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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 30, 1996
(AUGUST 7, 1996)
NORRIS COMMUNICATIONS CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
YUKON TERRITORY, CANADA 0-20734 NONE
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NUMBER)
12725 STOWE DRIVE, POWAY, CALIFORNIA 92064
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 679-1504
_______________________________________________________________________________
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Page 1 of 29
1 Exhibit Index on Page 4
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ITEM 5. OTHER EVENTS
On August 7, 1996, the Company completed a private placement of securities
through the sale of common stock and warrants convertible into common stock and
received gross proceeds of $5,670,000. The securities were sold in three
tranches, as follows: (a) On June 7, 1996, the Company closed the first
tranche of the private placement and received gross proceeds of $2,500,000.
The purchase price for the 2,420,143 shares of common stock sold was $.70. The
five warrants (sold at a face value of $805,000) are convertible into common
stock (without additional consideration) in an amount equal to the face value
of the warrant divided by the lesser of (i) $.70 per share or (ii) a 30%
discount to the average closing bid price for the shares for the five days
prior to (but not including) the conversion date; (b) On July 31, 1996, the
Company closed the second tranche of the private placement and received gross
proceeds of $2,580,000. The purchase price for the 245,931 shares of common
stock sold was $.69125. The five warrants (sold at a face value of $2,410,000)
are convertible into common stock (without additional consideration) in an
amount equal to the face value of the warrant divided by the lesser of (i)
$.69125 per share or (ii) a 30% discount to the average closing bid price for
the shares for the five days prior (but not including) the conversion date; and
(c) On August 7, 1996, the Company closed the third tranche of the private
placement and received gross proceeds of $590,000. The two warrants (sold at a
face value of $590,000) are convertible into common stock (without additional
consideration) upon the same terms and conditions as the warrants sold in the
second tranche.
These securities were offered and sold without registration under the
Securities Act of 1933, as amended, upon the exemption provided by Rule 506 of
Regulation D thereunder and an appropriate legend was placed on the securities.
The purchasers were granted certain demand and piggyback registration rights
under certain conditions.
A portion of the sale was effected through Iaccoca Capital Partners, L.P.
acting as placement agent who was paid a fee of 7% in cash and granted a
warrant to purchase 401,924 common shares at an exercise price of $.9875 per
share through July 31, 2001.
A total of $2,185,546 of the gross proceeds of $5,670,000 was applied to retire
the Company's obligation pursuant to its convertible note payable to CVD
Financial Corporation ("CVD"). The balance of the proceeds are intended to
supplement the Company's working capital.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
None
(b) Pro forma financial information.
None
(c) Exhibits
4.12 Warrant Agreement for an aggregate of $3,805,900
issued to a total of 12 investors.
4.13 Warrant Agreement for 401,924 Common Shares between
the Company and Klein Investment Group, L.P.
(formerly known as Iaccoca Capital Partners, L.P.)
dated August 7, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORRIS COMMUNICATIONS CORP.
Date: August 29, 1996 By: /s/ Kathleen E. Terry
----------------------------------
Kathleen E. Terry
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Page Number
------- -----------
<S> <C> <C>
4.12 Warrant Agreement for an aggregate
of $3,805,900 issued to a total of 12 investors. 6
4.13 Warrant Agreement for 401,924 Common Shares between the
Company and Klein Investment Group, L.P. (formerly known
as Iaccoca Capital Partners, L.P.) dated August 7, 1996. 19
</TABLE>
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NORRIS COMMUNICATIONS CORP.
EXHIBIT 4.12
FORM OF WARRANT AGREEMENT FOR AN AGGREGATE OF $3,805,900
ISSUED TO A TOTAL OF 12 INVESTORS
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THIS WARRANT AND THE SHARES OF COMMON STOCK OF NORRIS COMMUNICATIONS
CORP. ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE AND
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT NOR
ANY INTEREST IN THIS WARRANT NOR ANY INTEREST IN THE SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND UNDER
APPLICABLE STATE LAW, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE ISSUER.
IN ADDITION, THIS WARRANT IS SUBJECT TO RESTRICTIONS ON SALE,
ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION, GRANT OF SECURITY INTEREST,
ENCUMBRANCE, GIFT OR ANY OTHER MANNER OF DISPOSITION OR TRANSFER, WHETHER
VOLUNTARILY OR BY OPERATION OF LAW, AS SET FORTH IN THE INVESTOR UNIT PURCHASE
AGREEMENT, DATED AS OF ________, 1996, BY AND BETWEEN __________ AND NORRIS
COMMUNICATIONS CORP., A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
OFFICES OF NORRIS COMMUNICATIONS CORP.
COMMON STOCK WARRANT
to Purchase Shares
of
Common Stock (no par value)
of
NORRIS COMMUNICATIONS CORP.
This certifies that, for value received, $__________ (the "Face
Amount"), _______________ and any subsequent transferee pursuant to the terms
of this Warrant (each, a "Holder") is entitled to purchase, subject to the
provisions of this Warrant, from Norris Communications Corp., a corporation
organized under the laws of the Yukon Territory, Canada (the "Issuer"), at any
time or from time to time on or after the date hereof and on or before
_____________, 1999, or as may be extended pursuant to Section 3(b) hereof (the
"Expiration Date"), that number of fully paid, validly issued and nonassessable
shares of the Issuer's common stock, no par value (the "Common Stock") as
calculated pursuant to Section 2 hereof
Exhibit 4.12
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and as otherwise may be adjusted pursuant hereto (such shares of Common Stock
and other securities issued and issuable upon exercise of this Warrant are
hereinafter referred to as the "Warrant Shares").
Section 1. Definitions. Except as otherwise specified herein,
capitalized terms used herein shall have the meanings assigned to them in the
Investor Unit Purchase Agreement dated as of ________, 1996 between the Holder
and the Issuer (the "Investor Unit Purchase Agreement").
Section 2. Exercise of Warrant.
