EXHIBIT 10-22
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (the "Act"). NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PROVIDED IN SECTION 4 OF
THE WARRANT TO PURCHASE COMMON STOCK OF THE COMPANY EXPIRING MAY 21 2004,
A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
Issued as of Void after May 21, 2004
May 21,1999
WARRANT TO PURCHASE 25,000 SHARES
OF COMMON STOCK
OF
EXECUTONE INFORMATION SYSTEM, INC.
(incorporated under the Laws of the
Commonwealth of Virginia)
THIS IS TO CERTIFY THAT, ▇▇▇▇▇▇ ▇. ▇▇▇▇ ("▇▇▇▇") or his permitted
registered assigns (▇▇▇▇ and such assigns sometimes hereinafter being referred
to as the "Holder"), is entitled, subject to the terms and conditions set forth
herein, and further subject to an adjustment as hereinafter provided, to
purchase from EXECUTONE INFORMATION SYSTEMS, INC., a Virginia corporation (the
"Company"), an aggregate of Twenty-Five Thousand (25,000) fully paid and
nonassessable shares (the "Underlying Shares") of the common stock of the
Company, $0.01 par value ("Common Stock"), upon payment of the purchase price of
ONE HUNDRED THIRTY TWO THOUSAND SEVEN HUNDRED FIFTY DOLLARS ($132,750.00) or
FIVE and THIRTY ONE/100s DOLLARS ($5.31) per Underlying Share (the "Purchase
Price"), and also is entitled to exercise the other appurtenant rights, powers
and privileges hereinafter set forth at any time from and after 9:00 a.m.
(Eastern Standard Time) May 21, 1999 and on or before 5:00 p.m. (Eastern
Standard Time), on May 21, 2004.
This Warrant (the "Warrant") entitles the Holder hereof to purchase up to
an aggregate of 25,000 shares of Common Stock, which right shall vest ratably
over a period of three (3) years, one-third on May 21, 2000, one-third on May
21,
2001 and one-third on May 21, 2002; provided, however, that if ▇▇▇▇ ceases to be
a director of the Company, either voluntarily or because he has not been
reelected by the Shareholders of the Company, then ▇▇▇▇'▇ vesting of rights
shall terminate as of the date he is no longer a director of the Company.
THE EXERCISE AND TRANSFER OF THIS WARRANT ARE
RESTRICTED BY THE PROVISIONS OF SECTION 4 HEREOF.
1. Exercise of Warrant.
This Warrant may be exercised in whole or in part by the Holder
hereof, by delivery to the Company at its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ of (a) a written notice to the Holder, in substantially
the form of the Subscription Notice attached hereto as Exhibit "A", of such
Holder's election to exercise this Warrant, which notice shall specify the
number of Underlying Shares to be purchased, (b) a check payable to the Company
in an amount equal to the aggregate Current Price (as defined below) of the
number of shares of Common Stock being purchased and (c) this Warrant. The
Company shall, as soon as reasonably practicable, execute and deliver or cause
to be delivered to Holder, in accordance with such notice, one or more
certificates representing the aggregate number of shares of Common Stock
specified in such notice. The stock certificate(s) so delivered shall be issued
in the name of the Holder or such other name as shall be designated in such
notice. Such certificate(s) shall be deemed to have been issued and the Holder
or any other person so designated to be named therein shall be deemed for all
purposes to have become a Holder of record of such Underlying Shares as of the
date such notice is received by the Company. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of said
certificate(s), deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the remaining shares of Common Stock called for by this
Warrant (stated in Shares), which new Warrant shall in all other respects be
identical to this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant and the same returned to the Holder.
2. Fractional Shares.
This Warrant is only exercisable with respect to whole Underlying
Shares and not fractions thereof unless the Company otherwise agrees.
Accordingly, the Company shall not be required to issue certificates
representing fractions of Underlying Shares upon any exercise of this Warrant;
provided, however, in respect of any final fraction of a share it may, at its
sole option, in lieu of delivering a fractional share, make a payment in cash
based upon the then fair market value of such fraction of the Underlying Shares.
