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EXHIBIT 10.2
THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY MAY
NOT BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.
WARRANT
to Purchase Common Stock of
INTELECT COMMUNICATIONS, INC.
Expiring on April 30, 2005
This Amended and Restated Common Stock Purchase Warrant (the "Warrant")
certifies that for value received, Lifeline Industries, Inc. (the "Holder") is
entitled to subscribe for and purchase from the Company (as hereinafter
defined), in whole or in part, 30,000 shares of duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock (as hereinafter defined) at
an Exercise Price (as hereinafter defined) per share of $2.00, subject, however,
to the provisions and upon the terms and conditions hereinafter set forth. This
Warrant and all rights hereunder shall expire at 5:00 p.m., Houston, Texas time,
on April 30, 2005.
As used herein, the following terms shall have the meanings set forth
below:
"Company" shall mean Intelect Communications, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
"Common Stock" shall mean and include the Company's Common Stock, par
value $0.01 per share, authorized on the date of the original issue of this
Warrant.
"Exercise Price" shall mean the initial purchase price of $2.00 per
share of Common Stock payable upon exercise of the Warrant, as adjusted from
time to time pursuant to the provisions hereof.
"Market Price" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined as follows: (x) the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers National Market on such date, or,
if there
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shall have been no trading on such date or if the Common Stock shall not be
listed on such system, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any NASD member firm selected from time
to time by the Company for such purpose; or (y) if the Common Stock shall not be
listed or admitted to trading as provided in clause (x) above, the fair market
value of the Common Stock as determined in good faith by the Board of Directors
of the Company.
"Warrant Shares" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrant.
ARTICLE I
EXERCISE OF WARRANT
1.1 Method of Exercise. The Warrant represented hereby may be
exercised by the Holder hereof, in whole or in part, at any time and from time
to time on or after the date hereof until 5:00 p.m., Houston, Texas time, on
April 30, 2005. To exercise the Warrant, the Holder hereof shall deliver to the
Company (i) a written notice in the form of the Subscription Notice attached as
an exhibit hereto, stating therein the election of such Holder to exercise the
Warrant in the manner provided in the Subscription Notice; and (ii) payment in
full of the Exercise Price in cash or by bank check for all Warrant Shares
purchased hereunder. The Warrant shall be deemed to be exercised on the date of
receipt by the Company of the Subscription Notice, accompanied by payment for
the Warrant Shares and surrender of this Warrant, as aforesaid, and such date is
referred to herein as the "Exercise Date". Upon such exercise, the Company
shall, as promptly as practicable and in any event within ten (10) business
days, issue and deliver to such Holder a certificate or certificates for the
full number of the Warrant Shares purchased by such Holder hereunder, and shall,
unless the Warrant has expired or has been redeemed, deliver to the Holder
hereof a new Warrant representing the portion, if any, that shall not have been
exercised, in all other respects identical to this Warrant. As permitted by
applicable law, the Person in whose name the certificates for Common Stock are
to be issued shall be deemed to have become a holder of record of such Common
Stock on the Exercise Date and shall be entitled to all of the benefits of such
holder on the Exercise Date, including without limitation the right to receive
dividends and other distributions for which the record date falls on or after
the Exercise Date and to exercise voting rights.
1.2 Reservation of Shares. The Company shall reserve at all times
so long as the Warrant remains outstanding, free from preemptive rights, out of
its treasury Common Stock or its authorized but unissued shares of Common Stock,
or both, solely for the purpose of effecting the exercise of the Warrant, a
sufficient number of shares of Common Stock to provide for the exercise of the
Warrant.
1.3 Valid Issuance. All shares of Common Stock that may be issued
upon exercise of the Warrants will, upon issuance by the Company, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
1.4 No Fractional Shares. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would be issuable on the exercise of this
Warrant, the Company shall pay an amount in cash calculated by it to be equal to
the Market Price of one share of Common Stock at the time of such exercise
multiplied by such fraction computed to the nearest whole cent.
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ARTICLE II
TRANSFER
2.1 Ownership of Warrant. The Company may deem and treat the person
in whose name the Warrant is registered as the Holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary unless agreed to in writing by the Company.
2.2 Restrictions on Transfer of Warrants. The Holder of the Warrant
agrees that the Warrant is not transferrable without the prior written consent
of the Company and any such transfer without such consent shall be void and
without effect. Subject to the restrictions on transfer of the Warrant in this
Section 2.2, the Company, from time to time, shall register the transfer of the
Warrant in such books upon surrender of this Warrant at the Company's principal
office, properly endorsed or accompanied by appropriate instruments of transfer
and written instructions for transfer satisfactory to the Company. Upon any such
transfer and upon payment by the Holder or its transferee of any applicable
transfer taxes, a new Warrant shall be issued to the transferee and the
transferor (as their respective interests may appear) and the surrendered
Warrant shall be canceled by the Company. The Holder shall pay all taxes and all
other expenses and charges payable in connection with the transfer of the
Warrant pursuant to this Section 2.2.