(a) Subject to the provisions hereof, this Warrant may be
exercised, in whole or in part, but not as to a fractional share, at any time
or from time to time on or after the date hereof and on or before the
Expiration Date, as may be extended pursuant to Section 3(b), by presentation
and surrender hereof to the Issuer at the address which, in accordance with the
provisions of Section 11 hereof, is then effective for notices to the Issuer,
together with the Election to Purchase Form, attached hereto as Schedule One,
duly executed and indicating the amount (up to the Face Amount) to be used to
purchase the Warrant Shares. At any given time, the number of Warrant Shares
to which the Holder shall be entitled shall be determined by dividing the Face
Amount, reduced appropriately for any partial exercise hereof, by the Exercise
Price (hereinafter defined). As a result, the number of shares which the
Holder will receive at any given time will fluctuate depending on the Exercise
Price at the time of such exercise. If this Warrant should be exercised in
part only, the Issuer shall, upon surrender of this Warrant for cancellation,
execute and deliver a new warrant evidencing the rights of the Holder hereof to
use the balance of the Face Amount to purchase Warrant Shares purchasable
hereunder. The Issuer shall maintain at its principal place of business a
register for the registration of this Warrant and registration of transfer for
this Warrant.
(b) Prior to the delivery of any Warrant Shares, the
Issuer shall comply with all Federal and state laws and regulations thereunder,
including but limited to Regulation D requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority; provided, however, the Issuer shall have no obligation
to register the Warrant Shares beyond its obligation set forth in that certain
Registration Rights Agreement dated as of ___________, 1996 between the Holder
and the Issuer.
(c) All Warrant Shares, when issued upon exercise of this
Warrant or any new warrant issued in replacement hereof, shall be duly
authorized, validly issued, fully paid and nonassessable, and the Holder will
have full legal and equitable title thereto, free and clear of all liens,
encumbrances, claims and rights of others created by or through the Issuer.
(d) Unless the Warrant Shares have been registered under
the Act, upon any exercise of all or any part of this Warrant, all certificates
representing Warrant Shares shall bear on the face thereof substantially the
following legend:
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The shares of common stock represented hereby have not been
registered under the Securities Act of 1933, as amended (the
"Act") or the securities laws of any state, and neither the
shares represented hereby nor any interest in the shares
represented hereby may be sold, offered for sale, pledged or
otherwise disposed of except pursuant to an effective
registration statement under the Act, or pursuant to an
exemption from registration thereunder and under applicable
state law, the availability of which must be established to
the satisfaction of the Issuer.
(e) This Warrant may not be exercised to any extent by
anyone after the Expiration Date as adjusted pursuant to Section 3(b) hereof.
Section 3. Reservation of Shares: Preservation of Rights of Holder.
(a) The Issuer acknowledges and agrees that currently it
does not have sufficient authorized but unissued shares of
Common Stock to assure an adequate reserve of shares of Common
Stock to enable the exercise of all Warrants or other
instruments exercisable, convertible or exchangeable into
shares of Common Stock ("Other Convertible Instruments")
(including the $3,000,000 aggregate principal amount of seven
percent (7%) Convertible Notes due March 25, 1999), which were
granted or purchased but have not yet been exercised,
converted or exchanged to be exercised, converted or exchanged
at every conceivable Exercise Price. Following the Initial
Closing, the Issuer shall use its best efforts to promptly
notice and hold a stockholders' meeting and agrees that in no
event shall such meeting take place after July 31, 1996 to
obtain stockholder approval (i) to increase the number of
authorized but unissued shares of Common Stock from 30,000,000
shares to at least 60,000,000 shares and (ii) for such other
matters as set forth in the Issuer's 1996 Proxy Statement as
previously delivered to the Holder (the "Draft Proxy") with no
material changes requiring a vote of the stockholders of the
Issuer. Notwithstanding the foregoing, any change in
the presentation of the 1996 Proxy Statement whereby separate
votes of stockholders are required with respect to matters
already included with other matters presented for stockholder
vote in the Draft Proxy shall not be deemed a material change.
The Issuer agrees to execute and deliver such documents or
instruments to the stockholders of the Issuer as the Holder or
Placement Agent reasonably shall request to effect the
provisions of this Section 3.
(b) After the Final Closing, the Issuer shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock such number of shares of Common Stock as shall from time to time
be sufficient so that the Maximum Coverage Price (hereinafter defined) shall be
equal to or less than the Final Coverage Price (hereinafter defined). If at
any time after the Final Closing, the number of authorized but unissued shares
of Common Stock shall not be sufficient to allow all Warrants and Other
Convertible Instruments which were purchased or granted but not exercised,
converted or exchanged to be exercised, converted or exchanged, or if at any
time the Maximum Coverage Price shall be greater than the Final Coverage Price
(the "Final Coverage Test"), the Issuer immediately shall notify all holders of
Warrants and immediately take such corporate action as may be necessary or
appropriate to
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increase its authorized but unissued shares of Common Stock to such number of
shares of Common Stock as shall be sufficient for such purpose, including
without limitation, engaging in best efforts to obtain requisite stockholder
approval. If the Issuer is unable to obtain the requisite stockholder approval
to increase its authorized but unissued shares of Common Stock, then so long
thereafter as there are not sufficient authorized but unissued shares of Common
Stock to allow this Warrant to be exercised, (1) the Holder of any such Warrant
shall be deemed to have suspended his, her or its exercise notice with respect
to any shares of Common Stock which cannot legally be issued and the Issuer's
obligation to convert the remaining Warrants shall not be deemed to have been
satisfied and (2) the Expiration Date of any and all such Warrants shall be
extended by the period of time during which such issuances are prohibited. As
soon as sufficient authorized, but unissued shares become available for
issuance to allow this Warrant to be exercised, the Issuer promptly shall
notify each Holder and, at that time, the Holder may elect whether or not to
renew the exercise notice. If the Holder elects to renew the exercise notice,
the Exercise Price shall be the lower of the Exercise Price which would have
been applicable had the Holder been able to exercise his, her or its Warrants
on the date the notice of exercise originally was delivered or the then
currently applicable Exercise Price.
