NEITHER THIS WARRANT, NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF, HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAW. SUCH SECURITIES MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO OR (ii) IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE
SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH A PROPOSED SALE OR TRANSFER.
COMMON STOCK
PURCHASE WARRANT
For the Purchase of Shares of
Common Stock of
VODAVI TECHNOLOGY, INC.
(Par Value $.001 Per Share)
(Incorporated under the Laws of the State of Delaware)
VOID AFTER 5:00 P.M. MST ON FEBRUARY 22, 2004
Date of Original Issuance: February 22, 1999
This is to certify that, for value received, CONTINENTAL CAPITAL & EQUITY
CORPORATION, a Florida corporation, or permitted assigns (the "Warrantholder"),
is entitled, subject to the terms and conditions hereinafter set forth, to
purchase shares of common stock, par value $.001 per share (the "Common Stock"),
of VODAVI TECHNOLOGY, INC., a Delaware corporation (the "Company"), for the
Warrant Price (as defined below), and to receive a certificate or certificates
for the shares of Common Stock so purchased. This Warrant is being issued in
connection with and pursuant to the terms of that certain Market Access Program
Marketing Agreement dated February 4, 1999, by and between the Warrantholder and
the Company (the "Marketing Agreement").
1. TERMS AND EXERCISE OF WARRANT.
(a) EXERCISE PERIOD. Subject to the terms of this Warrant, the
Warrantholder shall have the right, at any time and from time to time during the
Exercise Period (as defined below), to exercise this Warrant for any or all
Warrant Shares (as defined below) and to purchase from the Company up to the
number of fully paid and nonassessable shares of Common Stock that the
Warrantholder may at the time be entitled to purchase pursuant to this Warrant.
The 122,500 shares of Common Stock subject to this Warrant and any other
securities that the Company may be required by the operation of SECTION 3 to
issue upon the exercise hereof are referred to herein as the "Warrant Shares."
The "Exercise Period" shall mean the period commencing on February 22, 1999 and
ending at 5:00 P.M., Mountain Standard Time, on February 22, 2004 (the
"Termination Date"), or if such
date is a day on which banking institutions are authorized by law to close, then
on the next succeeding day which shall not be such a day. Notwithstanding the
foregoing, if the Marketing Agreement expires or is terminated prior to the
Termination Date, this Warrant shall terminate and cease to be exercisable for
all Warrant Shares upon the earlier to occur of (i) the date that is six months
after the date of expiration or termination of the Marketing Agreement, or (ii)
the Terminate Date. If this Warrant is not exercised on or prior to the earlier
of the Termination Date or the date that is six months after the date of
expiration or termination of the Marketing Agreement, this Warrant shall become
void and all rights of the Warrantholder hereunder shall cease with respect to
any Warrant Shares for which this Warrant has not been exercised as of such
date.
(b) METHOD OF EXERCISE. The Warrantholder may exercise this Warrant by
surrender of this Warrant to the Company at its principal office in Scottsdale,
Arizona (or at such other address as the Company may designate by notice in
writing to the Warrantholder at the address of the Warrantholder appearing on
the books of the Company or such other address as the Warrantholder may
designate in writing), together with the form of Election to Purchase included
as Exhibit A hereto, duly completed and signed, and upon payment to the Company
of the Warrant Price (as defined in Section 2) multiplied by the number of
Warrant Shares being purchased upon such exercise (the "Aggregate Warrant
Price"), together with all taxes applicable upon such exercise. Payment of the
Aggregate Warrant Price shall be made in cash or by certified check or cashier's
check, payable to the order of the Company, or by wire transfer to the Company's
account.
(c) PARTIAL EXERCISE. At the election of the Warrantholder, this
Warrant shall be exercisable in whole or in part at any time, and from time to
time, during the Exercise Period for all remaining Warrant Shares.