3. Transfer, Division and Combination.
No Warrant granted under this Agreement shall be transferable by
▇▇▇▇ otherwise than by Will or the laws of descent and distribution and, during
the lifetime of ▇▇▇▇, shall not be exercisable by any other person, but only by
him. The Company agrees to maintain at its principal office in Milford,
Connecticut, books for the registration and transfer of the Warrants and,
subject to the provisions of this paragraph and Section 4 hereof, this Warrant
and all rights hereunder are transferable ONLY with respect to (i) ▇▇▇▇'▇ heirs
and devisees, or (ii) ▇▇▇▇'▇ Estate in whole or in part, on such books upon
surrender of this Warrant at such office, together with a written assignment of
this Warrant duly executed by the Holder hereof or his agent or attorney, and
with funds sufficient to pay any stock transfer taxes payable upon the making of
such transfer. Upon surrender and payment, the Company shall execute and deliver
a new Warrant(s) in the name of the assignee of Holder and in the denominations
specified in such instrument of assignment, and this Warrant shall be canceled
promptly. If and when this Warrant is assigned in blank, the Company may, but
shall not be obligated to, treat the bearer hereof as the absolute owner of this
Warrant for all purposes and the Company shall not be affected by any notice to
the contrary. A warrant may be exercised by a Holder for the purchase of shares
of Common Stock without having a new Warrant issued.
The Company shall pay all expenses, taxes (other than stock transfer
taxes and any of Holder's income taxes, if any, incurred as a result of the
transfer) and other charges payable in connection with the preparation, issue
and delivery of Warrants hereunder.
4. Restriction on Exercise and Transfer of Warrants and Transfer of
Warrants and Common Stock.
Except as otherwise provided herein, this Warrant and the
certificates representing the Underlying Shares shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"Neither this Warrant nor the shares of Common Stock issuable upon
exercise of this Warrant have been registered under the Securities Act of
1933, as amended (the "Act"). Neither this Warrant not such Shares may be
sold, transferred, pledged or hypothecated except as provided in Section 4
of the Warrant to purchase Common Stock of the Company expiring November
18, 2003, a copy of which is on file at the principal office of the
Company."
This Warrant shall be exercisable (1) only if the issue of
Underlying
Shares issuable upon exercise is exempt from the requirements of registration
under the Securities Act of 1933, as amended (the "Act") (or any similar statute
then in effect) and any applicable state securities law or (2) upon registration
of such Underlying Shares in compliance therewith. This Warrant shall be
transferable only (i) with the prior written consent of the Company, or (ii) by
will or the laws of descent and distribution, and in either event only if the
Warrant is registered or the transfer is exempt from the requirements of
registration under the Act (or any similar statute then in effect) and any
applicable state securities law.
5. Acknowledgment by the Holder of Restrictions.
The Holder of this Warrant and certificates representing the
Underlying Shares, by acceptance hereof and thereof, acknowledges and agrees
that: (a) the Warrant and the Underlying Shares have not been registered under
the Act in reliance upon exemptions from the registration provisions of the Act
set forth therein, or in the rules and regulations promulgated thereunder (and
there is no obligation on the part of the Company to register the Warrant or the
Underlying Shares under the Act); and (b) the Warrant and the Underlying Shares
will not be freely tradeable. The Holder represents that he fully understands
the restrictions on his ability to transfer this Warrant and the Underlying
Shares. Without limiting the foregoing and by way of illustration only, the
Holder understands that if he presently desired to sell Underlying Shares
pursuant to the exemption from the registration provisions of the Act contained
in Rule 144 (the "Rule") promulgated under the Act, as presently constituted,
such Underlying Shares might be sold by him pursuant to the Rule only after a
minimum holding period of two (2) years (computed in accordance with the Rule)
and, thereafter, only in the limited amounts, in the manner and under the
limited circumstances prescribed by the Rule.