(c) (1) The term "Maximum Coverage Price" as of a
particular date shall mean the price of a Share of Common Stock which is
required so that if all outstanding securities exercisable, convertible or
exchangeable for Shares of Common Stock were exercised, converted or exchanged
for shares of Common Stock (including but not limited to securities issued on
the date in question and the $3,000,000 aggregate principal amount of
Convertible Notes due March 25, 1999), the number of Shares of Common Stock
into which securities would be exercisable, convertible or exchangeable would
equal the total authorized but unissued shares of Common Stock and (2) The term
"Final Coverage Price" at a particular time shall mean the lower of $0.657 or
one-third of the average Closing Bid Price for the publicly traded shares of
Common Stock for the five (5) preceding trading days.
(d) The Warrant surrendered upon exercise shall be
canceled by the Issuer. After the Expiration Date, no shares of Common Stock
shall be subject to reservation in respect of this Warrant. The Issuer further
agrees (i) that it will not, by amendment of its Articles of Continuance or
through reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act, avoid or seek to avoid the observation or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Issuer, (ii) promptly to take all action as may
from time to time be required in order to permit the Holder to exercise this
Warrant and the Issuer duly and effectively to issue the Warrant Shares or
other securities as provided herein upon the exercise hereof and (iii) promptly
to take all action required or provided for herein to protect the rights of the
Holder granted hereunder against dilution. Without limiting the generality of
the foregoing, should the Warrant Shares at any time consist in whole or in
part of shares of capital stock having a par value, the Issuer agrees that
before taking any action which would cause an adjustment of the Exercise Price
so that the same would be less than the then par value of such Warrant Shares,
the Issuer shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Issuer may validly and legally issue
fully paid and nonassessable shares of such Common Stock at the Exercise Price
as so adjusted. The Issuer further agrees that it will not establish a par
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value for its Common Stock while this Warrant is outstanding in an amount
greater than the Exercise Price.
Section 4. Exercise Price; Additional Discount.
(a) The number of Warrant Shares to which the Holder
shall be entitled to receive pursuant to this Warrant at any given time shall
be determined by dividing the Face Amount of the Warrant, reduced appropriately
for any partial exercise thereof, by the Exercise Price (hereinafter defined).
With respect to the purchase of Warrants pursuant to the Initial Closing (as
defined in the investor Unit Purchase Agreement), if the Escrow Agent receives
the Subscription Package on or before June 4, 1996, the Exercise Price for such
Warrants shall be the least of (i) $1.00, (ii) the average Closing Bid Price
(hereinafter defined) for the publicly traded shares of Common Stock during the
five (5) trading days immediately preceding the Initial Closing and (iii)
thirty percent (30%) less than the average Closing Bid Price for the publicly
traded shares of Common Stock during the five (5) trading days immediately
preceding the day such Warrant is exercised. With respect to the purchase of
Warrants pursuant to the Initial Closing, if the Escrow Agent receives the
Subscription Package after June 4, 1996, the Exercise Price for such Warrants
shall be the lesser of (ii) and (iii) as described in this Section 4(a).
(b) With respect to the purchase of Warrants pursuant to
a subsequent Closing, if the Escrow Agent receives the Subscription Package on
or before June 4, 1996, the Exercise Price shall be the least of (i) $1.00,
(ii) the average Closing Bid Price for the publicly traded shares of Common
Stock during the five (5) trading days immediately preceding the Initial
Closing, (iii) the average Closing Bid Price for the publicly traded shares of
Common Stock during the five (5) trading days immediately preceding such
subsequent Closing and (iv) thirty percent (30%) less than the average Closing
Bid Price for the publicly traded shares of Common Stock during the five (5)
trading days immediately preceding the day of exercise. With respect to the
purchase of Warrants pursuant to a subsequent Closing, if the Escrow Agent
receives the Subscription Package after June 4, 1996, the Exercise Price for
the Warrants shall be the least of (iii) and (iv) as described above in this
Section 4(b).
(c) In addition, so long as the Holder retains any
exercise rights pursuant to this Warrant or any warrant issued in replacement
hereof, the applicable Exercise Price shall be discounted an additional amount
equal to seven percent (7%) per annum (prorated for other periods), annualized
from the date hereof until the date of exercise of the Warrant. No fractional
shares shall be issued and the number of shares issuable shall be rounded to
the nearest whole share.
(d) For purposes of this Warrant, the closing bid price
of the Common Stock on any given day (the "Closing Bid Price") shall be either
(i) the reported Closing Price (last sale price) of the Common Stock on the
principal stock exchange on which the Common Stock is listed, (ii) if the
Common Stock is not listed on a stock exchange, the reported Closing Price of
the Common Stock on the principal automated securities price quotation system
on which sale prices of the Common Stock are reported, or (iii) if the Common
Stock is not listed on a stock
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exchange and sale prices of the Common Stock are not reported on an automated
quotation system, the mean of the final bid and asked prices for the Common
Stock as reported by the National Quotation Bureau Incorporated if at least two
securities dealers have inserted bid quotations for the Common Stock on at
least five of the ten preceding trading days. If none of the foregoing
provisions are applicable, the Closing Bid Price of the Common Stock on any
given day shall be the fair market value of the Common Stock on that day as
determined by a member of the New York Stock Exchange, Inc., selected by the
Board of Directors of the Issuer and approved by Placement Agent. The term
"trading day" means (i) if the Common Stock is listed on at least one stock
exchange, a day on which there is trading on the principal stock exchange on
which the Common Stock is listed, (ii) if the Common Stock is not listed on a
stock exchange but sale prices of the Common Stock are reported on an automated
quotation system, a day on which trading is reported on the principal automated
quotation system on which sales of the Common Stock are reported or (iii) if
the foregoing provisions are inapplicable, a day on which quotations are
reported by the National Quotation Bureau Incorporated.
