Exhibit 10.3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TOWARD DISTRIBUTION OR
RESALE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE ACT OR ANY APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE
ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR APPLICABLE STATE LAW.
ELCOTEL, INC.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
Warrant No. W-2 No. of Shares - 18,938
This certifies that, for valued received, Greyhawke Capital Advisors LLC
("Holder"), or its registered assigns, is entitled, subject to the terms and
conditions hereinafter set forth, at or prior to 5:00 p.m., Sarasota, Florida
time, on May 22, 2005, but not thereafter, to purchase 18,938 shares of Common
Stock ("Common Stock"), par value $.01 per share, of Elcotel, Inc., a Delaware
corporation (hereinafter called the "Company"). The purchase price payable upon
the exercise of this Warrant (the "Warrant Price") shall be $2.475 per share.
Upon delivery of this Warrant with the subscription notice duly executed,
together with payment of the Warrant Price, by certified or cashier's check
payable to the Company, for the shares of Common Stock thereby purchased, at the
principal office of the Company, 6428 Parkland Drive, Sarasota, Florida 34243,
or at such other address as the Company may designate by notice in writing to
the Holder, the Holder of this Warrant shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. All
shares of Common Stock which may be issued upon the exercise of this Warrant
will, upon issuance, be fully paid and non-assessable and free from all taxes,
liens and charges with respect thereto.
This Warrant is subject to the following terms and conditions:
1. Exercise of Warrant. Except as otherwise provided in this paragraph 1,
this Warrant may be exercised in whole at any time, or in part from time to
time, at or prior to 5:00 p.m., Sarasota, Florida time, on May 22, 2005, but not
thereafter, as to all or any part of the number of whole shares of Common Stock
then subject hereto so long as for any partial exercise the number of shares of
Common Stock purchased is at least 100 shares. In case of any partial exercise
of this Warrant, the Company shall execute and deliver a new Warrant of like
tenor and date for the balance of the shares of Common Stock purchasable
hereunder or appropriate notation may be made on this Warrant which shall then
be returned to the Holder.
2. Adjustment of Warrant Price and Number of Shares Purchasable Hereunder.
The Warrant Price and the number of shares purchasable hereunder shall be
subject to adjustment from time to time in accordance with the following
provisions:
(a) In the event of any payment of any cash dividend or distribution
of property by the Company otherwise than out of earned surplus, either tangible
or intangible (other than distributions of the Common Stock), to the holders of
the Common Stock, the Warrant Price for the shares of Common Stock then subject
to this Warrant shall be reduced by the per share amount of such dividend or
distribution unless and until the Warrant Price is equal to the then par value
of the Common Stock. If and when the Warrant Price is equal to the then par
value of the Common Stock, the registered holder of this Warrant shall be
entitled to receive, concurrently with the holders of the Common Stock then
outstanding, the per share amount of any such dividend or distribution with
respect to the number of shares of Common Stock then purchasable upon exercise
of this Warrant in the same manner and to the same extent as if the registered
holder of this Warrant were then the registered owner of the shares of Common
Stock then subject hereto. For purposes of this subparagraph (a), the per share
amount of any
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distribution of property shall be the fair market value thereof as determined by
the Board of Directors in good faith in the resolutions authorizing any such
distribution.
(b) In case the Company shall at any time subdivide the outstanding
shares of its Common Stock, the Warrant Price in effect immediately prior to
such subdivision shall be proportionately decreased, and in case the Company
shall at any time combine the outstanding shares of its Common Stock, the
Warrant Price in effect immediately prior to such combination shall be
proportionately increased, effective from and after the record date of such
subdivision or combination, as the case may be.
Upon any adjustment in the Warrant Price per share pursuant to this
subparagraph (b), the Holder of this Warrant shall thereafter be entitled to
purchase, at the adjusted Warrant Price, the number of shares of Common Stock,
calculated to the nearest full share obtained by (X) multiplying the number of
shares of Common Stock purchasable hereunder immediately prior to such
adjustment by the Warrant Price in effect immediately prior to such adjustment,
and (Y) by dividing the product thereof by the Warrant Price resulting from such
adjustment. No such adjustment in the number of shares that may be purchased
upon exercise of this Warrant shall be required in the event of an adjustment in
the Warrant Price per share pursuant to subparagraph (a).
(c) In the event of the issuance of additional shares of Common
Stock of the Company as a dividend on the Common Stock, from and after the day
that is the record date for the determination of stockholders entitled to such
dividend the Holder of this Warrant shall (until another adjustment) be entitled
to purchase the number of shares of Common Stock, calculated to the nearest full
share, obtained by multiplying the number of shares of Common Stock purchasable
hereunder immediately prior to said record date by the percentage which the
number of additional shares constituting any such dividend is of the total
number of shares of Common Stock outstanding immediately prior to said record
date plus the number of shares of Common Stock issuable upon conversion of the
outstanding convertible securities or upon exercise of any outstanding warrants,
options or rights (including those with respect to convertible securities) and
adding the result so obtained to the number of shares of Common Stock
purchasable hereunder immediately prior to said record date.
