EXHIBIT 10.14
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
This COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this"Agreement") is
made as of the 1st day of March, 1999 between Dialogic Corporation, a New Jersey
corporation (the "Company"), and Microsoft Corporation, a Washington corporation
(the "Purchaser").
RECITALS
WHEREAS, the Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, shares of the Company"s Common
Stock, no par value (the "Common Stock"), and a warrant to purchase Common Stock
(the "Warrant") on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recital, the mutual
promises hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1
Agreement to Purchase and Sell Common Stock and Warrant
Upon the terms and subject to the conditions of this Agreement, the
Company hereby agrees to sell to the Purchaser, and the Purchaser agrees to
purchase from the Company, 860,681 shares of Common Stock (the "Shares") and the
Warrant, which shall entitle the holder thereof to purchase 279,869 shares of
Common Stock (the "Warrant Shares"), for an aggregate purchase price of
$24,228,170.15. The Warrant shall be exercisable at an exercise price of $35.19
per Warrant Share, for an aggregate purchase price of $9,848,590. The Warrant
shall be in the form attached as Exhibit A.
SECTION 2
Delivery; Payment; Legend
2.1 Closing Date. The Closing of the purchase and sale of the Shares
and Warrant hereunder (the "Closing") shall be held upon the exchange via
facsimile of executed signature pages of all documents required by this
Agreement, together with the deliveries contemplated by Section 2.2 (the date of
the Closing being hereinafter referred to as the "Closing Date"). Each of the
Company and the Purchaser covenant to deliver originals of each document
promptly following the Closing Date.
2.2 Delivery and Payment. At the Closing, the Company will deliver to
the Purchaser a duly executed Warrant and a certificate or certificates
representing the Shares against payment of the aggregate purchase price of
$24,228,170.15 by wire transfer of immediately available funds to an account
designated by the Company.
2.3 Legend. The certificate or certificates representing the Shares
shall be subject to a legend restricting transfer under the Securities Act of
1933, as amended (the "Securities Act") and referring to restrictions on
transfer herein, such legend to be substantially as follows:
"The shares represented by this certificate have been issued
without registration under the Securities Act of 1933, as amended, or under
any state securities law. Such shares may not be sold or transferred in the
absence of such registration or an opinion of counsel reasonably
satisfactory to the Company as to the availability of an exemption from
registration.
The shares represented by this certificate are subject to
restrictions on transfer set forth in a Common Stock and Warrant Purchase
Agreement dated as of March 1, 1999 between the Company and Microsoft
Corporation, a copy of which agreement may be obtained at no cost by
written request made by the holder of record of this certificate to the
secretary of the Company at the Company's principal executive offices."
The Company agrees (i) to remove the legend set forth in the second
preceding paragraph upon (a) receipt of a request from the Purchaser after
registration of the Shares under the Securities Act in which the Purchaser
represents that the Shares are being sold or otherwise transferred in a
transaction of the character (including lending of securities) described in the
plan of distribution of the registration statement applicable to such Shares, or
(b) receipt of an opinion of counsel in form and substance reasonably
satisfactory to the Company that the Shares are eligible for transfer without
registration under the Securities Act and (ii) to remove the legend set forth in
the immediately preceding paragraph at such time with respect to those Shares
that may be transferred from time to time upon the termination of the covenants
of Section 7 as provided for in Section 8.3.
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser as
follows:
3.1 Organization. The Company is a corporation duly organized and
validly existing under the laws of the State of New Jersey and is in good
standing under such laws. The Company has the requisite corporate power to own
and operate its properties and assets, and to carry on its business as presently
conducted and as contemplated by the Development and License Agreement referred
to in Section 5.6. The Company is qualified to do business as a foreign
corporation in each jurisdiction in which the ownership of its property or the
nature of its business requires such qualification, except where the failure to
be so qualified would not have a materially adverse effect on the Company and
its subsidiaries, taken as a whole.
3.2 Authorization. All corporate action on the part of the Company
necessary for the authorization, execution, delivery and performance of this
Agreement and the Warrant by the Company, and the authorization, sale, issuance
and delivery of the Shares hereunder have been taken. This Agreement and the
Warrant constitute legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies. Upon their issuance and delivery pursuant to this Agreement,
the Shares will be validly issued, fully paid and nonassessable. The issuance
and sale of the Shares will not give rise to any preemptive rights or rights of
first refusal on behalf of any person in existence on the date hereof.
3.3 No Conflict. The execution and delivery of this Agreement and the
Warrant do not, and the consummation of the transactions contemplated hereby and
thereby will not, conflict with, or result in any violation of, or default (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under, any provision of the Restated Certificate of
Incorporation or Bylaws, as amended to date, of the Company or any mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company, its properties or assets, the effect of
which would have a material adverse effect on the Company and its subsidiaries,
taken as a whole, or materially impair or restrict the Company's power to
perform its obligations as contemplated under said agreements.
3.4 SEC Documents. The Company has filed all required reports,
schedules, forms, statements and other documents required to be filed by the
Company with the Securities and Exchange Commission (the "SEC") since December
31, 1997 (the "SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents, except to the
extent that information contained in any SEC Document has been revised or
superseded by a later Filed SEC Document (as defined below), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company's Form 10-K for the
year ended December 31, 1997 and the Form 10-Q for the period ended September
30, 1998 comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") (except, in the case of unaudited statements as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or as
described in writing to the Purchaser prior to the date hereof) and fairly
present the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operation and cashflows for the periods then ending in accordance with GAAP
(subject, in the case of the unaudited statements, to normal year end audit
adjustments). Except as set forth in the Filed SEC Documents and except for
liabilities that have arisen in the ordinary course of business subsequent to
September 30, 1998, neither the Company nor any of its subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company and its consolidated subsidiaries or in the notes
thereto and which can reasonably be expected to have a material adverse effect
on the Company and its subsidiaries taken as a whole.
3.5 Absence of Certain Changes or Events. Except as disclosed in the
SEC Documents filed and publicly available (either on the XXXXX system or by
delivery to the Purchaser) prior to the date of this Agreement (the "Filed SEC
Documents"), since the date of the most recent audited financial statements
included in the Filed SEC Documents, there has not been (i) any declaration,
setting aside or payment of any dividend or distribution (whether in cash, stock
or property) with respect to any of the Company's capital stock, (ii) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (iii) any damage,
destruction or loss of property, whether or not covered by insurance, that has
or is likely to have a material adverse effect on the Company and its
subsidiaries taken as a whole, or (iv) any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities, or business, except insofar as may have been required by a change
in GAAP.