(e) In the event that during any period of consecutive
trading days provided for above, the Issuer shall declare or pay any dividend
on the Common Stock payable in Common Stock or in rights to acquire Common
Stock, or shall effect a stock split or reverse stock split, or a combination,
consolidation or reclassification of the Common Stock, then the Exercise Price
shall be decreased or increased proportionately, as appropriate, to give effect
to such event.
Section 5. Exchange, Transfer, Assignment or Loss of Warrant.
(a) Any attempted transfer of this Warrant or any new
warrant not in accordance with this Section shall be null and void, and the
Issuer shall not in any way be required to give effect to such transfer. No
transfer of this Warrant shall be effective for any purpose hereunder until (i)
written notice of such transfer and of the name and address of the transferee
has been received by the Issuer, (ii) the transferee shall first agree in a
writing deposited with the Secretary of the Issuer to be bound by all the
provisions of this Warrant and (iii) in the opinion of the Issuer's counsel
(such counsel's fees to be paid by the Issuer), all requirements of applicable
state securities laws and any requirement to register such transfer under the
Act have been complied with. Upon surrender of this Warrant to the Issuer by
any transferee authorized under the provisions of this Section 5, and subject
to the terms and conditions of the Act, the Issuer shall, without charge,
execute and deliver a new warrant registered in the name of such transferee at
the address specified by such transferee, and this Warrant promptly shall be
canceled. The Issuer may deem and treat the registered holder of any warrant
as the absolute owner thereof for all purposes, and the Issuer shall not be
affected by any notice to the contrary. Any Warrant, if presented by an
authorized transferee, may be exercised by such transferee without prior
delivery of a new warrant issued in the name of the transferee.
(b) Upon receipt by the Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of reasonably
satisfactory indemnification, and upon surrender and cancellation of
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this Warrant, if mutilated, the Issuer shall execute and deliver a new warrant
of like tenor and date. Any such new warrant executed and delivered shall
constitute a separate contractual obligation on the part of the Issuer, whether
or not the Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
Section 6. Rights of the Holder. Neither a Holder nor his transferee
by devise or the laws of descent and distribution or otherwise shall be, or
have any rights or privileges of, a shareholder of the Issuer with respect to
any Warrant Shares, unless and until certificates representing such Warrant
Shares shall have been issued and delivered thereto.
Section 7. Adjustments in Exercise Price and Warrant Shares. The
Exercise Price and the amount of Warrant Shares exercisable hereunder shall be
subject to further adjustment from time to time as provided in this Section 7.
(a) If the Issuer is recapitalized through the
subdivision or combination of its outstanding shares of Common Stock into a
larger or smaller number of shares, the number of shares of Common Stock for
which this Warrant may be exercised shall be increased or reduced, as of the
record date for such recapitalization, in the same proportion as the increase
or decrease in the outstanding shares of Common Stock, and the Exercise Price
shall be adjusted so that the aggregate amount payable for the purchase of all
Warrant Shares issuable hereunder immediately after the record date for such
recapitalization shall equal the aggregate amount so payable immediately before
such record date.
(b) If the Issuer declares a dividend on Common Stock, or
makes a distribution to holders of Common Stock, and such dividend or
distribution is payable or made in Common Stock or securities convertible into
or exchangeable for Common Stock, or rights to purchase Common Stock or
securities convertible into or exchangeable for Common Stock, the number of
shares of Common Stock for which this Warrant may be exercised shall be
increased, as of the record date for determining which holders of Common Stock
shall be entitled to receive such dividend or distribution, in proportion to
the increase in the number of outstanding shares (and shares of Common Stock
issuable upon conversion of all such securities convertible into Common Stock)
of Common Stock as a result of such dividend or distribution, and the Exercise
Price shall be adjusted so that the aggregate amount payable for the purchase
of all the Warrant Shares issuable hereunder immediately after the record date
for such dividend or distribution shall equal the aggregate amount so payable
immediately before such record date.
(c) If the Issuer declares a dividend on Common Stock
(other than a dividend described in subsection (b) above) or distributes to
holders of its Common Stock, other than as part of a dissolution or
liquidation or the winding up of its affairs, any shares of its stock, any
evidence of indebtedness or any cash or other of its assets (other than
Common Stock or securities convertible into or exchangeable for Common Stock),
the Holder shall receive notice of such event as set forth in Section 9 below.
(d) In case of any consolidation of the Issuer with, or
merger of the Issuer into, any other corporation (other than a consolidation or
merger in which the Issuer is the
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continuing corporation and in which no change occurs in its outstanding Common
Stock), or in case of any sale or transfer of all or substantially all of the
assets of the Issuer, or in the case of any statutory exchange of securities
with another corporation (including any exchange effected in connection with a
merger of a third corporation into the Issuer, except where the Issuer is the
surviving entity and no change occurs in its outstanding Common Stock), the
corporation formed by such consolidation or the corporation resulting from such
merger or the corporation which shall have acquired such assets or securities
of the Issuer, as the case may be, shall execute and deliver to the Holder
simultaneously therewith a new warrant on the same terms and conditions as this
Warrant, including but not limited to the determination of the Exercise Price
as set forth in Section 4 hereof and in all other respects satisfactory in form
and substance to the Holder, together with such other documents as the Holder
may reasonably request, entitling the Holder thereof to receive upon exercise
of such warrant the kind and amount of shares of stock and other securities and
property receivable upon such consolidation, merger, sale, transfer or exchange
of securities, or upon the dissolution following such sale or other transfer,
by a holder of the number of shares of Common Stock purchasable upon exercise
of this Warrant immediately prior to such consolidation, merger, sale,
transfer, or exchange, provided that if the kind or amount of securities, cash
or other property receivable upon such consolidation, merger, statutory
exchange, sale or conveyance is not the same for each share of Common Stock in
respect of which rights of election shall not have been exercised
("non-electing share"), then for the purpose of this paragraph (d) the kind and
amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares. Such new warrant shall
contain the same terms and conditions as this Warrant and shall provide for
adjustments which, for events subsequent to the effective date of such written
instrument, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The above provisions of this
paragraph (d) shall similarly apply to successive consolidations, mergers,
exchanges, sales or other transfers covered hereby.