6. Change in Control.
The Warrant that is outstanding on a Control Change Date, as
hereinafter defined, shall be exercisable in whole or in part on that date and
thereafter during the remainder of the Warrant period stated in this Warrant
Agreement (the "Agreement"). A Change in Control occurs if, after the date of
this Agreement, (i) any person, including a "group" as defined in Section
13(d)(3) of the Securities and Exchange Act of 1934 (the "Exchange Act"),
becomes the owner or beneficial owner of Company securities having twenty
percent (20%) or more of the combined voting power of the then outstanding
Company securities that may be cast for the election of the Company's directors
(other than as a result of an issuance of securities initiated by the Company,
or open market purchases approved in advance by the board, as long as the
majority at the time the purchases are made are directors who were members of
the Board immediately prior to the purchases being made and approved such
purchases); or (ii) as the direct or indirect result of, or in connection with,
a cash tender or exchange offer, a merger
or other business combination, a sale of assets, a contested election, or any
combination of these transactions, the persons who were directors of the Company
before such transactions cease to constitute a majority of the Company's Board,
or any successor's board, within two (2) years of the last of such transactions.
For purposes of this Agreement, the Control Change Date is the date on which an
event described in (i) or (ii) occurs. If a Change in Control occurs on account
of a series of transactions, the Control Change Date is the date of the last of
such transactions.
7. Change in Management.
Notwithstanding any specified vesting or applicable early exercise
Warrant prices, if this Warrant is outstanding on the date ▇▇▇▇'▇ directorship
with the Company is terminated or constructively terminated (as described
herein) as a direct or indirect result of the occurrence of one of the events
specified in subsections (i) or (ii) of this paragraph, this Warrant shall be
exercisable, in whole or in part, at the lowest Warrant price available during
the term of the Warrant, on that date and thereafter during the remainder of the
Warrant period stated herein. Such exercisability will occur if after the date
of the Agreement, (i) any person, including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the owner or beneficial owner of Company
securities having twenty percent (20%) or more of the combined voting power of
the then outstanding Company securities that may be cast for the election of the
Company's directors (other than as a result of an issuance of securities
initiated by the Company); or (ii) the Company is the subject of a successful
cash tender or exchange offer, is a party to a merger or other business
combination, sells a substantial portion of its assets, experiences a change in
management brought about by a contested election or participates in any
combination of these transactions. For purposes of this paragraph, the
Transaction Date is the date on which an event described in subsections (i) or
(ii) hereof occurs. The date upon which ▇▇▇▇ is no longer a member of the Board
of Directors of the Company either through resignation, a majority of the
shareholders of the Company not voting for ▇▇▇▇ as a director or voting for his
earlier removal with or without cause or through his removal by a majority of
the members of the Board of Directors shall constitute a constructive
termination of ▇▇▇▇'▇ directorship with the Company within the meaning of this
paragraph.
In the event ▇▇▇▇'▇ service as a director of the Company terminates
for any other reason or due to any other cause, including death, or a
resignation or removal that is not a direct or indirect result of the events
described above, then this Warrant shall be exercisable, to the same extent it
was exercisable at the date of termination, for a period of seven months
following the date of termination, provided that in no event shall this Warrant
be exercisable after November 18, 2003.
8. Current Price: Adjustments.
As used in this Warrant, "Current Price" (per share of Underlying
Stock) at any date shall mean the amount equal to the quotient resulting from
dividing (i) the purchase price per Share provided herein by (ii) the number of
shares (including any fractional share) of Underlying Shares comprising a Share
on such date. A "Share" shall consist initially of one share of Common Stock of
the Company as such stock is constituted on the date of this Agreement. The
Purchase Price of a Share shall be Five and 31/100 Dollars ($5.31).
In the event that the outstanding Common Stock of the Company is
hereafter changed by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of Shares, stock
dividends or the like, an appropriate adjustment shall be made by the Board of
Directors in the aggregate number of Underlying Shares available under this
Warrant and in the number of Underlying Shares and price per Underlying Share
subject to outstanding Warrants. If the Company shall be reorganized,
consolidated or merged with another corporation, or if all or substantially all
of the assets of the Company shall be sold or exchanged, the Holder of the
Warrant shall, at the time of issuance of the stock under such corporate event,
be entitled to receive upon the exercise of the Holder's Warrant the same number
and kind of shares of stock or the same amount of property, cash or securities
as the Holder would have been entitled to receive upon the happening of any such
corporate event as if the Holder had been, immediately prior to such event, the
Holder of the number of Underlying Shares covered by the Holder's Warrant.