3.6 Governmental Consent, etc. In reliance on the representations of
the Purchaser contained herein, no consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated hereby, except such filings
as may be required to be made with the SEC and the National Association of
Securities Dealers, Inc. There is no order in effect enjoining or restricting
the Company from executing, delivering or performing this Agreement or the
Warrant.
3.7 Litigation. Except as is disclosed in the Filed SEC Documents,
there is no suit, action or proceeding pending against the Company or any of its
subsidiaries that, individually or in the aggregate, would reasonably be
expected to (i) have a material adverse effect on the Company and its
subsidiaries taken as a whole, (ii) impair the ability of the Company to perform
its obligations under this Agreement and the Warrant, or (iii) prevent the
consummation of any of the transactions contemplated by said agreements.
3.8 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 60,000,000 shares of the Common Stock, no par value, and
10,000,000 shares of preferred stock, no par value, of the Company (the "Company
Preferred Stock").
(b) As of December 31, 1998, there were (1) 15,895,041 shares of the
Common Stock issued and outstanding, (2) 392,500 shares of the Common Stock held
in the treasury of the Company, (3) no shares of the Company Preferred Stock
issued and outstanding, (4) 3,179,428 shares of Common Stock reserved for
issuance upon exercise of outstanding awards under the Company's stock incentive
plans granted to current or former employees, directors or consultants of the
Company and its subsidiaries, (5) 1,813,924 shares of Common Stock reserved for
issuance under awards not then granted under the Company's stock incentive
plans, and (6) 85,419 shares of Common Stock reserved for issuance under the
Company's stock purchase plan. On February 22, 1999, the Company's board of
directors approved, subject to stockholder approval, an increase in the number
of shares covered by such stock purchase plan by 200,000 shares of Common Stock.
(c) All outstanding shares of the Common Stock are duly authorized,
validly issued, fully paid and nonassessable, free from any liens created by the
Company with respect to the issuance and delivery thereof and not subject to
preemptive rights.
3.9 Registration Rights. No person has the right to register shares of
Common Stock on the registration statement required to be filed by the Company
pursuant to Section 7.2 of this Agreement.
SECTION 4
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company as
follows:
4.1 Organization. The Purchaser is a corporation duly organized and
validly existing under the laws of the State of Washington, with all requisite
corporate power and authority to own, lease and operate its assets and
properties and to conduct its business as now being conducted.
4.2 Authority. All corporate action on the part of the Purchaser
necessary for the authorization, execution, delivery and performance of this
Agreement by the Purchaser has been taken. This Agreement has been duly executed
and delivered by the Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, subject
to laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies. The execution and delivery of the Agreement do not,
and the consummation of the transactions contemplated hereby will not, conflict
with or result in any violation of any obligation under any provision of the
Articles of Incorporation (as restated and amended) or Bylaws of the Purchaser
or any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Purchaser.
4.3 Investment. The Purchaser is acquiring the Shares and the Warrant
for investment for its own account, not as a nominee or agent, and not with a
view to, or for resale in connection with, any distribution thereof. The
Purchaser understands that the Shares and the Warrant have not been registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Purchaser's
representations and warranties contained herein.
4.4 Disclosure of Information. The Purchaser has had full access to
all information it considers necessary or appropriate to make an informed
investment decision with respect to the Shares to be purchased by the Purchaser
under this Agreement and the Warrant. The Purchaser further has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares and the Warrant and to obtain
additional information necessary to verify any information furnished to the
Purchaser or to which the Purchaser had access.
4.5 Investment Experience. The Purchaser understands that the purchase
of the Shares and Warrant involves substantial risk. The Purchaser has
experience as an investor in securities of companies and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment in the
Shares and the Warrant and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of this
investment in the Shares and the Warrant and protecting its own interests in
connection with this investment.
4.6 Accredited Investor Status. The Purchaser is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act.
4.7 Restricted Securities. The Purchaser understands that the Shares
to be purchased by the Purchaser hereunder and the Warrant are characterized as
"restricted securities" under the Securities Act inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under the Securities Act and applicable regulations thereunder such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. The Purchaser is familiar with Rule 144 of the
Securities Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act. The Purchaser understands that the
Company is under no obligation to register any of the Shares sold hereunder and
the Warrant except as provided in Section 7.2. The Purchaser shall not dispose
of the Shares, the Warrant or the Warrant Shares other than pursuant to offers
and sales which are either (a) registered under the Securities Act and any
applicable state securities law or (b) in the opinion of counsel satisfactory to
the Company, exempt from the registration requirements of the Securities Act and
any applicable securities law.
4.8 Passive Investor. The Purchaser is acquiring the Shares "solely
for the purpose of investment" as such phrase is defined in 16 C.F.R. Section
801.1(i)(1) and the Purchaser has no intention of participating in the
formulation, determination or direction of the basic business decisions of the
Company.
4.9 Governmental Consent, etc. No consent, approval or authorization
of, or designation, declaration or filing with, any governmental authority on
the part of the Purchaser is required in connection with the valid execution and
delivery of this Agreement or the consummation of any transaction contemplated
hereby. There is no order in effect enjoining or restricting the Purchaser from
executing, delivering or performing this Agreement.
SECTION 5
Conditions to Obligation of the Purchaser
The Purchaser's obligation to purchase the Shares at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions:
5.1 Representations and Warranties. Each of the representations and
warranties of the Company contained in Section 3 will be true and correct on and
as of the date hereof and on and as of the Closing Date with the same effect as
though such representations and warranties had been made as of the Closing Date.
The Purchaser shall have received a certificate signed by an officer of the
Company to such effect on the Closing Date, except that no such certificate
shall be necessary if this Agreement is executed on the Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects. The
Purchaser shall have received a certificate signed by an officer of the Company
to such effect on the Closing Date, except that no such certificate shall be
necessary if this Agreement is executed on the Closing Date.
5.3 No Order Pending; Governmental Consent, etc. There shall not then
be in effect any order enjoining or restraining the transactions contemplated by
this Agreement.
5.4 No Law Prohibiting or Restricting Sale of the Shares. There shall
not be in effect any law, rule or regulation prohibiting or restricting the sale
of the Shares, or requiring any consent or approval of any person which shall
not have been obtained to issue the Shares.