(e) If the Issuer shall, at any time before the
expiration of this Warrant, dissolve, liquidate or wind up its affairs, the
Holder shall, upon exercise of this Warrant have the right to receive, in lieu
of the shares of Common Stock that the Holder otherwise would have been
entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to the Holder upon any such dissolution,
liquidation or winding up with respect to such shares of Common Stock had the
Holder been the holder of record of such shares of Common Stock receivable upon
exercise of this Warrant on the date for determining those entitled to receive
any such distribution. If any such dissolution, liquidation or winding up
results in any cash distribution in excess of the Exercise Price provided by
this Warrant for the shares of Common Stock receivable upon exercise of this
Warrant, the Holder may, at the Holder's option, exercise this Warrant without
making payment of the Exercise Price and, in such case, the Issuer shall, upon
distribution to the Holder, consider the Exercise Price to have been paid in
full and, in making settlement to the Holder, shall obtain receipt of the
Exercise Price by deducting an amount equal to the Exercise Price for the
shares of Common Stock receivable upon exercise of this Warrant from the amount
payable to the Holder. For purposes
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of this paragraph, the sale of all or substantially all of the assets of the
Issuer and distribution of the proceeds thereof to the Issuer's shareholders
shall be deemed a liquidation.
(f) If an event occurs which is similar in nature to the
events described in this Section 7, but is not expressly covered hereby, the
Board of Directors of the Issuer shall make or arrange for a equitable
adjustment to the number of Warrant Shares and the Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock,
no par value, of the Issuer as the same exists on the date hereof or as such
stock may be constituted from time to time, except that for the purpose of this
Section 7, the term "Common Stock" shall include any stock of any class of the
Issuer which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Issuer and which is not subject to redemption by the Issuer.
(h) The Issuer shall retain a firm of independent public
accountants of recognized standing (who may be any such firm regularly employed
by the Issuer) to make any computation required under this Section 7, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section 7.
(i) Whenever the number of Warrant Shares or the Exercise
Price shall be adjusted as required by the provisions of this Section 7, the
Issuer forthwith shall file in the custody of its secretary or an assistant
secretary, at its principal office, and furnish to each Holder hereof, a
certificate prepared in accordance with paragraph (h) above, showing the
adjusted number of Warrant Shares and the Exercise Price and setting forth in
reasonable detail the circumstances requiring the adjustment.
(j) Notwithstanding any other provision, this Warrant
shall be binding upon and inure to the benefit of any successor or successors
of the Issuer.
(k) No adjustment in the Exercise Price in accordance
with the provisions of this Section 7 need be made if such adjustment would
amount to a change in such Exercise Price of less than $.01; provided, however,
that the amount by which any adjustment is not made by reason of the provisions
of this paragraph (k) shall be carried forward and taken into account at the
time of any subsequent adjustment in the Exercise Price and/or in connection
with the exercise of this Warrant.
(l) If an adjustment is made pursuant to this Section 7
and the event to which the adjustment relates does not occur, then any
adjustments made in accordance with this Section 7 shall be readjusted such
that the Exercise Price and the number of Warrant Shares which would be in
effect had the earlier adjustment not been made.
Section 8. Taxes on Issue or Transfer of Common Stock and Warrant.
The Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of the Warrant Shares or
other securities issuable upon the exercise of this Warrant. The Issuer shall
not be required to pay any tax which may be payable
9
<PAGE> 11
in respect of any transfer of this Warrant or in respect of any transfers
involved in the issue or delivery of shares or the exercise of this Warrant in
a name other than that of the Holder and the person requesting such transfer,
issue or delivery shall be responsible for the payment of any such tax (and the
Issuer shall not be required to issue or deliver said shares until such tax has
been paid or provided for).
Section 9. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, (b) if the Issuer shall offer generally to
the holders of Common Stock the right to subscribe to or purchase any shares of
any class of Common Stock or securities convertible into Common Stock or any
other similar rights or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notice, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the Holder, at least thirty days prior to
the relevant date described below (or such shorter period as is reasonably
possible if thirty days is not reasonably possible), a notice containing a
description of the proposed action or event and stating the date on which a
record of the Issuer's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if
any, is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such event.
Section 10. Registration of Rights. This Agreement is subject to,
and the terms and conditions of that certain Registration Rights Agreement
dated ______________, 1996, between the Holder and the Issuer such terms and
conditions are incorporated herein as if fully set forth herein.
Section 11. Notices. All notices or communications required or
permitted hereunder shall be in writing, and shall be deemed effectively given
upon personal delivery, on the first business day following mail by overnight
courier or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company and the
Holder at the addresses set forth below:
[Name and Notice Information of Holder]
10
<PAGE> 12
Norris Communications Corporation
12725 Stowe Drive
Poway, California 92064
Attention: R. Gordon Root
Telephone: (619) 679-1504
Telecopy: (619) 486-3922
or at such other address as the Holder or the Issuer shall have specified to
the other in writing.
Section 12. Governing Law. This Warrant shall be governed by, and
interpreted in accordance with, the laws of the State of California.
Section 13. Survival. This Warrant and the rights and obligations of
the Issuer and the Holder hereunder shall not be terminated by any of the
following events: (a) merger, reorganization or consolidation of the Issuer,
(b) transfer of all or substantially all of the assets of the Issuer or (c) the
voluntary or involuntary dissolution of the Issuer. In the event of any such
merger, reorganization, consolidation or transfer of assets, the surviving or
resulting corporation or transferee of the assets shall be bound by and shall
have the benefit of, the provisions of this Warrant, and the Issuer shall take
all actions necessary to ensure that such corporation or transferee is bound by
the provisions of this Warrant, including but not limited to ensuring that the
corporation or transferee expressly shall assume, by supplemental agreement
satisfactory in substance to the Holder and executed and delivered to the
Issuer, the due and punctual performance and observance of each and every
covenant and condition of this Warrant to be performed or observed by the
Issuer.