Upon each adjustment pursuant to this subparagraph (c), the Warrant Price
in effect immediately prior to such adjustment shall be reduced to an amount
determined by dividing (X) the product obtained by multiplying such Warrant
Price by the number of shares of Common Stock purchasable hereunder immediately
prior to such adjustment by (Y) the number of shares of Common Stock purchasable
hereunder immediately following such adjustment.
(d) If the Company, at any time subsequent to the date on which this
Warrant has been issued, shall issue any additional shares of Common Stock at a
price per share less than the lesser of the (i) Warrant Price and (ii) Current
Market Price (as defined below), including, for purposes of this subparagraph
(d) any shares of Common Stock that may be issued upon the exercise of
conversion or other rights with respect to any security of the Company issued by
the Company subsequent to the date on which this Warrant has been issued that is
convertible into or exchangeable for Common Stock, other than additional shares
of Common Stock issued in transactions described in subparagraphs (b) or (c) of
this paragraph 2, the number of shares of Common Stock thereafter purchasable
upon exercise of this Warrant (calculated to the nearest full share) shall be
adjusted by multiplying the number of shares of Common Stock purchasable upon
exercise of this Warrant prior to such issuance by a fraction (i) the numerator
of which shall be (A) the number of shares of Common Stock outstanding
immediately prior to such issue or sale (assuming exercise of all outstanding
options and warrants and conversion of all outstanding convertible securities)
plus (B) the number of such additional shares of Common Stock so issued and (ii)
the denominator of which shall be (A) the number of shares of Common Stock
outstanding immediately prior to such issue or sale (assuming exercise of all
outstanding options and warrants and conversion of all outstanding convertible
securities) plus (B) the number of shares of Common Stock that the aggregate
consideration received by the Company for the total number of additional shares
of Common Stock so issued would purchase at the lower of the (i) Warrant Price
and (ii) Current Market Price. "Current Market Price" shall mean the closing
sales price of the Common Stock on the NASDAQ National Market System or the
principal securities exchange on which the Common Stock is then listed or
admitted to trading, or if not so reported, the mean between the highest and
lowest quoted selling prices of the Common Stock, or the mean between the
highest asked price and the lowest bid price as the case may be, as reported on
the National Association of Securities Dealers Automated Quotation System as of
the close of business on the last full day of trading prior to the issue or sale
of such Common Stock by the Company.
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If the Common Stock shall not be so traded, the Current Market Price shall
be determined by the Board of Directors taking into account all relevant facts
and circumstances.
For the purposes of the subparagraph (d), the issuance of any warrants,
options or other subscription rights with respect to Common Stock and the
issuance of any securities convertible into or exchangeable for Common Stock (or
the issuance of any warrants, options or any rights with respect to such
securities) shall be deemed an issuance at such time of Common Stock. No
adjustment of the number of shares of Common Stock purchasable hereunder shall
be made under this subparagraph (d) upon the subsequent issuance of any
additional shares of Common Stock pursuant to the exercise of such warrants,
options or other subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any convertible securities. On the
expiration or termination of any warrants, options or other subscription rights
with respect to Common Stock, or on the expiration or termination of any
conversion or exchange rights with respect to securities convertible into Common
Stock (or warrants, options or any rights therefor), the number of shares of
Common Stock then purchasable hereunder shall forthwith be decreased to the
number of shares of Common Stock which would have been purchasable hereunder at
the time of such expiration or termination if such warrants, options or other
subscription rights, or such conversion or exchange rights (or warrants, options
or any rights therefor), to the extent outstanding immediately prior to such
expiration or termination, had never been issued.
For the purpose of this subparagraph (d), in the case of the issue of
shares of Common Stock for a consideration other than cash, the consideration
received by the Company therefore shall be deemed to be the fair value of such
consideration as determined in good faith by its Board of Directors.
This subparagraph (d) shall not apply to the issuance by the Company of
(i) Common Stock pursuant to the exercise of warrants, options or other rights
to purchase Common Stock outstanding on the date hereof or (ii) Common Stock,
warrants, options or other subscription rights with respect to Common Stock or
securities convertible into or exchangeable for Common Stock (or the issuance of
any warrants, options or any rights with respect to such securities) pursuant to
a private placement completed on or before December 31, 2000.