5.5 Warrant. The Company shall have executed and delivered the Warrant
substantially in the form attached hereto as Exhibit A.
5.6. Development Agreement. The Company shall have executed and
delivered a Development and License Agreement in a form acceptable to the
Purchaser.
5.7 Opinion of Counsel. The Purchaser shall have received an opinion
dated as of the Closing Date of Xxxxxxxxxx Xxxxxxx PC, counsel to the Company,
substantially in the form attached as Exhibit 5.7.
SECTION 6
Conditions to Obligation of the Company
The Company's obligation to sell and issue the Shares at the Closing
is subject to the fulfillment on or prior to the Closing Date of the following
conditions:
6.1 Representations and Warranties. The representations and warranties
of the Purchaser contained in Section 4 will be true and correct on and as of
the date hereof and on and as of the Closing Date with the same effect as though
such representations and warranties had been made as of the Closing Date. The
Company shall have received a certificate signed on behalf of the Purchaser by
an officer of the Purchaser to such effect on the Closing Date, except that no
such certificate shall be necessary if this Agreement is executed on the Closing
Date.
6.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchaser on or prior to the Closing Date
shall have been performed or complied with in all material respects. The Company
shall have received a certificate signed on behalf of the Purchaser by an
officer of the Purchaser to such effect on the Closing Date, except that no such
certificate shall be necessary if this Agreement is executed on the Closing
Date.
6.3 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
6.4 No Law Prohibiting or Restricting the Sale of the Shares. There
shall not be in effect any law, rule or regulation prohibiting or restricting
the sale of the Shares, or requiring any consent or approval of any person which
shall not have been obtained to issue the Shares with full benefits afforded the
Common Stock (except as otherwise provided in this Agreement).
6.5 Opinion of Counsel. The Company shall have received an opinion
dated as of the Closing Date of Xxxxxxx Xxxxx & Xxxxx LLP, counsel to the
Purchaser, substantially in the form attached as Exhibit 6.5.
SECTION 7
Covenants of the Parties
7.1 Restrictions on Transfer of Shares.
(a) Limitations in the First Year. Except as otherwise provided in
Section 7.1(c), for a period of one year from the date of this Agreement, the
Purchaser shall not sell or transfer (i) any Shares acquired pursuant to this
Agreement, (ii) the Warrant or any portion thereof or (iii) any Warrant Shares
acquired upon exercise of the Warrant.
(b) Limitations in the Second Year. Except as otherwise provided in
Section 7.1(c), after the first anniversary of the execution of this Agreement
until the second anniversary thereof, the Purchaser shall not sell or transfer
more than 50% of the Shares (i.e., the Purchaser may sell or transfer up to 50%
of the Shares without restriction), shall not sell or transfer more than 50% of
the Warrant Shares that may be acquired upon exercise of the Warrant (i.e., the
Purchaser may sell or transfer up to 50% of such Warrant Shares without
restriction) and shall not sell or transfer the Warrant or any portion thereof.
(c) Exceptions to Limitations on Transfer. Sections 7.1(a) and (b)
shall not apply as follows:
(1) If (i) the Purchaser terminates, pursuant to Section 14.2
thereof, the Development and License Agreement referred to in Section 5.6
executed and delivered by the parties hereto concurrent with the execution of
this Agreement (the "Development and License Agreement"); (ii) the Company and
Purchaser mutually agree to terminate the Development and License Agreement;
(iii) the Company terminates the Development and License Agreement without
cause; or (iv) the Company shall consummate a merger, consolidation,
reclassification, recapitalization, reorganization or similar transaction or be
the subject of a tender offer where the offeror has announced the purchase of
more than fifty percent (50%) of the outstanding shares and for which
shareholder withdrawal rights have expired, so that, the stockholders of the
Company immediately prior to any such transactions described in this clause (iv)
do not, immediately after such transaction, have more than 50% of the voting
power thereof.
(2) In the event that there shall occur an "Insolvency
Proceeding" involving the Company. The term "Insolvency Proceeding" shall mean
(i) an assignment for the benefit of creditors, (ii) the filing by the Company
of a petition to have the Company adjudged insolvent, bankrupt or seeking a
reorganization or liquidation under any law relating to bankruptcy, insolvency
or receivership, (iii) an appointment of a receiver or trustee for all or
substantially all of the assets of the Company unless appointed without the
Company's consent, in which case if after sixty (60) days such appointment has
not been vacated or stayed, (iv) a public admission in writing by the Company of
the Company's inability to pay its debts as they become due, or (v) the adoption
of a plan of liquidation or dissolution by the board of directors of the
Company.
(3) The Purchaser may transfer the Shares, the Warrant and the
Warrant Shares to any entity of which the Purchaser owns more than 50% of the
voting power thereof (a "Controlled Entity"), so long as such Controlled Entity
agrees to hold such Shares, the Warrant and such Warrant Shares subject to all
the provisions of this Agreement, including this Section 7.1, and agrees to
transfer such Shares, the Warrant and such Warrant Shares to the Purchaser or
another Controlled Entity of the Purchaser if it ceases to be a Controlled
Entity of the Purchaser.
(4) After the second anniversary of the execution of this
Agreement, the Purchaser may sell or transfer any or all of the Shares, the
Warrant and the Warrant Shares without any restriction under this Section 7.
(5) The restrictions on transfer in this Section 7 shall not
prevent the Purchaser from entering into bona fide hedging transactions
(including any derivative transaction) with one or more nationally recognized
investment banking firms as a means to hedge fluctuations in the market price of
the Shares, provided that such transactions do not impair, in any respect, the
Company's reliance upon Section 4(2) of the Securities Act to exempt the
issuance of the Shares, the Warrant and the Warrant Shares from the registration
requirements of the Securities Act or the Company's reliance upon exemptions
from the registration requirements of applicable state securities laws.
7.2 Registration of Shares. (a) On or before April 16, 1999, the
Company shall register 440,681 of the Shares and all of the Warrant Shares for
resale by filing with the SEC a registration statement on Form S-3 (electing to
rely on rule 415) and shall thereafter use its best efforts to have the
registration statement declared effective as promptly as practicable.
(b) On or before January 15, 2000, the Company shall register the
Shares not previously registered for resale by filing with the SEC a
registration statement on Form S-3 (electing to rely on rule 415) and shall
thereafter use its best efforts to have the registration statement declared
effective as promptly as practicable.