Dated: , 1996
----------------
NORRIS COMMUNICATIONS CORP.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ATTEST:
- ------------------------
Secretary
11
<PAGE> 13
Schedule One
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and to use
$_________ towards the purchase of shares of Norris Communications Corp. Common
Stock issuable upon the exercise of this Warrant, and requests that certificates
for such shares shall be issued in the name of
(Name)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from the above, be delivered to:
- --------------------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Address)
and, if the dollar amount set forth above is less than the Face Amount, as
adjusted for any partial exercise hereof, a warrant to purchase Shares of
Common Stock of Norris Communications Corp. shall be issued in the remaining
Face Amount, and be registered in the name of, and delivered to, the
undersigned at the address stated below.
Date:____________________, 199__.
Name of Registered Owner:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
Signature:
- --------------------------------------------------------------------------------
12
<PAGE> 1
NORRIS COMMUNICATIONS CORP.
EXHIBIT 4.13
WARRANT AGREEMENT FOR 401,924 COMMON SHARES
BETWEEN THE COMPANY AND KLEIN INVESTMENT GROUP, L.P.
(FORMERLY KNOWN AS IACCOCA CAPITAL PARTNERS, L.P.)
DATED AUGUST 7,1996
<PAGE> 2
THIS WARRANT AND THE SHARES OF COMMON STOCK OF NORRIS COMMUNICATIONS
CORP. ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANY STATE AND
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT NOR
ANY INTEREST IN THIS WARRANT NOR ANY INTEREST IN THE SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND UNDER
APPLICABLE STATE LAW, THE AVAILABILITY OF WHICH MUST BE ESTABLISHED TO THE
SATISFACTION OF THE ISSUER.
COMMON STOCK WARRANT FOR
KLEIN INVESTMENT GROUP, L.P.
(FORMERLY KNOWN AS IACOCCA CAPITAL PARTNERS, L.P.)
to Purchase Shares
of
Common Stock (no par value)
of
NORRIS COMMUNICATIONS CORP.
This certifies that, for value received, Klein Investment Group, L.P.,
a Delaware limited partnership (formerly known as Iacocca Capital Partners,
L.P.) and any subsequent transferee pursuant to the terms of this Warrant
(each, a "Holder") is entitled to purchase, subject to the provisions of this
Warrant, from Norris Communications Corp., a corporation organized under the
laws of the Yukon Territory, Canada (the "Issuer"), at any time after the
expiration of four (4) months from the date hereof and from time to time
thereafter and on or before July 31, 2001, or as may be extended pursuant to
Section 3(b) (the "Expiration Date"), 401,924, fully paid, validly issued and
nonassessable shares of the Issuer's common stock, no par value (the "Common
Stock"), as may be adjusted as provided herein, at an exercise price as
determined pursuant to Section 4 hereof (the "Exercise Price") (such shares of
Common Stock and other securities issued and issuable upon exercise of this
Warrant are hereinafter referred to as the "Warrant Shares").
Exhibit 4.13
<PAGE> 3
Section 1. Definitions. Except as otherwise specified herein,
capitalized terms used herein shall have the meanings assigned to them in the
Investor Unit Purchase Agreements dated as of July 31, 1996, entered into
between the issuer and various purchasers in connection with an offering of
securities of the Issuer whereby the Holder acted as agent for the Issuer in
the offering of such securities.
Section 2. Exercise of Warrant.
(a) Subject to the provisions hereof, this Warrant may be
exercised, in whole or in part, but not as to a fractional share, at any time
after the expiration of four (4) months from the date hereof and from time to
time thereafter and on or before the Expiration Date, as may be extended
pursuant to Section 3(b), by presentation and surrender hereof to the Issuer at
the address which, in accordance with the provisions of Section 10 hereof, is
then effective for notices to the Issuer, together with the Election to
Purchase Form attached hereto as Schedule One, duly executed and accompanied by
payment to the Issuer for the account of the Issuer of the Exercise Price for
the number of Warrant Shares specified in such form. If this Warrant should be
exercised in part only, the Issuer shall, upon surrender of this Warrant for
cancellation, execute and deliver a new warrant evidencing the rights of the
Holder hereof to purchase the balance of the Warrant Shares purchasable
hereunder. The Issuer shall maintain at its principal place of business a
register for the registration of this Warrant and registration of transfer for
this Warrant. The Exercise Price for the number of Warrant Shares specified in
the Election to Purchase Form shall be payable in United States dollars by
certified or official bank check payable to the order of the Issuer or by wire
transfer of immediately available funds to an account held by the Issuer for
that purpose.
(b) Prior to the delivery of any Warrant Shares, the
Issuer shall comply with all Federal and state laws and regulations thereunder,
including but not limited to Regulation D, requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority; provided, however, the Issuer shall have no obligation
to register the Warrant Shares beyond its obligation set forth in that certain
Registration Rights Agreement dated as of July 31, 1996 between the Holder and
the Issuer.
(c) All Warrant Shares, when issued upon exercise of this
Warrant or any new warrant issued in replacement hereof, shall be duly
authorized, validly issued, fully paid and nonassessable, and the Holder will
have full legal and equitable title thereto, free and clear of all liens,
encumbrances, claims and rights of others created by or through the Issuer.
(d) Unless the Warrant Shares have been registered under
the Act, upon any exercise of all or any part of this Warrant, all certificates
representing Warrant Shares shall bear on the face thereof substantially the
following legend:
The shares of common stock represented hereby have not been
registered under the Securities Act of 1933, as amended (the
"Act") or the securities laws of any state, and neither the
shares represented hereby nor any interest in the shares
represented hereby may be sold, offered for sale, pledged or
otherwise
2
<PAGE> 4
disposed of except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from
registration thereunder and under applicable state law, the
availability of which must be established to the satisfaction
of the Issuer.