Upon each adjustment pursuant to this subparagraph (d), the Warrant Price
in effect immediately prior to such adjustment shall be reduced to an amount
determined by dividing (X) the product obtained by multiplying such Warrant
Price by the number of shares of Common Stock purchasable hereunder immediately
prior to such adjustment by (Y) the number of shares of Common Stock purchasable
hereunder immediately following such adjustment.
3. Reorganization, Reclassification, Consolidation or Merger. If at any
time while this Warrant is outstanding there shall be any reorganization or
reclassification of the Common Stock of the Company (other than a subdivision or
combination of shares provided for in paragraph 2 above), any consolidation or
merger of the Company with another corporation or any sale of all or
substantially all of its assets to another corporation effected in such a way
that holders of Common Stock shall be entitled to receive stock, securities or
property with respect to or in exchange for Common Stock, the Holder of this
Warrant shall thereafter be entitled to receive, during the term hereof and upon
payment of the Warrant Price, the number of shares of stock or other securities
or property of the Company or of the successor corporation resulting from such
consolidation, merger or sale of assets, as the case may be, to which a holder
of the Common Stock of the Company, deliverable upon the exercise of this
Warrant, would have been entitled upon such reorganization, reclassification,
consolidation, merger or sale of assets if this Warrant had been exercised
immediately prior to such reorganization, reclassification, consolidation,
merger or sale of assets; and in any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the Holder of this Warrant to the end that the
provisions set forth herein (including the adjustment of the Warrant Price and
the number of shares issuable upon the exercise of this Warrant) shall
thereafter be applicable, as near as reasonably may be, in relation to any
shares or other property thereafter deliverable upon the exercise hereof.
4. Net Issue Exercise. In lieu of exercising this Warrant or any part
thereof, Holder may elect to receive shares of Common Stock equal to the value
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with written notice
stating (i) that the Holder elects to receive Common Stock by exercise of its
net issue exercise right pursuant to this paragraph 4 and
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(ii) the number of Warrants the Holder desires to surrender, in which event the
Company shall issue to Holder that number of shares of Common Stock computed
using the following formula:
X=Y(A-B)
A
Where:
X= the number of shares of Common Stock to be issued to
Holder
Y= the number of shares of Common Stock being purchased
under this Warrant
A= the Current Market Price (as defined in paragraph 2(d))
of one share of Common Stock
B= the Warrant Price (as adjusted to the date of such
calculations)
5. Notice of Adjustments. Upon any adjustment of the Warrant Price and any
increase or decrease in the number of shares of Common Stock purchasable upon
the exercise of this Warrant, then, and in each such case, the Company, within
thirty days after a Holder's request, shall give written notice thereof to the
Holder of this Warrant at the address of such Holder as shown on the books of
the Company, which notice shall state the Warrant Price as adjusted and the
increased or decreased number of shares purchasable upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation of each.
6. Charges, Taxes and Expenses. The issuance of certificates for shares of
Common Stock upon any exercise of this Warrant shall be made without charge to
the Holder hereof for any tax or other expense in respect to the issuance of
such certificates, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of, or in such name or names
as may be directed by, the Holder of this Warrant; provided, however, that in
the event that certificates for shares of Common Stock are to be issued in a
name other than the name of the Holder of this Warrant, this Warrant when
surrendered for exercise shall be accompanied by an instrument of transfer in
form satisfactory to the Company, duly executed by the Holder hereof in person
or by an attorney duly authorized in writing and the Holder shall pay all stock
transfer taxes payable upon issuance of such stock certificate.
7. Certain Obligations of the Company. The Company agrees that it will not
establish or increase the par value of the shares of any Common Stock which are
at the time issuable upon exercise of this Warrant above the then prevailing
Warrant Price hereunder and that, before taking any action which would cause an
adjustment reducing the Warrant Price hereunder below the then par value, if
any, of the shares of any Common Stock issuable upon exercise hereof, the
Company will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of Common Stock at the Warrant Price as so adjusted.
8. Restrictions on Exercise and Transfer. Notwithstanding any provisions
contained in this Warrant to the contrary, this Warrant shall not be exercisable
or transferable and the related shares of Common Stock shall not be transferable
except upon the conditions specified in this paragraph 7 8, which conditions are
intended, among other things, to insure compliance with the provisions of the
Act in respect of the exercise or transfer of the Warrant or transfer of the
related shares of Common Stock. The Holder represents and warrants that the
language contained in the legend on the first page hereof is true and correct.
The Holder of this Warrant, by acceptance hereof, agrees that it will not (a)
exercise this Warrant except in compliance with the applicable securities laws
or (b) transfer this Warrant or the related shares of Common Stock except (i)
pursuant to an effective registration statement covering such securities under
the Act and any applicable state securities laws, (ii) in a transaction
permitted by Rule 144 promulgated under the Act and as to which the Company has
received reasonably satisfactory evidence of compliance with the provisions of
Rule 144, or (iii) upon receipt of a legal opinion rendered
<PAGE>
by counsel reasonably satisfactory to the Company to the effect that the
transaction does not require registration under the Act and any applicable state
securities laws.