(d) SHARE ISSUANCE UPON EXERCISE. Upon the exercise and surrender of
this Warrant certificate and payment of the Aggregate Warrant Price, the Company
shall issue and cause to be delivered with all reasonable dispatch to the
Warrantholder, in such name or names as the Warrantholder may designate in
writing, a certificate or certificates for the number of full Warrant Shares so
purchased upon the exercise of the Warrant, together with cash, as provided in
Section 4 hereof, with respect to any fractional Warrant Shares otherwise
issuable upon such surrender and, if applicable, the Company shall issue and
deliver a new Warrant to the Warrantholder for the number of Warrant Shares not
so exercised. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of such Warrant Shares as of the close of business on the date
of the surrender of the Warrant and payment of the Aggregate Warrant Price,
notwithstanding that the certificates representing such Warrant Shares shall not
actually have been delivered or that the stock transfer books of the Company
shall then be closed.
2
2. WARRANT PRICE. The price per share at which Warrant Shares shall be
purchasable upon the exercise of this Warrant (originally and as adjusted
pursuant to Section 3 hereof, the "Warrant Price") shall be as follows:
Number of
Warrant Shares Warrant Price
-------------- -------------
22,500 $4.00
20,000 $4.50
20,000 $5.00
20,000 $5.50
20,000 $6.00
20,000 $6.50
-------
122,500
3. ADJUSTMENT OF NUMBER OF WARRANT SHARES AND WARRANT PRICE. The Company
agrees to reserve and shall keep reserved for issuance the number of shares of
Common Stock issuable upon exercise of this Warrant. The number of Warrant
Shares purchasable upon the exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time upon the happening of certain events,
as follows:
(a) In case the Company shall (1) pay a dividend or make a
distribution in shares of its Common Stock, (2) subdivide its outstanding Common
Stock into a greater number of shares, (3) combine its outstanding Common Stock
into a smaller number of shares, or (4) issue by reclassification of its Common
Stock any shares of capital stock of the Company (other than a change in par
value, or from par value to no par value, or from no par value to par value),
the number of Warrant Shares issuable upon exercise of this Warrant and the
Warrant Price in effect immediately prior thereto shall be adjusted as follows:
(i) The number of Warrant Shares issuable upon exercise of this
Warrant shall be adjusted by multiplying the number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately after such adjustment, and the denominator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such adjustment; and
(ii) The Warrant Price shall be adjusted by multiplying the
Warrant Price in effect immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of Warrant Shares issuable upon exercise
of this Warrant immediately prior to such adjustment, and the denominator of
which shall be the number of Warrant Shares as so adjusted.
An adjustment made pursuant to this Section 3(a) shall become effective
immediately after the record date in the case of a dividend or distribution
(provided, however, that such adjustments shall be reversed if such dividends or
distributions are not actually paid) and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to this Section
3(a), the Warrantholder shall become entitled to receive shares of two or more
classes of capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be evidenced by a resolution) shall
determine the allocation of the adjusted Warrant Price between or among the
shares of such classes of capital stock.
(b) In case of any reclassification of the outstanding Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result
3
of a subdivision, combination or stock dividend), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation wherein the Company is not the surviving entity, or in case of any
sale of all, or substantially all, of the property, assets, business and
goodwill of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall provide, by a written instrument
delivered to the Warrantholder, that the Warrantholder shall thereafter be
entitled, upon exercise of this Warrant, to the kind and amount of shares of
stock or other equity securities, or other property or assets which would have
been receivable by such Warrantholder upon such reclassification, consolidation,
merger or sale, if this Warrant had been exercised immediately prior thereto.
Such corporation, which thereafter shall be deemed to be the "Company" for
purposes of this Warrant, shall provide in such written instrument for
adjustments to the Warrant Price which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 3.
(c) No adjustment in the number of securities purchasable hereunder
shall be required unless such adjustment would require an increase or decrease
of at least five percent (5%) in the number of securities (calculated to the
nearest full share or unit thereof) then purchasable upon the exercise of this
Warrant; provided, however, that any adjustment which by reason of this Section
3(c) is not required to be made immediately shall be carried forward and taken
into account in any subsequent adjustment.
(d) For the purpose of this Section 3, the term "Common Stock" shall
mean (i) the class of stock designated as Common Stock of the Company at
February 22, 1999, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an adjustment made pursuant
to this Section 3, the Warrantholder shall become entitled to purchase any
shares of the Company's capital stock other than Common Stock, thereafter the
number of such other shares so purchasable upon the exercise of this Warrant and
the Warrant Price of such shares shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in this Section 3.
