied by (a)
payment of the exercise price therefor by cash or certified check payable to the
order of the Company and (b) such other documents (including a confirmation of
the representations, warranties and covenants contained in Section 4 as of the
time of exercise of this Warrant) as the Company may reasonably require.
This Warrant may not be exercised in an amount less than 2,500
Shares, nor may it be exercised as to a fraction of a Share.
This Warrant shall be considered exercised on the date such
notice, together with all required payments and other documents, is deemed given
under Section 8(d). The Company shall deliver or
cause to be delivered to Holder a certificate or certificates representing the
Shares for which this Warrant is presently exercised, registered in the name of
Holder, as soon as practicable after this Warrant shall have been properly
exercised. Shares to be issued on the exercise of this Warrant may be, at the
election of the Company, either authorized but unissued Common Stock or Common
Stock previously issued and reacquired by the Company. Holder shall not be, nor
have any of the rights or privileges of, a stockholder of the Company in respect
of any of the Shares issuable upon the exercise of the Warrant hereby granted
unless and until certificates representing such Shares shall have been issued
and delivered. The Company has reserved for issuance the Shares issuable under
this Warrant.
4. Investment Covenant. Holder represents and warrants that this
Warrant and the Shares issued upon such exercise are being acquired for
investment by Holder and for its own account and without a view to the resale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Act"). Holder agrees that it will not sell, transfer, pledge,
hypothecate or otherwise dispose of any of such Shares except (i) pursuant to an
effective Registration Statement under the Act covering such disposition, or
(ii) in the manner described in an opinion of counsel to the Company, in
response to a request therefor, to the effect that such registration is not
required as a condition of such disposition. Holder acknowledges that such
Shares are not presently registered under the Act and that, except for the
Registration Rights being afforded , pursuant to Section 5, the Company is under
no obligation to so register or qualify this Warrant or any of the Shares
underlying this Warrant under, or do any act which may be requisite to Holder
securing an exemption from the registration or qualification requirements of,
the Act or any state securities law in connection with the exercise of this
Warrant or any disposition of the Shares. Accordingly, any Shares acquired
hereunder must be held indefinitely unless they are registered under the Act or
the disposition thereof is exempt from the registration requirements of the Act;
any sale of the Shares or any part thereof made in reliance on Rule 144 of the
Securities and Exchange Commission under the Act can be made only after
compliance with any requisite holding period and in amounts and in accordance
with the terms and conditions of that Rule. Holder agrees that the certificates
representing the Shares to be received by Holder upon exercise of this Warrant
may have "stop transfer instructions" placed against the transfer thereof, and
may bear the following (or a similar) legend:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of in
the absence of (i) an effective registration statement for such
shares under said Act or (ii) an opinion of Company counsel that
such registration is not required."
5. Registration Rights.
(a) With respect to all of the Shares (i) theretofore issued upon
the exercise of this Warrant (or a portion hereof) and (ii) represented by the
portion of this Warrant which has not theretofore been exercised, if requested
to do so by Holder, but only on one occasion, the Company shall (subject to all
of the provisions of this Section) use its best efforts to promptly file with
the Securities and Exchange Commission (the "Commission"), a registration
statement under the Act on
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Form S-3 or the comparable short registration form (but the Company shall not be
obligated to file a registration statement under this clause (a) of Section 5 on
any other form) covering the Shares issued upon exercise of this Warrant prior
to the time of the filing of such registration statement (and those Shares which
Holder agrees to purchase by exercising this Warrant (or applicable portion) no
later than contemporaneously with the effectiveness of such registration
statement) which are so specifically designated in such written request as being
proposed to be sold by Holder and requested to be included in such registration
statement. Those whose Shares of Common Stock are to be included in any
registration statement filed under [this clause (a)] of this Section 5 are
hereinafter referred to as the "Selling Stockholders".
(b) The Company shall not be obligated to register this Warrant
or any portion hereof.
(c) The Company shall use its best efforts to keep any
registration statement filed pursuant to this Section 5 effective for a period
of nine months following its initial effective date or such earlier date as all
of the Shares of Common Stock covered by such registration statement have been
sold by the Selling Stockholders.
(d) Notwithstanding anything to the contrary set forth herein,
the Company shall not be required to include in any such registration statement
any Shares owned by any Selling Stockholder if (1) in the opinion of the
Company's counsel, the Shares proposed to be included in the registration
statement may properly be disposed of under Rule 144 under the Act or otherwise
without registration under the Act, (ii) the offering to which the registration
statement relates is an underwritten offering which would include Shares to be
offered by the Company and/or other of the Company's security holders and the
underwriter or representative of the underwriters objects to the inclusion of
such Shares in such registration statement or (iii) to the extent the Company is
otherwise contractually prohibited from, or restricted in, including such Shares
in such registration statement.