9. Miscellaneous. (a) The Company covenants that it will at all times
reserve and keep available, solely for the purpose of issue upon the exercise
hereof, a sufficient number of shares of Common Stock to permit the exercise
hereof in full.
(b) The terms of this Warrant shall be binding upon and shall inure
to the benefit of any successors or assigns of the Company and of the Holder or
Holders hereof.
(c) No Holder of this Warrant, as such, shall be entitled to vote,
receive dividends (except as provided in paragraph 2(a) hereof), receive notice
in respect of meetings of stockholders or any other matter whatsoever as a
stockholder of the Company or be deemed to be a stockholder of the Company for
any purpose.
(d) This Warrant may be divided into separate Warrants covering at
least one hundred shares of the Common Stock for the total number of shares of
Common Stock then subject to this Warrant at any time, or from time to time,
upon the request of the Holder of this Warrant and the surrender of the same to
the Company for such purpose. Such subdivided Warrants shall be issued promptly
by the Company following any such request and shall be of the same form and
tenor as this Warrant, except for any requested change in the name of the Holder
stated herein.
(e) Except as otherwise provided herein, this Warrant and all rights
hereunder are transferable by the Holder hereof in person or by duly authorized
attorney on the books of the Company upon surrender of this Warrant, with the
attached assignment properly endorsed, to the Company. The Company may deem and
treat the registered Holder of this Warrant at any time as the absolute owner
hereof for all purposes and shall not be affected by any notice to the contrary.
(f) Notwithstanding any provision herein to the contrary, the Holder
hereof may not exercise, sell, transfer or otherwise assign this Warrant unless
the Company is provided with an opinion of counsel satisfactory in form and
substance to the Company, to the effect that such exercise, sale, transfer or
assignment does not violate the Securities Act of 1933 or applicable state
securities laws.
(g) This Warrant contains the entire agreement between the Holder
hereof and the Company with respect to the purchase of shares of Common Stock of
the Company and supersedes all prior arrangements or understandings with respect
thereto.
(h) This Warrant shall be governed by and construed in accordance
with the laws of the State of Delaware.
(i) 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 of this Warrant and the Company, except that any waiver of any term or
condition, or any amendment or supplementation, of this Warrant must be in
writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way affect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with any
term or condition of this Warrant.
(j) Any notice or other document required or permitted to be given
or delivered to the Holder of this Warrant shall be delivered personally, or
sent by certified or registered mail, to each such Holder at the last address
shown on the books of the Company for the registration of, and the registration
of transfer of, the Warrant or at any more recent address of which the Holder of
this Warrant shall have notified the Company in writing. Any notice or other
document required or permitted to be given or delivered to the Company, shall be
delivered at, or sent by certified or registered mail to, the office of the
Company at 6428 Parkland Drive, Sarasota, Florida 34243, Attention: Chief
Executive Officer, or such other address within the United States of America as
shall have been furnished by the Company to the Holder of the Warrant.
<PAGE>
IN WITNESS WHEREOF, the Company and the Holder caused this Warrant to be
signed by their duly authorized officers.
Dated: May 22, 2000
ELCOTEL, INC.
By: /s/ Michael J. Boyle
------------------------------------------
Michael J. Boyle, Chief Executive Officer
GREYHAWKE CAPITAL ADVISORS LLC
By: /s/ Mark L, Plaumann
-----------------------------------------
Mark L. Plaumann, Managing Member
<PAGE>
SUBSCRIPTION NOTICE
Elcotel, Inc.
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented by said Warrant for, and to purchase
thereunder, ________ shares of the Common Stock covered by said Warrant and
herewith makes payment in full therefor of $_______ by certified or cashier's
check payable to the order of the Company, and requests (a) that certificates
for such shares (and any securities or other property issuable upon such
exercise) be issued in the name of and delivered to ______________ whose address
is _________________________________ and (b) if such shares shall not include
all of the shares issuable as provided in said Warrant, that a new Warrant of
like tenor and date for the balance of the shares issuable thereunder be
delivered to the undersigned or that appropriate notation be made on the Warrant
which shall be returned to the undersigned.
_______________________________
Signature Guaranteed:
Dated:
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ASSIGNMENT
(To be Executed by the Registered Holder to
effect a transfer of the foregoing Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and
transfers unto ______________________________________________ the foregoing
Warrant and the rights represented thereby to purchase shares of Common Stock of
the Company in accordance with the terms and conditions thereof, and does hereby
irrevocably constitute and appoint _________________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.
Holder:
________________________________
________________________________
Address
Dated: _____________________, 20__
In the presence of:
_____________________________________