(c) The Company will provide the Purchaser the opportunity to comment
on the registration statements prior to its filing and will incorporate the
Purchaser's reasonable comments (provided such comments are consistent with this
Agreement) with respect to information concerning the Purchaser and the plan of
distribution. The Company shall use its best efforts to keep the registration
statements effective until such time as all the Shares and the Warrant Shares
held by the Purchaser may be sold pursuant to Rule 144 within a three-month
period.
7.3 Nasdaq Listing. The Company shall use its best efforts to cause
the Shares and the Warrant Shares, issuable to the Purchaser pursuant to this
Agreement (including shares issuable under the Warrant) to be authorized for
listing as a Nasdaq National Market Security on the Nasdaq Stock Market, or a
national securities exchange.
SECTION 8
Miscellaneous
8.1 Best Efforts. Each of the Company and the Purchaser shall use its
best efforts to take all actions required under any law, rule or regulation
adopted subsequent to the date hereto to ensure that the conditions to the
Closing set forth herein are satisfied on or before the Closing Date.
8.2 Governing Law. This Agreement shall be governed in all respects by
the internal laws of the State of Washington as applied to contracts entered
into solely between residents of, and to be performed entirely within, such
state, and without reference to its principles of conflicts of laws or choice of
laws.
8.3 Survival; Termination of Covenants. The representations and
warranties in Sections 3 and 4 of this Agreement shall survive the Closing for a
period of five years from the date hereof. The covenants in Section 7 shall
survive the consummation of the transaction provided for herein and shall
terminate on the date specified therein or upon the satisfaction of the
condition or conditions stated therein.
8.4 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
8.5 Entire Agreement; Amendment. This Agreement and the Warrant
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof and supersede all prior
agreements and understandings among the parties relating to the subject matter
hereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
8.6 Notices. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is (a) deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, or (b) sent by a
nationally recognized overnight express courier, or (iii) by facsimile upon
written confirmation (other than the automatic confirmation that is received
from the recipient's facsimile machine) of receipt by the recipient of such
notice:
(a) if to the Company, to it at:
Dialogic Corporation
0000 Xxxxx 00
Xxxxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Chief Financial Officer
and with a copy to:
Dialogic Corporation
0000 Xxxxx 00
Xxxxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: General Counsel
(b) if to the Purchaser, to it at:
Microsoft Corporation
One Microsoft Way
Building 8 North Office 2211
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile Number: (000) 000-0000
with a copy addressed as set forth above but to the attention of
General Counsel, Finance and Administration, Facsimile Number:
(000) 000-0000
with a copy to:
Xxxx X. Xxxxxx
Xxxxxxx Xxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Facsimile Number: (000) 000-0000
8.7 Brokers. (a) The Company has not engaged, consented to or
authorized any broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. The Company hereby agrees to
indemnify and hold harmless the Purchaser from and against all fees, commissions
or other payments owing to any party acting on behalf of the Company hereunder.
(b) The Purchaser has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Purchaser hereby agrees to indemnify and
hold harmless the Company from and against all fees, commissions or other
payments owing to any party acting on behalf of the Purchaser hereunder.
8.8 Fees, Costs and Expenses. All fees, costs and expenses (including
attorneys' fees and expenses) incurred by either party hereto in connection with
the preparation, negotiation and execution of this Agreement and the Warrant and
the consummation of the transactions contemplated hereby and thereby, shall be
the sole and exclusive responsibility of such party.
8.9 Severability. If any term, provision, covenant or restriction of
this Agreement or the Warrant is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restriction of this Agreement or the Warrant shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
8.10 Counterparts. This Agreement may be executed in two or more
partially or fully executed counterparts and by facsimile signatures each of
which shall be deemed an original and shall bind the signatory, but all of which
together shall constitute but one and the same instrument. The execution and
delivery of a Signature Page - Common Stock and Warrant Purchase Agreement in
the form attached to this Agreement by any party hereto who shall have been
furnished the final form of this Agreement shall constitute the execution and
delivery of this Agreement by such party.
8.11 Initial Public Announcement. The Company and the Purchaser have
agreed on the form and content of the initial public announcement which shall be
made concerning this Agreement and the Warrant and the transactions contemplated
hereby and thereby. Neither the Company nor the Purchaser shall make any other
public announcement regarding this Agreement, the Warrant and the transactions
contemplated hereby and thereby without the consent of the other, except for (a)
press releases and other public announcements that are consistent with and that
confirm such initial public announcement and (b) other press releases or public
announcements as required by law.
[remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the date set forth
above.
DIALOGIC CORPORATION
By:
Name:
Title:
MICROSOFT CORPORATION
By:
Name:
Title:
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
Dated as of March 1, 1999
Between
DIALOGIC CORPORATION
and
MICROSOFT CORPORATION
EXHIBIT A
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THIS
WARRANT SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES LAW, OR (B) THE HOLDER SHALL DELIVER TO THE
COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND OF ANY APPLICABLE STATE SECURITIES LAW.
Warrant No. M-1 March 1, 1999
DIALOGIC CORPORATION
COMMON STOCK PURCHASE WARRANT
Dialogic Corporation, a New Jersey corporation (the "Company"), hereby
grants to Microsoft Corporation, a Washington corporation ("Microsoft"), or its
permitted assigns or transferees (Microsoft and each such permitted assignee or
transferee being referred to herein as a "holder" and collectively as the
"holders") the right to purchase, at any time after the Exercise Date (as
defined below) and from time to time on and after the date hereof until the
Expiration Date (as defined below), up to 279,869 fully paid and non-assessable
shares of Common Stock of the Company, no par value, (the "Common Stock"), on
the terms and subject to the conditions set forth below.
This Common Stock Purchase Warrant (hereinafter, this "Warrant") was
originally issued on March 1, 1999 (the "Original Issue Date"). This Warrant
shall expire and be of no further force or effect on the date (the "Expiration
Date") four (4) years from the Original Issue Date.
1. Exercise of Warrant.
1.1 Exercise and Vesting. Subject to adjustment as hereinafter
provided, the rights represented by this Warrant are exercisable on and after
the date hereof (the "Exercise Date") until the Expiration Date, at a price per
share (the "Exercise Price") of the Common Stock issuable hereunder
(hereinafter, "Warrant Shares") equal to $35.19. The Exercise Price shall be
payable in cash or by certified or official bank check in immediately available
funds as hereinafter provided or in accordance with Section 1.2 below. This
Warrant is fully vested.