(e) In the event of an underwritten offering of any equity
securities of the Company (and whether or not any of the Shares are included in
such offering), this Warrant may not be exercised during such period (up to 180
days following the consummation of such offering) that any officer or director
of the Company pursuant to the related underwriting or purchase agreement agrees
not to sell shares of Common Stock; provided, however, that, in such event, the
Expiration Date of this Warrant shall be extended by the number of days during
such period.
(f) In connection with any such registration statement which
includes Shares, the Company agrees to take all reasonable steps to comply with
such state securities laws as may be reasonably requested by Selling
Stockholders (except that the Company shall in no event be required to qualify
as a foreign corporation, give a general consent to the service of process or
subject itself to taxation in such jurisdiction) and to furnish to Selling
Stockholders such number of copies of prospectuses related to such offering as
the Selling Stockholders may from time to time reasonably request.
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(g) The Company's obligations under this Section 5 shall be
conditioned upon the Selling Stockholder (i) furnishing to the Company in
writing all such information and material as may be reasonably requested by the
Company or its counsel for inclusion in any such registration statement, (ii)
doing all such things and executing all such additional instruments as may be
reasonably necessary or desirable in the opinion of the Company or its counsel
in connection with such registration statement or public offering and (iii)
complying in all respects with the Act, the Securities Exchange Act of 1934 and
all applicable rules and regulations thereunder both acts and with the
securities laws of the states in which any such public offering is made.
(h) All costs and expenses in connection with any registration
statement filed pursuant to this Section 5 with respect to a Selling
Stockholder's Shares including, without limitation, Federal and State
registration and filing fees, printing expenses and the fees and disbursements
of the Company's counsel and of the Company's independent accountants, shall be
borne by the Company, except that such Selling Stockholder shall be responsible
for all (i) discounts and commissions related to the sale of Shares and all
stock transfer taxes applicable to the Selling Stockholder's Shares and (ii)
fees and expenses of any counsel or accountants representing such Selling
Stockholder.
(i) In connection with any registration statement which pursuant
to this Section 5 includes Shares of Selling Stockholders, the Company will
indemnify each Selling Stockholder, its partners, officers and directors and
each person, if any, who controls the Selling Stockholder within the meaning of
Section 15 of the Act and hold all such indemnified persons harmless against and
in respect of any losses, claims, damages or liabilities, joint or several, to
which the indemnified persons may become subject under the Act or otherwise
insofar as such losses, claims, damages or liabilities (or actions with respect
thereto) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement (or any
amendment thereto or supplement to any Prospectus contained therein) or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, except to the extent that any such untrue statement
or omission or alleged untrue statement or omission is based upon information
furnished to the Company by any of the Selling Stockholders or any of their
representatives for use in such registration statement; and the Company agrees
to reimburse the Selling Stockholders and such other persons entitled to
indemnification under this paragraph for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action.
In connection with any registration statement which pursuant to
this Section 5 includes Shares of Selling Stockholders, each Selling Stockholder
will indemnify the Company and each other Selling Stockholder and each other
person who participates in the offering and each of their respective partners,
officers, directors and persons, if any, who control such indemnified persons
within the meaning of Section 15 of the Act and hold all such indemnified
persons harmless against and in respect of any losses, claims, damages or
liabilities, joint or several, to which such indemnified persons may become
subject under the Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions with respect thereto) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
such registration statement (or any
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amendment thereto or supplement to any Prospectus contained therein) or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, but only to the extent that any such untrue
statement or omission or alleged untrue statement or omission is based upon
information furnished to the Company by such Selling Stockholder or any of its
or his representatives, and such Selling Stockholder agrees to reimburse the
Company, such other Selling Stockholders and such other persons entitled to
indemnification under this paragraph for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action.
Promptly after receipt by a party entitled to indemnity pursuant
hereto (an "indemnified party") of notice of a claim or the commencement of any
action, such indemnified party will, if a claim with respect thereto is to be
made against another pursuant to this Section 5 (an "indemnifying party"),
notify the indemnifying party of the claim or commencement of such action, but
failure to so notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have on account of this indemnity
agreement except to the extent such indemnifying party is materially, adversely
and permanently prejudiced thereby. The indemnifying party will be entitled to
participate in and, to the extent that it may wish, jointly with any other
indemnifying party, assume the defense thereof, with counsel reasonably
satisfactory to the indemnified parties, and from and after notice to such
indemnified parties of the indemnifying party's election so to assume the
defense thereof, the indemnifying party shall thenceforth not be liable to such
indemnified party for any legal and related expense subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that nothing herein shall
be deemed to preclude any indemnified party from participating in any such
defense at its own cost and expense.
No indemnifying or indemnified party will consent to the entry of
a judgment or enter into a settlement of any claims which might give rise to
liability of an indemnified party (or another indemnifying party) without the
prior written consent of such other parties, which consent shall not be
unreasonably withheld.