2.3 Compliance with Securities Laws. Notwithstanding any other
provisions contained in this Warrant, the Holder hereof understands and agrees
that the following restrictions and limitations shall be applicable to all
Warrant Shares and to all resales or other transfers thereof pursuant to the
Securities Act, and that as a condition to the exercise of such warrant that the
following are and will be true and correct:
(A) The Holder hereof agrees that the Warrant Shares shall
not be sold or otherwise transferred unless the Warrant Shares are
registered under the Securities Act and applicable state securities or
blue sky laws or are exempt therefrom.
(B) A legend in substantially the following form will be
placed on the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW
AND, ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS."
(C) Stop transfer instructions will be imposed with respect
to the Warrant Shares so as to restrict resale or other transfer
thereof, subject to this Section 2.3.
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(D) The Holder is an "accredited investor" within the meaning
of Rule 501 of Regulation D as promulgated under the Securities Act of
1933, and will be so as a condition of purchasing any of the Warrant
Shares. The Holder will acquire the Warrant Shares for its own account
for investment purposes and not with a view towards distribution. The
Holder must bear the economic risk of the investment for an indefinite
period of time because the Warrant Shares have not been registered
under the Securities Act and therefore cannot be sold unless they are
subsequently registered under the Securities Act or an exemption from
such registration is available. The Holder has received and carefully
reviewed copies of all documents filed by the Company as of the time of
each exercise with the Securities and Exchange Commission. No
representations or warranties have been made to the Holder by the
Company, the officers or directors of the Company, or any agent,
employee or affiliate of any of them. The Holder is aware that the
purchase of the Warrant Shares involves a high degree of risk and that
it may sustain, and has the financial ability to sustain, the loss of
its entire investment. The Holder has had the opportunity to ask
questions of, and receive answers, satisfactory to it from the
Company's management regarding the Company. The Holder understands that
no Federal or State governmental authority has made any finding or
determination relating to the fairness of an investment in the Warrant
Shares and that no Federal or State governmental authority has
recommended or endorsed, or will recommend or endorse, the investment
herein. The Holder, in making the decision to purchase the Warrant
Shares subscribed for, has relied upon independent investigations made
by it and has not relied on any information or representations made by
third parties. The Holder has significant assets, and upon consummation
of the purchase of the Warrant Shares, will continue to have
significant assets exclusive of the Warrant Shares. The Holder
understands that the Warrant Shares are being offered and sold to it in
reliance on specific provisions of Federal and State securities laws
and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Holder set forth herein in order to determine the
applicability of such provisions. The Holder, in making the decision to
purchase the Warrant Shares subscribed for, has relied upon independent
investigations made by it and has not relied on any information or
representations made by third parties.
ARTICLE III
ANTI-DILUTION
3.1 Anti-Dilution Provisions. If the outstanding shares of the
Company's Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of Common Stock, the Exercise
Price in effect immediately prior to such subdivision or at the record date of
such dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Exercise Price, the number of Warrant Shares purchasable upon the exercise of
this Warrant shall be changed to the number determined by dividing (i) an amount
equal to the number of shares issuable upon the exercise of this Warrant
immediately prior to such adjustment, multiplied by the Exercise Price in effect
immediately in effect prior to such adjustment, by (ii) the Exercise Price in
effect immediately after such adjustment.
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3.2 Reorganizations and Asset Sales. If any capital reorganization
or reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that a holder of Common Stock of
the Company shall be entitled to receive capital stock, securities or assets
with respect to or in exchange for their shares, then as part of any such
reorganization, reclassification, consolidation, merger or sale, as the case may
be, lawful provision shall be made so that the Holder of this Warrant shall have
the right thereafter to receive upon exercise hereof the kind and amount of
share of stock or other securities or property which such holder would have been
entitled to receive if, immediately prior to any such reorganization,
reclassification, consolidation, merger or sale, as the case may be, such holder
had held the number of shares of Common Stock which were the purchasable upon
the exercise of this Warrant. In any such case, appropriate adjustment (as
reasonably determined in good faith by the Board of Directors of the Company)
shall be made in the application of the provisions set forth herein with respect
to the rights and interests thereafter of the Holder of this Warrant, such that
the provisions set forth herein (including provisions with respect to adjustment
of the Exercise Price) shall thereafter be applicable, as nearly as is
reasonably practicable, in relation to any shares of stock or other securities
or property thereafter deliverable upon the exercise of this Warrant.