Upon surrender of this Warrant with a duly executed Notice of Exercise
in the form of Annex A hereto, together with payment, if applicable, of the
Exercise Price for the Warrant Shares purchased, at the Company's principal
executive offices presently located at 0000 Xxxxx 00, Xxxxxxxxxx, XX 00000, or
at such other address as the Company shall have advised the holder in writing
(the "Designated Office"), the holder shall be entitled to receive a certificate
or certificates for the Warrant Shares so purchased. The Company agrees that the
Warrant Shares shall be deemed to have been issued to the holder as of the close
of business on the date on which this Warrant shall have been surrendered
together with the Notice of Exercise and payment, if applicable, for such
Warrant Shares.
1.2 Right to Convert.
(a) Subject to the provisions of Section 1.1, at any time or from time
on or prior to the Expiration Date, the holder of this Warrant shall also have
the right to convert this Warrant or any portion thereof (the "Conversion
Right"), without payment by the holder of this Warrant of the Exercise Price in
cash or any other consideration (other than the surrender of rights to receive
Warrant Shares hereunder), into shares of Common Stock as provided in this
Section 1.2. Upon exercise of the Conversion Right with respect to a particular
number of Warrant Shares (the "Converted Warrant Shares"), the Company shall
deliver to the holder of this Warrant (without payment by the holder of this
Warrant of the Exercise Price in cash or any other consideration (other than the
surrender of rights to receive Warrant Shares hereunder)) that number of shares
of Common Stock computed using the following formula: [OBJECT OMITTED] N = CWS *
(CMP - EP) CMP Where:
N = the number of shares of Common Stock to be issued to holder;
CWS = the Converted Warrant Shares, which is either (1) the total
number of shares of Common Stock purchasable under the Warrant
or, if only a portion of the Warrant is being exercised, (2)
the portion of the Warrant Shares being exercised and canceled
(as of the Conversion Date as defined by Section 1.2(b));
CMP = the Current Market Price of one share of Common Stock, as
defined in Section 1.2(c) (as of the Conversion Date); and
EP = Exercise Price (as of the Conversion Date).
No fractional Warrant Shares shall be issuable upon exercise of the Conversion
Right, and if the number of Warrant Shares to be issued determined in accordance
with the above formula is other than a whole number, the Company shall pay to
the holder of this Warrant an amount in cash equal to the Current Market Price
of the resulting fractional Warrant Share on the Conversion Date.
(b) The Conversion Right may be exercised by the holder of this
Warrant by the surrender of this Warrant as provided in Section 1.1, together
with a written statement specifying that the holder of this Warrant thereby
intends to exercise the Conversion Right and indicating the number of Converted
Warrant Shares which are covered by the exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant,
together with such written statement, or on such later date as is specified
therein (the "Conversion Date"). The Company shall issue to the holder of this
Warrant as of the Conversion Date a certificate for the Warrant Shares issuable
upon exercise of the Conversion Right and, if applicable, a new warrant of like
tenor evidencing the balance of the Warrant Shares remaining subject to this
Warrant.
(c) The term "Current Market Price" for the Common Stock shall mean:
(i) if the Common Stock is publicly traded on the date of a duly executed Notice
of Exercise, the closing price per share on the day immediately preceding
delivery of such duly executed Notice of Exercise as reported on the principal
stock exchange or quotation system on which the Common Stock is listed or
quoted; or (ii) if the Common Stock is not publicly traded on such date, the
fair value of the Common Stock as determined in the good faith judgment of the
Company's board of directors; provided, however, that if the holder of this
Warrant objects to the decision of the board of directors, then the appraised
value per share of Common Stock as of such date shall be determined by an
investment banking firm of nationally recognized standing selected and paid for
by the Company and reasonably satisfactory to the holder hereof. In the event
that the holder disputes such appraised value, the holder shall be entitled to
select an additional investment banking firm of recognized standing and paid for
by the holder to calculate the appraised value. The Company and the holder shall
use their good faith best efforts to agree on the appraised value based on the
reports of the two investment banking firms. In the event that the Company and
the holder are still unable to reach agreement as to the appraised value, the
Company and the holder agree to submit such determination to binding
arbitration, with the cost of such arbitration to be shared equally by the
Company and the holder.
2. Transfer; Issuance of Stock Certificates; Restrictive Legends.
2.1. Transfer. Until the second anniversary of the issue date hereof,
this Warrant shall not be transferable by the holder thereof except to any
entity in which the holder owns more than 50% of the voting power thereof (a
"Controlled Entity"), so long as such Controlled Entity agrees to hold the
Warrant and such Warrant Shares subject to all the provisions of this Agreement
and Section 7.1 of the Common Stock and Warrant Purchase Agreement by and
between the Company and Microsoft (the "Common Stock and Warrant Purchase
Agreement"), and agrees to transfer the Warrant and such Warrant Shares to the
holder or another Controlled Entity of the holder if it ceases to be a
Controlled Entity of the Purchaser. After the second anniversary of the issue
date hereof, this Warrant may be transferred in whole but not in part by the
holder without restriction (other than restrictions, if any, imposed by Section
4.7 of the Common Stock and Warrant Purchase Agreement.)
Subject to compliance with the restrictions on transfer set forth in
this Section 2, each transfer of this Warrant and all rights hereunder, in whole
or in part, shall be registered on the books of the Company to be maintained for
such purpose, upon surrender of this Warrant at the Designated Office, together
with a written assignment of this Warrant in the form of Annex B hereto duly
executed by the holder or its agent or attorney. Upon such surrender and
delivery, the Company shall execute and deliver a new warrant or warrants in the
name of the assignee or assignees and in the denominations specified in such
instrument of assignment, and shall issue to the assignor a new warrant
evidencing the portion of this Warrant not so assigned, if any. A warrant, if
properly assigned in compliance with the provisions hereof, may be exercised by
the new holder for the purchase of Warrant Shares without having a new warrant
issued. All warrants issued upon any assignment of warrants shall be the valid
obligations of the Company, evidencing the same rights, and entitled to the same
benefits as the warrants surrendered upon such registration of transfer or
exchange.