(e) Whenever the number of shares of Common Stock and/or other
securities purchasable upon the exercise of this Warrant or the Warrant Price is
adjusted as herein provided, the Company shall cause to be promptly mailed to
the Warrantholder by first class mail, postage prepaid, notice of such
adjustment and a certificate of the Company's chief financial officer setting
forth the number of shares of Common Stock and/or other securities purchasable
upon the exercise of this Warrant, the Warrant Price after such adjustment, a
brief statement of the facts requiring such adjustment, and the computation by
which such adjustment was made.
(f) Irrespective of any adjustments in the Warrant Price or the number
or kind of securities purchasable upon the exercise of this Warrant, the Warrant
certificate or certificates theretofore or thereafter issued may continue to
express the same price or number or kind of securities stated in this Warrant
initially issuable hereunder.
4. FRACTIONAL INTEREST. The Company shall not be required to issue
fractional shares upon exercise of this Warrant, but shall pay an amount in cash
equal to the closing price of the Company's Common Stock on a national
securities exchange, the Nasdaq National Market or other trading market on the
day preceding the date of the surrender of this Warrant pursuant to Section 1(b)
hereof, or if there is no public market, cash equal to the then fair market
value of the shares as
4
reasonably determined by the Board of Directors of the Company, in its sole
discretion, multiplied by such fraction.
5. TRANSFER PROHIBITION. Neither this Warrant nor any rights hereunder may
be sold, exchanged, conveyed, assigned, given, pledged, hypothecated or
otherwise transferred by the Warrantholder to any person or entity other than a
person or entity directly or indirectly controlled by, in control of, or under
common control with the Warrantholder.
6. NO RIGHTS AS SHAREHOLDER; NOTICES TO WARRANTHOLDER. Prior to the
exercise of this Warrant pursuant to the terms hereof, nothing contained in this
Warrant shall be construed as conferring upon the Warrantholder any rights as a
shareholder of the Company, either at law or in equity, including the right to
vote, receive dividends, consent or receive notices as a shareholder with
respect to any meeting of shareholders for the election of directors of the
Company or for any other matter.
7. NOTICES. Any notice given pursuant to this Warrant by the Company or by
the Warrantholder shall be in writing and shall be deemed to have been duly
given upon (a) personal delivery, (b) transmitter's confirmation of the receipt
of a facsimile transmission, (c) confirmed delivery by a standard overnight
carrier, or (d) the expiration of three business days after the day when mailed
by United States Postal Service by certified or registered mail, return receipt
requested, postage prepaid. Such notices shall be delivered (i) if to the
Company, at its principal corporate offices, and (ii) if to Warrantholder, to
such person's address as it appears in the warrant ledger of the Company. Each
party hereto may, from time to time, change the address to which notices to it
are to be transmitted, delivered or mailed hereunder by notice in accordance
herewith to the other party.
8. INVESTMENT REPRESENTATION. The Warrantholder hereby represents to the
Company that it is acquiring this Warrant for its own account, as principal, for
investment and not with a view to or the intent to participate in, directly or
indirectly, the resale, assignment, distribution or fractionalization of all or
any part hereof. Further, the Warrantholder shall furnish the Company an
investment letter, in form and substance satisfactory to the Company, prior to
the issuance of any Warrant Shares or other securities issuable upon the
exercise hereof, to the effect that such securities, and any additional
securities of the Company for which such securities may be exercised or
exchanged or into which they may ultimately be converted, if not registered
pursuant to applicable state and federal securities laws, will be acquired for
investment and not with a view to the sale or distribution thereof. The
Warrantholder hereby further represents that it has been provided with, or given
reasonable access to, full and fair disclosure of all material information
regarding the Company, this Warrant, and the Common Stock.
9. REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(a) During the "Registration Period," as defined below, the Company
shall advise the Warrantholder by written notice at least ten (10) days prior to
the filing of any registration statement (other than a Form S-8 or Form S-4 or
any successor to such forms) under the Securities Act of 1933 (the "Act")
covering securities of the Company and will, upon the request of the
Warrantholder given within ten (10) days of the Company's notice, include in any
such registration statement such information as may be required to permit the
Warrantholder to conduct a public offering of the Warrant Shares. The Company
shall supply prospectuses and other documents as the Warrantholder may
reasonably request in order to facilitate the public sale or other disposition
of the Warrant Shares, use its reasonable best efforts to qualify the Warrant
Shares for sale in such states as
5
the Warrantholder shall reasonably designate, and do any and all other acts and
things that may be reasonably necessary or desirable to enable the Warrantholder
to consummate the public sale or other disposition of the Warrant Shares. The
Company shall use its commercially reasonable best efforts to keep such
registration statement effective for up to 180 days, or such shorter period as
is reasonably required to enable the Warrantholder to dispose of all Warrant
Shares covered by such registration statement. The Company's obligations to
include the Warrant Shares in a public offering under this Section 9(a) shall be
subject to the provisions of Sections 9(c), 9(d), and 9(e)(ii), below. For
purposes of this Section 9, the term "Registration Period" shall commence on
February 22, 1999 and shall terminate on the earlier to occur of (i) the date
when all outstanding Warrant Shares issued upon exercise of this Warrant have
been distributed to the public pursuant to an effective registration statement
or (ii) the date on which all outstanding Warrant Shares issued upon exercise of
this Warrant may be sold pursuant to Rule 144(k) under the Act.
(b) The Company shall bear the entire cost and expense of any
registration of securities initiated by it under Section 9(a) notwithstanding
that Warrant Shares subject to this Warrant may be included in any such
registration. Any person whose Warrant Shares are included in any such
registration statement pursuant to this Section 9 shall, however, bear the fees
of his, her, or its own counsel and any registration fees, transfer taxes or
underwriting discounts or commissions applicable to the Warrant Shares sold by
him, her, or it pursuant thereto.
(c) In the event the offering in which Warrant Shares are to be
included pursuant to Section 9(a) is to be underwritten, the Company shall
furnish the Holders with a written statement of the managing or principal
underwriter as to the Maximum Includable Securities (as defined in Section
9(c)(iii), below) as soon as practicable after the Warrantholder's request to
have Warrant Shares included in such offering, as provided for in Section 9(a).
If the total number of securities proposed to be included in such registration
statement is in excess of the Maximum Includable Securities, the number of
securities to be included within the coverage of such registration statement
shall be reduced to the Maximum Includable Securities as follows:
(i) no reduction shall be made in the number of shares of capital
stock or other securities to be registered for the account of the Company or for
the account of any of the Company's securityholders that have the right to
require the Company to initiate the registration of such securities; and
(ii) the number of Warrant Shares and other securities that may
be included in the registration, if any, shall be allocated among the
Warrantholder and holders of other securities (the "Other Holders") requesting
inclusion on a pro rata basis, with the number of each type or class of
securities of the Warrantholder and each Other Holder thereof included in the
registration to be that number determined by multiplying (A) the total number of
such type or class of security included in the Maximum Includable Securities
less (B) the number of such type or class of security to be registered for the
account of the Company or other securityholders that have the right to require
the Company to initiate the registration, by a fraction, the numerator of which
will be the total number of such type or class of security that such
Warrantholder or Other Holder owns, and the denominator of which will be the
total number of such type or class of security owned by the Warrantholder and
all Other Holders that have requested inclusion of such type or class of
security in the registration.
(iii) "Maximum Includable Securities" shall mean the maximum
number of shares of each type or class of the Company's securities that a
managing or principal underwriter, in its good faith judgment, deems practicable
to offer and sell at that time in a firm commitment underwritten
6
offering without materially and adversely affecting the marketability or price
of the securities of the Company to be offered. When more than one type or class
of the Company's securities are to be included in a registration, the managing
or principal underwriter of the offering shall designate the maximum number of
each such type or class of securities that is included in the Maximum Includable
Securities.
(d) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 9 that the Warrantholder
shall:
(i) furnish to the Company such information regarding the
Warrantholder, the Warrant Shares, and such other information as may reasonably
be required to effect the registration of the Warrant Shares;
(ii) notify the Company, at any time when a prospectus relating
to the Warrant Shares covered by a registration statement is required to be
delivered under the Act, of the happening of any event with respect to the
Warrantholder as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing; and
(iii) in the event of any underwritten public offering, the right
of the Warrantholder to include its Warrant Shares in such registration shall be
conditioned upon the Warrantholder participating in such underwriting agreement
for such offering, and if requested to do so by the underwriters managing such
offering, shall enter into a customary holdback agreement.