(e) This Warrant may not be exercised to any extent by
anyone after the Expiration Date as may be extended pursuant to Section 3(b)
hereof.
Section 3. Reservation of Shares: Preservation of Rights of Holder.
(a) The Issuer acknowledges and agrees that currently it
does not have sufficient authorized but unissued shares of Common Stock to
assure an adequate reserve of shares of Common Stock to enable the complete
exercise of this Warrant and all other instruments exercisable, convertible or
exchangeable into shares of Common Stock ("Other Convertible Instruments")
(including the $3,000,000 aggregate principal amount of seven percent (7%)
Convertible Notes due March 25, 1999), which were granted or purchased, but
have not yet been exercised, converted or exchanged to be exercised, converted
or exchanged at every conceivable Exercise Price. Following the Initial
Closing, the Issuer shall use its best efforts to promptly notice and hold a
stockholders' meeting and agrees that in no event shall such meeting take place
after July 31, 1996 to obtain stockholder approval (i) to increase the number
of authorized shares of Common Stock from 30,000,000 shares to at least
60,000,000 shares, and (ii) for such other matters as set forth in the Issuer's
1996 Proxy Statement previously delivered to the Holder (the "Draft Proxy")
with no material changes requiring a vote of the stockholders of the Issuer.
Notwithstanding the foregoing, any change in the presentation of the 1996 Proxy
Statement whereby separate votes of the stockholders are required with respect
to matters already included with other matters presented for stockholder vote
in the Draft Proxy shall not be deemed a material change. The Issuer agrees to
execute and deliver such documents or instruments to the stockholders of the
Issuer as the Holder reasonably shall request to effect the provisions of this
Section 3.
(b) After the Final Closing, the Issuer shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock such number of shares of Common Stock as shall from time to time
be sufficient so that the Maximum Coverage Price (hereinafter defined) shall be
equal to or less than the Final Coverage Price (hereinafter defined). If at
any time after the Final Closing, the number of authorized but unissued shares
of Common Stock shall not be sufficient to allow this Warrant and all Other
Convertible Instruments which were purchased or granted, but not exercised,
converted or exchanged to be exercised, converted or exchanged, or if at any
time the Maximum Coverage Price shall be greater than the Final Coverage Price
(the "Final Coverage Test"), the Issuer immediately shall notify the Holder and
immediately take such corporate action as may be necessary or appropriate to
increase its authorized but unissued shares of Common Stock to such number of
shares of Common Stock as shall be sufficient for such purpose, including
without limitation, engaging in best efforts to obtain requisite stockholder
approval. If the Issuer is unable to obtain the requisite stockholder approval
to increase its authorized but unissued shares of Common Stock, then so long
thereafter as there are not sufficient authorized but unissued shares of Common
Stock to allow this Warrant
3
<PAGE> 5
to be exercised, (1) the Holder shall be deemed to have suspended its exercise
notice with respect to any shares of Common stock which cannot legally be
issued and the Issuer's obligation to convert the remaining amounts pursuant to
this Warrant shall not be deemed to have been satisfied and (2) the Expiration
Date of this Warrant shall be extended by the period of time during which such
issuances are prohibited. As soon as sufficient authorized, but unissued
shares become available for issuance to allow this Warrant to be exercised, the
Issuer promptly shall notify the Holder and, at that time, the Holder may elect
whether or not to renew the exercise notice.
(c) (1) The term "Maximum Coverage Price" as of a
particular date shall mean the price of a Share of Common Stock which is
required so that if all outstanding securities exercisable, convertible or
exchangeable for shares of Common Stock were exercised, converted or exchanged
for shares of Common Stock (including but not limited to securities issued on
the date in question and the $3,000,000 aggregate principal amount of
Convertible Notes due March 25, 1999), the number of shares of Common Stock
into which such securities would be exercisable, convertible or exchangeable
would equal the total authorized but unissued shares of Common Stock and (2)
The term "Final Coverage Price" at a particular time shall mean the lower of
$0.657 or one-third of the average Closing Bid Price for the publicly traded
shares of Common Stock for the five (5) preceding trading days.
(d) The Warrant surrendered upon exercise shall be
canceled by the Issuer. After the Expiration Date, no shares of Common Stock
shall be subject to reservation in respect of this Warrant. The Issuer further
agrees (i) that it will not, by amendment of its Articles of Continuance or
through reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act, avoid or seek to avoid the observation or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Issuer, (ii) promptly to take all action as may
from time to time be required in order to permit the Holder to exercise this
Warrant and the Issuer duly and effectively to issue the Warrant Shares or
other securities as provided herein upon the exercise hereof and (iii) promptly
to take all action required or provided for herein to protect the rights of
the Holder granted hereunder against dilution. Without limiting the generality
of the foregoing, should the Warrant Shares at any time consist in whole or in
part of shares of capital stock having a par value, the Issuer agrees that
before taking any action which would cause an adjustment of the Exercise Price
so that the same would be less than the then par value of such Warrant Shares,
the Issuer shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Issuer may validly and legally issue
fully paid and nonassessable shares of such Common Stock at the Exercise Price
as so adjusted. The Issuer further agrees that it will not establish a par
value for its Common Stock while this Warrant is outstanding in an amount
greater than the Exercise Price.
Section 4. Exercise Price.
(a) The Exercise Price for this Warrant shall be $0.9875
per Share.
4
<PAGE> 6
(b) In the event that, the Issuer shall declare or pay any
dividend on the Common Stock payable in Common Stock or in rights to acquire
Common Stock, or shall effect a stock split or reverse stock split, or a
combination, consolidation or reclassification of the Common Stock, then the
Exercise Price shall be decreased or increased proportionately, as appropriate,
to give effect to such event.
Section 5. Exchange, Transfer, Assignment or Loss of Warrant.