2.2 Stock Certificates. Certificates for the Warrant Shares shall be
delivered to the holder within a reasonable time after the rights represented by
this Warrant shall have been exercised pursuant to Section 1, and a new warrant
representing the share, shares or fraction of a share of Common Stock, if any,
with respect to which this Warrant shall not then have been exercised shall also
be issued to the holder within such time. The issuance of certificates for
Warrant Shares upon the exercise of this Warrant shall be made without charge to
the holder hereof including, without limitation, any tax that may be payable in
respect thereof; provided, however, that the Company shall not be required to
pay any income tax to which the holder hereof may be subject in connection with
the issuance of this Warrant or the Warrant Shares.
2.3. Restrictive Legends. (a) Except as otherwise provided in this
Section 2.3, each certificate for Warrant Shares issued upon such exercise of
this Warrant, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER
IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
LAWS, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF
COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY
THAT SUCH PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.
(b) Except as otherwise provided in this Section 2.3, each certificate
for Warrant Shares issued upon such exercise of this Warrant, shall be stamped
or otherwise imprinted with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER SET FORTH IN A COMMON STOCK AND WARRANT PURCHASE AGREEMENT
DATED AS OF MARCH 1, 1999 BETWEEN THE COMPANY AND MICROSOFT
CORPORATION, A COPY OF WHICH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY AT THE COMPANY'S PRINCIPAL EXECUTIVE
OFFICES.
(c) Except as otherwise provided in this Section 2.3, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NO
TRANSFER OF THIS WARRANT SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH
TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.
(d) The Company agrees (i) to remove the legend set forth in Section
2.3(a) upon (a) receipt of a request from the holder after registration of the
Warrant Shares under the Securities Act in which the holder represents that the
Warrant Shares are being sold or otherwise transferred in a transaction of the
character (including lending of securities) described in the plan of
distribution of the registration statement applicable to such Warrant Shares, or
(b) receipt of an opinion of counsel in form and substance reasonably
satisfactory to the Company that the Warrant Shares are eligible for transfer
without registration under the Securities Act; and (ii) to remove the legend set
forth in Section 2.3(b) with respect to Warrant Shares that may be transferred
from time to time upon the termination of the covenants of Section 7 of the
Common Stock and Warrant Purchase Agreement executed by the Company and
Microsoft as of March 1, 1999 as provided for in Section 8.3 thereof.
(e) The Company agrees, if the holder of the Warrant is not then, and
has not then been for a period of three months, an affiliate of the Company and
if the Warrant Shares have been acquired pursuant to Section 1.2 hereof, to
remove (or, in the event the Warrant Shares are issued after the second
anniversary of the issuance date of the Warrant, to issue the Warrant Shares
without the legends specified by Sections 2.3(a) and (b)) the legends set forth
in Section 2.3(a), (b) and (c) on and after the second anniversary date of the
issuance of this Warrant.
3. Adjustment of Number of Warrant Shares; Exercise Price; Nature of
Securities Issuable Upon Exercise of Warrants.
3.1 Exercise Price; Adjustment of Number of Warrant Shares. The
Exercise Price set forth in Section 1 hereof and the number of shares
purchasable hereunder shall be subject to adjustment from time to time as
hereinafter provided.
3.2 Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another entity, or
the sale of all or substantially all of the Company's assets to another person
or entity (collectively referred to as a "Transaction") shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash or assets with respect to or in exchange for Common Stock,
then, as a condition of such Transaction, reasonable, lawful and adequate
provisions shall be made whereby the holder of this Warrant shall thereafter
have the right to purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant, upon exercise of this Warrant and in lieu
of the Warrant Shares immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby, such number, amount and like kind
of shares of stock, securities, cash or assets as may be issued or payable
pursuant to the terms of the Transaction with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby as if such shares
were outstanding immediately prior to the Transaction, and in any such case
appropriate provision shall be made with respect to the rights and interest of
the holders to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the number
of Warrant Shares purchasable and receivable upon the exercise of this Warrant)
shall thereafter be applicable, as nearly as may be practicable, in relation to
any shares of stock or securities thereafter deliverable upon the exercise
hereof.
3.3 Stock Splits, Stock Dividends and Reverse Stock Splits. In case at
any time the Company shall subdivide its outstanding shares of Common Stock into
a greater number of shares, or shall declare and pay any stock dividend with
respect to its outstanding stock that has the effect of increasing the number of
outstanding shares of Common Stock, the Exercise Price in effect immediately
prior to such subdivision or stock dividend shall be proportionately reduced and
the number of Warrant Shares purchasable pursuant to this Warrant immediately
prior to such subdivision or stock dividend shall be proportionately increased,
and conversely, in case at any time the Company shall combine its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately reduced.
3.4 Issuance of Additional Shares of Common Stock. If at any time
prior to the Expiration Date the Company shall issue any Additional Shares of
Common Stock (as defined below) for a consideration per share (the "Subsequent
Issue Price") that is less than the lesser of (a) ninety-five percent (95%) of
the average market price ("Average Market Price") in effect immediately prior to
such issuance (calculated on the basis of the average closing price for the 20
trading days preceding such issuance) and (b) one hundred percent (100%) of the
last closing price available prior to such issuance (the "Market Price"; the
lesser of the Average Market Price and the Market Price being referred to
hereinafter as the "Adjustment Price"), then, upon such issuance, the Exercise
Price shall be reduced to the lower of the prices calculated in the following
subparagraphs (a) or (b) by:
(a) dividing (i) an amount equal to the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issuance multiplied
by the Exercise Price then in effect plus (y) the aggregate consideration, if
any, received by the Company in connection with such issuance by (ii) the total
number of shares of Common Stock outstanding immediately after such issuance;
and
(b) multiplying the then existing Exercise Price by a fraction, the
numerator of which shall be the quotient obtained by dividing (i) the sum of (x)
the number of shares of Common Stock outstanding immediately prior to such
issuance multiplied by the Adjustment Price per share of Common Stock
immediately prior to such issuance plus (y) the aggregate consideration received
by the Company in connection with such issuance divided by (ii) the total number
of shares of Common Stock outstanding immediately after such issuance, and the
denominator of which shall be the Adjustment Price per share of Common Stock
immediately prior to such issuance.