(e) The following provisions of this Section 9 shall also be
applicable:
(i) The Company shall indemnify and hold harmless the
Warrantholder and each underwriter, within the meaning of the Act, who may
purchase from or sell for the Warrantholder any Warrant Shares from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement under the Act or any post-effective amendment thereto or
any prospectus included therein required to be filed or furnished by reason of
this Section 9 or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or alleged untrue statement
or omission or alleged omission based upon information furnished or required to
be furnished in writing to the Company by the Warrantholder or underwriter
expressly for use therein, which indemnification shall include each person, if
any, who controls the Warrantholder or underwriter within the meaning of such
Act provided, however, that the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by the Warrantholder,
specifically for use in the preparation thereof.
(ii) The Warrantholder shall indemnify and hold harmless the
Company and each person who controls the Company, within the meaning of the Act,
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement under the Act or any post-effective amendment
7
thereto or any prospectus included therein required to be filed or furnished by
reason of this Section 9 or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided, however, that the Warrantholder
will be liable in any such case to the extent, but only to the extent, that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with written
information furnished by the Warrantholder specifically for use in the
preparation thereof. In no event, however, shall the liability of the
Warrantholder for indemnification under this Section 9 exceed the net proceeds
received by the Warrantholder from the sale of such person's Warrant Shares.
10. GENERAL PROVISIONS.
(a) SUCCESSORS. All covenants and provisions of this Warrant shall
bind and inure to the benefit of the respective successors and permitted assigns
of the parties hereto.
(b) CHOICE OF LAW. This Warrant and the rights of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of Arizona, including all matters of construction, validity, performance,
and enforcement, and without giving effect to the principles of any Arizona or
other conflict-of-law provisions to the contrary.
(c) ENTIRE AGREEMENT. This Warrant and the Marketing Agreement,
including exhibits hereto and thereto, contain the entire agreement of the
parties, and supersede all existing negotiations, representations or agreements
and all other oral, written, or other communications between them concerning the
subject matter of this Warrant and the Marketing Agreement.
(d) SEVERABILITY. If any provision of this Warrant is unenforceable,
invalid, or violates applicable law, such provision shall be deemed stricken and
shall not affect the enforceability of any other provisions of this Warrant.
(e) CAPTIONS. The captions in this Warrant are inserted only as a
matter of convenience and for reference and shall not be deemed to define,
limit, enlarge, or describe the scope of this Warrant or the relationship of the
parties, and shall not affect this Warrant or the construction of any provisions
herein.
8
IN WITNESS WHEREOF, the Company caused this Warrant to be duly executed as
of the date first above written.
VODAVI TECHNOLOGY, INC.,
a Delaware corporation
By: /s/
------------------------------------
Its: CFO, VP Finance
The Warrantholder hereby agrees to and accepts the terms and conditions of
this Warrant this 22nd day of February, 1999.
CONTINENTAL CAPITAL & EQUITY CORPORATION,
a Florida corporation
By:
-------------------------------------
Its:
9
EXHIBIT A
ELECTION TO PURCHASE
Vodavi Technology, Inc.
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
The undersigned hereby irrevocably elects to exercise the right of purchase
set forth in the attached Warrant to purchase thereunder ____________________
shares of the Common Stock (the "Warrant Shares") provided for therein and
requests that the Warrant Shares be issued in the name of
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please Print Name, Address and SSN or EIN of Shareholder above)
Dated:______________
Name of Warrantholder or Assignee:
----------------------------------------------
(Please Print)
Signature:
----------------------------------------------------------------------
(Signature must conform in all respects to name of holder as specified
on the face of the Warrant.)
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
Aggregate Warrant Price Paid: $__________________
Method of payment:
--------------------------------------------------------------
(Please Print)
--------------------------------------------------------------------------------
Medallion Signature Guarantee (required if an assignment of Warrant Shares
acquired on exercise is made upon exercise.)
10