If it is determined that, as a matter of public policy, the
indemnification provided for in this clause (i) is unavailable to an indemnified
party as contemplated, then, to the extent not determined to be prohibited by
public policy, the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations.
Notwithstanding anything to the contrary contained in this clause
(i), if pursuant to an underwritten public offering of Shares, the Company and
any underwriters enter into an underwriting or purchase agreement relating to
such offering which contains provisions relating to indemnification,
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such provisions (in lieu of the foregoing provisions) shall be deemed to govern
indemnification among the Company, the Selling Stockholders and such
underwriters.
6. Effect of Change of Outstanding Shares.
(a) In the event that, prior to the full exercise of this
Warrant, the outstanding shares of Common Stock of the Company are changed by
reason of a stock dividend, stock split-up, combination, recapitalization or the
like, an appropriate adjustment shall be made by the Board of Directors of the
Company (whose determination shall be final and binding on the parties) in the
aggregate number and kind of shares and the Warrant exercise price per share of
Common Stock then remaining subject to this Warrant (but without regard to
fractions) with a view to maintaining the relative ownership position of the
Shares.
(b) In the event of: (i) the liquidation of dissolution of the
Company or (i) a merger or similar transaction in which the Company is not the
surviving corporation or (iii) a merger (or similar transaction) in which the
Company is the surviving corporation but more than 50% of the outstanding Common
Stock is transferred or exchanged for other consideration or in which shares of
Common Stock are issued in an amount in excess of the number of shares of Common
Stock outstanding immediately preceding the merger (or similar transaction),
this Warrant shall terminate unless other provision is, in the sole discretion
of the Board of Directors of the Company, made therefor in the transaction,
provided, however, that the Company will use its best efforts to have this
Warrant assumed on any merger or consolidation.
7. Transfer of Warrant. This Warrant may only be exercised by
Holder, and this Warrant may not be assigned, transferred, pledged or
hypothecated in any way except as expressly consented to by the Company, in its
discretion, in writing, (whether by operation of law or otherwise), and shall
not be subject to execution, attachment or similar process and any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Warrant
or the levy of any execution, attachment or similar process upon this Warrant,
shall be null, void and without effect and shall result in the immediate
termination of this Warrant.
8. Miscellaneous.
(a) This Warrant is made under and shall be governed by the laws
of the Sate of New York in all respects, including matters of construction,
validity and performance, except insofar as the laws of the State of Delaware
mandatorily apply.
(b) If any provision of this Warrant is held to be illegal,
invalid or unenforceable under applicable law, such provisions shall be fully
severable, with this Warrant to be construed and enforced as if such illegal,
invalid or unenforceable provision had never constituted a part of this Warrant;
and the remaining provisions of this Warrant shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Warrant. Furthermore, in lieu of such
illegal, invalid or unenforceable provision there shall be added
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automatically as a part of this Warrant a provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.
(c) This Warrant and the Letter Agreement constitute the entire
agreement between the parities with respect to the subject matter hereof. This
Warrant may not be modified or amended, nor may any term or provision hereof be
waived or discharged, except in writing, signed by the party against whom such
modification, amendment, waiver or discharge is sought to be enforced. A waiver
in one instance shall not be effective unless it is in writing and shall not be
deemed a continuing waiver.
(d) All notices or other communications required, desired or
permitted to be given under this Warrant shall be in writing and shall be (i) if
sent to the Company, addressed to the Company at 0000 Xxxxx Xxxxxx, Xxxxxxxx,
Xxx Xxxx 00000, Attention: President and (ii) if sent to Holder, addressed to
___________________________ or (iii) in either case to any different address as
a party may notify the other. Any such notice or other communication shall be
deemed "given" when delivered personally, one business day after sent by Federal
Express (or similar overnight delivery service) or Express Mail, or five days
after sent by registered or certified mail, postage prepaid.
(e) The captions of the various sections are inserted only for
reference and for convenience of the parties, and in no way define, limit or
describe the scope of this Warrant, nor the intent of any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement the
day and year first written above.
TII INDUSTRIES, INC.
By: ______________________________
Xxxxxxx X. Xxxxx
President
______________________________
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SUBSCRIPTION FORM
[To be signed only if holder desires to
exercise all or a portion of the Warrant]
To: TII Industries, Inc.
The undersigned, the registered holder of the within Warrant,
hereby irrevocably elects to exercise the purchase rights represented by the
within Warrant to purchase thereunder:
______________ shares of Common Stock covered by the within
Warrant and herewith makes payment of $________ therefor, and requests that the
certificates for such shares be issued in the name of
__________________________________ whose address is ___________________
___________ and whose social security or employer identification number is
_______________ ______________________ and if such shares shall not be all of
the shares purchasable under the within Warrant, that a new Warrant of like
tenor for the balance of the number of shares purchasable thereunder be
delivered to the undersigned. Dated:
___________________________________
(Signature must conform in all
respects to name of the registered
holder as specified on the face of
the Warrant.)
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