For purposes of this Section 3.4, "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued or issuable by the Company after
the Original Issue Date, other than (i) shares issued pursuant to the Company's
stock purchase plans, stock incentive plans, and any other Company plan or
contract adopted for the benefit of employees, directors or consultants (but
only if such consultants are eligible to have their shares registered on Form
S-8), including without limitation options and benefits assumed by the Company
in connection with acquisitions and other similar transactions, whether such
stock purchase plans, stock incentive plans, or other plan or contract is in
effect on the date hereof or adopted subsequent to the date hereof (the
"Employee Stock"); (ii) shares issued by the Company in an underwritten public
offering; (iii) shares issued by the Company in connection with an acquisition
of a business or business assets involving receipt of property or other noncash
consideration where the Company's board of directors has made a good faith
judgment that the consideration received is fair value for the issuance of the
shares; provided, however, that this clause (iii) shall not be interpreted to
include the issuance of options, warrants, or other Convertible Securities (as
defined below) that do not qualify as Employee Stock; and (iv) shares issued
pursuant to rights, warrants or options for a Subsequent Issue Price that, on
the date of grant of such rights, warrants or options, is at least equal to the
lesser of (a) ninety-five percent (95%) of the Average Market Price on the date
of such grant and (b) the Market Price on the date of such grant.
For purposes of this Section 3.4, in the case of securities that are
convertible into or exchangeable for Common Stock ("Convertible Securities"),
there shall be determined the price per share for which Additional Shares of
Common Stock are issuable upon the conversion or exchange thereof, such
determination to be made by dividing (i) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon conversion or exchange thereof by (ii) the
maximum aggregate number of Additional Shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities for such minimum
aggregate amount of additional consideration; and such issue or sale shall be
deemed to be an issue or sale for cash (as of the date of issue or sale of such
Convertible Securities, whether or not then exercisable or convertible) of such
maximum number of Additional Shares of Common Stock at the price per share so
determined.
If any rights of conversion or exchange evidenced by Convertible
Securities the issuance of which resulted in an adjustment to the Exercise Price
and the number of Warrant Shares issuable hereunder pursuant to this Section 3.4
shall expire without having been exercised, or if any such Convertible
Securities are exercised for a consideration greater than or for a number of
Additional Shares of Common Stock less than those used for purpose of
determining the adjustment to the Exercise Price provided in this Section 3.4,
the adjusted Exercise Price shall forthwith be readjusted to such Exercise Price
as would have been in effect had an adjustment with respect to such Convertible
Securities been made on the basis that the only Additional Shares of Common
Stock issued or sold were those issued upon the conversion or exchange of such
Convertible Securities, and that they were issued or sold for the consideration
actually received by the Company upon such exercise, plus the consideration, if
any, actually received by the Company for the granting of such Convertible
Securities.
In addition, upon adjustment of the Exercise Price under this Section
3.4, the holder hereof shall thereafter be entitled to purchase at the Exercise
Price resulting from such adjustment a number of Warrant Shares obtained by
multiplying the Exercise Price immediately prior to such issuance by the number
of Warrant Shares purchasable pursuant hereto immediately prior to such issuance
and dividing the product thereof by the Exercise Price resulting from such
adjustment. The provisions of this Section 3.4 shall not apply to any issuance
of Common Stock (i) for which an adjustment is provided for under Sections 3.2
or 3.3 or (ii) upon exercise of any option, right or warrant of the Company
outstanding on the Original Issue Date. Notwithstanding anything to the contrary
in this Section 3.4, in no event shall (i) the Exercise Price be increased or
(ii) the number of Warrant Shares purchasable hereunder be decreased pursuant to
the provisions of this Section 3.4.
3.5 Dissolution, Liquidation or Wind-Up. In case the Company shall, at
any time prior to the exercise of this Warrant, dissolve, liquidate or wind up
its affairs, the holder hereof shall be entitled, upon the exercise of this
Warrant, to receive, in lieu of the Warrant Shares which the holder would have
been entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to such holder upon any such dissolution,
liquidation or winding up with respect to such Warrant Shares, had such holder
hereof been the holder of record of the Warrant Shares receivable upon the
exercise of this Warrant on the record date for the determination of those
persons entitled to receive any such liquidating distribution.
3.6 Accountant's Certificate. In each case of an adjustment in the
Exercise Price, number of Warrant Shares or other stock, securities or property
receivable upon the exercise of this Warrant, the Company shall compute, and
upon the holder's request shall at the Company's expense cause independent
public accountants of nationally recognized standing selected by the Company to
certify such computation, such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment and showing in
detail the facts upon which such adjustment is based, including a statement of
(i) the number of shares of Common Stock of each class outstanding or deemed to
be outstanding, (ii) the adjusted Exercise Price and (iii) the number of Warrant
Shares issuable upon exercise of this Warrant. The Company will forthwith mail a
copy of each such certificate to the holder hereof. In the event that the holder
disputes such adjustment, the holder shall be entitled to select an additional
firm of independent certified public accountants of national standing and paid
for by the holder to certify such adjustment and the Company and the holder
shall use their good faith best efforts to agree on such adjustment based on the
reports of the two accounting firms. In the event that the Company and the
holder are still unable to reach agreement as to such adjustment, the Company
and the holder agree to submit such determination to binding arbitration. Upon
determination of such adjustment, the board of directors shall forthwith make
the adjustments described therein.
4. Anti-Dilution.
In the event that the Company at any time after the Original Issue
Date shall pay a special dividend or make any other distribution with respect to
its Common Stock (or any other shares of the capital stock of the Company for
which this Warrant becomes exercisable pursuant to Section 3 above) in the form
of cash or other property (other than (i) a distribution to which the provisions
of Section 3.2 apply, (ii) a stock dividend subject to the provisions of Section
3.3 above or (iii) a cash dividend announced by the Company as intended to be a
dividend paid on a regular periodic basis), at the election of the holder,
either:
(i) The Exercise Price in effect immediately prior to the record
date with respect to such distribution or issuance (the "Adjustment Date") shall
forthwith be adjusted effective on the Adjustment Date to a price determined by
multiplying such Exercise Price by a fraction (x) the numerator of which shall
be the closing price of the Company's Common Stock as publicly reported on the
primary exchange or market on which it is listed (the "Exchange") on the next
trading day following the Adjustment Date (the "Post-Event Market Price"), and
(y) the denominator of which shall be the average closing price of the Company's
Common Stock as publicly reported on the Exchange over the ten trading days
preceding the Adjustment Date (the "Pre-Event Market Price") and after each such
adjustment of the Exercise Price, the total number of shares then issuable upon
exercise of the Warrant shall be adjusted by multiplying such number of shares
issuable upon exercise of the Warrant by a fraction (x) the numerator of which
shall be the amount obtained by subtracting the Exercise Price in effect
immediately prior to the Adjustment Date from the Pre-Event Market Price for the
Company"s Common Stock and (y) the denominator of which shall be the amount
obtained by subtracting the Exercise Price in effect immediately following the
Adjustment Date from the Post-Event Market Price for the Company's Common Stock;
or
(ii) The Company shall deliver to the holder hereof a dilution
fee (a "Dilution Fee") payable in cash on the date of payment of such dividend
or other distribution equal to the number of shares of Common Stock (or such
other shares of stock) issuable upon exercise of this Warrant on such date
multiplied by the amount of cash and the fair value of any other property
distributed with respect to each share of Common Stock (or such other stock).