Any adjustment in the number of Underlying Shares shall apply
proportionately to only the unexercised portion of the Warrant granted
hereunder. If a fraction of a share would result from any such adjustment, the
adjustment shall be revised to the next lower whole number of Underlying Shares.
9. Reservation of Shares.
The Company covenants and agrees that (a) so long as this Warrant is
outstanding, it has or will reserve and keep available out of its authorized but
unissued Common Stock, solely for the purpose of issuing Underlying Shares from
time to time upon the exercise of this Warrant, an adequate number of Shares of
Common Stock for delivery at the times and in the manner provided herein upon
exercise of this Warrant; (b) the Underlying Shares delivered upon exercise of
this Warrant shall be validly issued and outstanding and fully paid and
nonassessable shares of Common Stock, free from any preemptive rights; and (c)
it will pay when due any and all Federal and state original issue taxes which
may be payable with respect to the issuance of the Warrant or of any Shares of
Common Stock upon exercise of the Warrant. The Company shall not, however, be
required (i) to pay any transfer tax which may be payable with respect to any
transfer of the Warrant, the issuance of certificates of Common Stock in a name
other than that of the
Holder or any transfer of Underlying Shares or (ii) to pay any Federal or state
income taxes of Holder which may occur as a result of the exercise of the
Warrant or (iii) to issue or deliver the Warrant or any certificate for
Underlying Shares until any such taxes shall have been paid by the Holder.
10. No Rights of Shareholders; Limitation of Liability.
No Holder shall, based on being a holder of this Warrant, be
entitled to vote or receive dividends or be deemed the holder of Common Stock or
any other security of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a shareholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change to or of par value, consolidation,
merger, conveyance or otherwise or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have been
exercised in accordance with Section 1 hereof. No provisions hereof, in the
absence of affirmative action by the Holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of rights or privileges of the Holder
hereof, shall give rise to any liability of such Holder for the purchase price
or as a shareholder of the Company, whether such liability is asserted by the
Company, creditors of the Company or others.
11. Replacement of Securities.
Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of any certificates evidencing
ownership of this Warrant and in the event of any such loss, theft or
destruction upon delivery of an indemnity agreement or, if the Holder so elects,
a surety bond reasonably satisfactory to the Company or, in the case of any such
mutilation, upon surrender and cancellation of any such certificate, the Company
shall forthwith execute and deliver in lieu thereof a new Warrant of like tenor.
12. Negotiability.
Every Holder of this Warrant, by accepting the same, consents and
agrees with the Company that (a) this Warrant is transferable, in whole or in
part, only upon compliance with the conditions set forth herein by the
registered holder hereof in person or by an attorney duly authorized in writing
by the Holder at the office of the Company as provided herein; (b) this Warrant
may be transferred by the Holder only with respect to that portion of the
Warrant to which the Holder is vested at the time of such transfer; and (c) the
Company may deem and treat the person in whose name this Warrant is registered
as the absolute, true and lawful owner for all purposes whatsoever, and the
Company shall not be affected by any
notice to the contrary.
13. Change; Waiver; Applicable Law.
This Warrant and any term hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against whom
enforcement of such change, waiver, discharge or termination is sought. This
Warrant shall be construed and enforced in accordance with the laws of the
Commonwealth of Virginia.
14. Notices.
Any notice to be given to the Company under the terms hereof shall
be addressed to the Company in care of its President at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and any notice to the Holder shall be addressed to
his address as reflected on the records of the Company, or at such other address
as the Company, the Holder and his successors or assigns may hereafter designate
in writing to the other. Any such notice shall have been deemed given upon
personal delivery or on the third business day after being enclosed in a
properly sealed envelope or wrapper properly addressed, registered or certified
and deposited (postage and registry or certification fee prepaid) in post office
or branch post office regularly maintained by the United States Government.
15. Forms of Election to Exercise or Transfer Warrant.
The form to be used in the event the Holder hereof desires to
exercise or transfer the Warrant is attached hereto as Exhibit "A".
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by its President or a duly authorized Vice President.
DATED this 21st day of May, 1999
COMPANY:
EXECUTONE INFORMATION SYSTEMS, INC.,
a Virginia corporation
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its President and Chief Executive
Officer
[CORPORATE SEAL] ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, Law and Administration
HOLDER:
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