3.3 Notice of Adjustment. Whenever the Exercise Price or the number
of Warrant Shares issuable upon the exercise of the Warrant shall be adjusted as
herein provided, or the rights of the Holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare a notice setting forth the adjusted Exercise
Price and the adjusted number of Warrant Shares issuable upon the exercise of
the Warrant or specifying the other shares of stock, securities or assets
receivable as a result of such change in rights, and showing in reasonable
detail the facts and calculations upon which such adjustments or other changes
are based. The Company shall cause to be mailed to the Holder hereof copies of
such notice stating that the Exercise Price and the number of Warrant Shares
purchasable upon exercise of the Warrant have been adjusted and setting forth
the adjusted Exercise Price and the adjusted number of Warrant Shares
purchasable upon the exercise of the Warrant.
ARTICLE IV
MISCELLANEOUS
4.1 Entire Agreement. This Warrant, together with the Agreement,
contain the entire agreement between the Holder hereof and the Company with
respect to the Warrant Shares purchasable upon exercise hereof and the related
transactions and supersedes all prior arrangements or understandings with
respect thereto.
4.2 Governing Law; Venue. This warrant shall be governed by and
construed in accordance with the laws of the State of Texas. Venue for any
dispute arising under this Warrant shall lie in the state or federal courts of
Harris County, Texas.
4.3 Waiver and Amendment. Any term or provision of this Warrant may
be waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the Holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall
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not in any way effect, limit or waive a party's rights hereunder at any time to
enforce strict compliance thereafter with every term or condition of this
Warrant.
4.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
4.5 Copy of Warrant. A copy of this Warrant shall be filed among
the records of the Company.
4.6 Notice. Any notice or other document required or permitted to
be given or delivered to the Holder or the Company hereof shall be in writing
and will deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided a confirmation
of transmission is mechanically generated and kept on file by the sending
party); or (iii) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be: any notice or other document required or permitted to be given or
delivered to the Company shall be sent to the offices of the Company at 1100
Executive Drive, Richardson, Texas 75081, Attn: Chief Executive Officer,
Telecopy No. (972) 367-2271 or such other address as shall have been furnished
in writing by the Company to the Holder of this Warrant, with a copy to Philip
P. Sudan, Jr., Esq., Sudan, L.L.P., 909 Fannin, 39th Floor, Houston, Texas
77010, Telecopy No. (713) 652-0503. Any notice sent or required to be sent
hereunder to the Holder shall be sent to Lifeline Industries, Inc., 160 Overlook
Ave., Suite 24E, Hackensack, New Jersey 07601, Attn: Robb Knie, Telecopy No.
(201) 488-6988 or such other address as shall have been furnished in writing by
the Holder to the Company.
4.7 Limitation of Liability; Not Stockholders. No provision of this
Warrant shall be construed as conferring upon the Holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the Holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
4.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity or such other security in such
form and amount as shall be reasonably satisfactory to the Company, or in the
event of such mutilation upon surrender and cancellation of this Warrant, the
Company will make and deliver a new Warrant of like tenor, in lieu of such lost,
stolen, destroyed or mutilated Warrant. Any Warrant issued under the provisions
of this Section 4.8 in lieu of any Warrant alleged to be lost, destroyed or
stolen, or in lieu of any mutilated Warrant, shall constitute an original
contractual obligation on the part of the Company. This Warrant shall be
promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The Company shall pay all taxes (other than
securities transfer taxes or income taxes) and
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all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 4.8.
4.9 Headings. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: September 1, 1998
INTELECT COMMUNICATIONS, INC.
By /s/ Herman M. Frietsch
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Name: Herman M. Frietsch
Title: Chairman and Chief Executive Officer
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SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby for and to purchase thereunder,
________ shares of the Common Stock covered by such Warrant, and herewith makes
payment in full for such shares pursuant to Section 1.1 of such Warrant, and
requests (a) that certificates for such shares (and any other securities or
other property issuable upon such exercise) be issued in the name of, and
delivered to _____________________________________ and (b), if such shares shall
not include all of the shares issuable as provided in such Warrant, that a new
Warrant of like tenor and date for the balance of the shares issuable thereunder
be delivered to the undersigned.
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Date:
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ASSIGNMENT
For value received, _______________________, hereby sells, assigns, and
transfers unto _________________________ the within Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ attorney, to transfer such Warrant on the books
of the Company, with full power of substitution.
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Date:
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