The fair value of any such other property shall mean the fair market value
thereof on the record date for such dividend, as determined by the board of
directors of the Company in good faith and supported, upon the request of the
holder, by an opinion of an investment banking firm or appraisal firm of
recognized national standing selected by the Company and acceptable to the
holder.
Notwithstanding the foregoing, in no event shall the Exercise Price be
increased or the number of Warrant Shares issuable upon exercise hereof be
reduced pursuant to the provisions of this Section 4.
5. Registration; Exchange and Replacement of Warrant; Reservation of
Shares.
The Company shall keep at the Designated Office a register in which
the Company shall provide for the registration, transfer and exchange of this
Warrant. The Company shall not at any time, except upon the dissolution,
liquidation or winding-up of the Company, close such register so as to result in
preventing or delaying the exercise or transfer of this Warrant.
The Company may deem and treat the person in whose name this Warrant
is registered as the holder and owner hereof for all purposes and shall not be
affected by any notice to the contrary, until presentation of this Warrant for
registration or transfer as provided in this Section 5.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new warrant of like tenor, in lieu of this Warrant without
requiring the posting of any bond or the giving of any security.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of this Warrant, such number of shares of Common Stock as shall be
issuable upon the exercise hereof. The Company covenants and agrees that, upon
exercise of this Warrant and payment of the Exercise Price therefor, if
applicable, all Warrant Shares issuable upon such exercise shall be duly and
validly issued, fully paid and non-assessable.
6. Company Information.
Until the exercise of this Warrant, the Company shall deliver to each
holder hereof or of Warrant Shares one copy of each of the following items:
(i) as soon as available, and in any event within forty-eight
(48) days after the end of each of the first three fiscal quarters of the
Company's fiscal year, its Form 10-Q as filed with the Securities and Exchange
Commission (the "Commission") for such quarter or if the Company is not publicly
traded its unaudited interim consolidated balance sheets of the Company and its
subsidiaries as of the end of such quarter and the related consolidated
statements of income and cash flow of the Company and its subsidiaries for the
period from the beginning of the current fiscal year to the end of such quarter,
all in reasonable detail and certified by a principal financial officer of the
Company, as prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied (subject to year end adjustments and the absence
of footnotes), and fairly presenting the consolidated financial position and
results of operations of the Company and its subsidiaries for such periods;
(ii) within one hundred and twenty-three (123) days after the end
of each fiscal year of the Company, its Form 10-K as filed with the Commission
for such fiscal year or if the Company is not publicly traded its consolidated
balance sheets of the Company and its subsidiaries as of the end of such year
and the related consolidated statements of income, cash flow and stockholders'
equity of the Company and its subsidiaries for such fiscal year, setting forth
in each case in comparative form the consolidated figures for the previous
fiscal year, all in reasonable detail and accompanied by a report thereon of
independent public accountants of recognized national standing selected by the
Company, which report shall state that such consolidated financial statements
present fairly the financial position of the Company and its subsidiaries as at
the dates indicated and the results of their operations and changes in their
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except as otherwise specified in such
report) and that the audit by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards; and
(iii) promptly upon their becoming available, copies of all
financial statements, reports, proxy statements, notices, documents or other
communications sent or made available generally by the Company to any class of
its security holders.
7. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered
personally, or mailed by registered or certified mail, return receipt requested,
or telecopied or telexed and confirmed in writing and delivered personally or
mailed by registered or certified mail, return receipt requested:
(a) If to the holder of this Warrant, to the address of such holder as
shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 1 of this
Warrant;
or at such other address as the holder or the Company may hereafter have advised
the other.
8. Successors.
All the covenants, agreements, representations and warranties
contained in this Warrant shall bind the parties hereto and their respective
heirs, executors, administrators, distributees, successors, assigns and
transferees.
9. Law Governing.
This Warrant shall be construed and enforced in accordance with, and
governed by, the laws of the State of Washington (not including the choice of
law rules thereof) regardless of the jurisdiction of creation or domicile of the
Company or its successors or of the holder at any time hereof.
10. Entire Agreement; Amendments and Waivers.
This Warrant sets forth the entire understanding of the parties with
respect to the transactions contemplated hereby. The failure of any party to
seek redress for the violation or to insist upon the strict performance of any
term of this Warrant shall not constitute a waiver of such term and such party
shall be entitled to enforce such term without regard to such forbearance. This
Warrant may be amended, and any breach of or compliance with any covenant,
agreement, warranty or representation may be waived, only if the Company has
obtained the written consent or written waiver of the holder, and then such
consent or waiver shall be effective only in the specific instance and for the
specific purpose for which given.
11. Severability; Headings.
If any term of this Warrant as applied to any person or to any
circumstance is prohibited, void, invalid or unenforceable in any jurisdiction,
such term shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or invalidity without in any way affecting any other term of this
Warrant or affecting the validity or enforceability of this Warrant or of such
provision in any other jurisdiction. The Section headings in this Warrant have
been inserted for purposes of convenience only and shall have no substantive
effect.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the date first written above.
DIALOGIC CORPORATION
By:________________________________
Name:
Title:
Accepted and agreed:
MICROSOFT CORPORATION
By:_______________________________
Name:
Title:
ANNEX A
NOTICE OF EXERCISE
(To be executed upon partial or full
exercise of the Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase ___________ shares of Common Stock of ___________ Corporation covered
by the Warrant according to the conditions hereof and herewith makes payment of
the Exercise Price of such shares in full in the amount of
$____________________.
By:________________________________
(Signature of Registered Holder)
Dated:_______________