(a) Any attempted transfer of this Warrant or any new
warrant not in accordance with this Section shall be null and void, and the
Issuer shall not in any way be required to give effect to such transfer. No
transfer of this Warrant shall be effective for any purpose hereunder until (i)
at least four months after the Closing Date (although during such four month
period, the Holder may transfer this Warrant or any part hereof to one or more
of its partners), (ii) written notice of such transfer and of the name and
address of the transferee has been received by the Issuer, (iii) the transferee
shall first agree in a writing deposited with the Secretary of the Issuer to be
bound by all the provisions of this Warrant and (iv) in the opinion of the
Issuer's counsel (such counsel's fees to be paid by the Issuer), all
requirements of applicable state securities laws and any requirement to
register such transfer under the Act have been complied with. Upon surrender
of this Warrant to the Issuer by any transferee authorized under the provisions
of this Section 5, and subject to the terms and conditions of the Act, the
Issuer shall, without charge, execute and deliver a new warrant registered in
the name of such transferee at the address specified by such transferee, and
this Warrant promptly shall be canceled. The Issuer may deem and treat the
registered holder of any Warrant as the absolute owner thereof for all
purposes, and the Issuer shall not be affected by any notice to the contrary.
Any Warrant, if presented by an authorized transferee, may be exercised by such
transferee without prior delivery of a new warrant issued in the name of the
transferee.
(b) Upon receipt by the Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Issuer shall execute and deliver a new warrant of
like tenor and date. Any such new warrant executed and delivered shall
constitute a separate contractual obligation on the part of the Issuer, whether
or not the Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
Section 6. Rights of the Holder. Neither the Holder nor his
transferee by devise or the laws of descent and distribution or otherwise shall
be, or have any rights or privileges of, a shareholder of the Issuer with
respect to any Warrant Shares, unless and until certificates representing such
Warrant Shares shall have been issued and delivered thereto.
Section 7. Adjustments in Exercise Price and Warrant Shares. The
Exercise Price and Warrant Shares shall be subject to adjustment from time to
time as provided in this Section 7.
(a) If the Issuer is recapitalized through the
subdivision or combination of its outstanding shares of Common Stock into a
larger or smaller number of shares, the number of
5
<PAGE> 7
shares of Common Stock for which this Warrant may be exercised shall be
increased or reduced, as of the record date for such recapitalization, in the
same proportion as the increase or decrease in the outstanding shares of Common
Stock, and the Exercise Price shall be adjusted so that the aggregate amount
payable for the purchase of all Warrant Shares issuable hereunder immediately
after the record date for such recapitalization shall equal the aggregate
amount so payable immediately before such record date.
(b) If the Issuer declares a dividend on Common Stock, or
makes a distribution to holders of Common Stock, and such dividend or
distribution is payable or made in Common Stock or securities convertible into
or exchangeable for Common Stock, or rights to purchase Common Stock or
securities convertible into or exchangeable for Common Stock, the number of
shares of Common Stock for which this Warrant may be exercised shall be
increased, as of the record date for determining which holders of Common Stock
shall be entitled to receive such dividend or distribution, in proportion to
the increase in the number of outstanding shares (and shares of Common Stock
issuable upon conversion of all such securities convertible into Common Stock)
of Common Stock as a result of such dividend or distribution, and the Exercise
Price shall be adjusted so that the aggregate amount payable for the purchase
of all the Warrant Shares issuable hereunder immediately after the record date
for such dividend or distribution shall equal the aggregate amount so payable
immediately before such record date.
(c) If the Issuer declares a dividend on Common Stock
(other than a dividend described in subsection (b) above) or distributes to
holders of its Common Stock, other than as part of a dissolution or liquidation
or the winding up of its affairs, any shares of its stock, any evidence of
indebtedness or any cash or other of its assets (other than Common Stock or
securities convertible into or exchangeable for Common Stock), the Holder shall
receive notice of such event as set forth in Section 9 below.
(d) In case of any consolidation of the Issuer with, or
merger of the Issuer into, any other corporation (other than a consolidation or
merger in which the Issuer is the continuing corporation and in which no change
occurs in its outstanding Common Stock), or in case of any sale or transfer of
all or substantially all of the assets of the Issuer, or in the case of any
statutory exchange of securities with another corporation (including any
exchange effected in connection with a merger of a third corporation into the
Issuer, except where the Issuer is the surviving entity and no change occurs in
its outstanding Common Stock), the corporation formed by such consolidation or
the corporation resulting from such merger or the corporation which shall have
acquired such assets or securities of the Issuer, as the case may be, shall
execute and deliver to the Holder simultaneously therewith a new warrant,
satisfactory in form and substance to the Holder, together with such other
documents as the Holder may reasonably request, entitling the Holder thereof to
receive upon exercise of such warrant the kind and amount of shares of stock
and other securities and property receivable upon such consolidation, merger,
sale, transfer or exchange of securities, or upon the dissolution following
such sale or other transfer, by a holder of the number of shares of Common
Stock purchasable upon exercise of this Warrant immediately prior to such
consolidation, merger, sale, transfer, or exchange, provided that if the kind
or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is not the same
for each share of
6
<PAGE> 8
Common Stock in respect of which rights of election shall not have been
exercised ("non-electing share"), then for the purpose of this paragraph (d) the
kind and amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares. Such new warrant shall
contain the same terms and conditions as this Warrant and shall provide for
adjustments which, for events subsequent to the effective date of such written
instrument, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The above provisions of this
paragraph (d) shall similarly apply to successive consolidations, mergers,
exchanges, sales or other transfers covered hereby.
(e) If the Issuer shall, at any time before the
expiration of this Warrant, dissolve, liquidate or wind up its affairs, the
Holder shall, upon exercise of this Warrant, have the right to receive, in lieu
of the shares of Common Stock that the Holder otherwise would have been
entitled to receive, the same kind and amount of assets as would have been
issued, distributed or paid to the Holder upon any such dissolution,
liquidation or winding up with respect to such shares of Common Stock had the
Holder been the holder of record of such shares of Common Stock receivable upon
exercise of this Warrant on the date for determining those entitled to receive
any such distribution. If any such dissolution, liquidation or winding up
results in any cash distribution in excess of the Exercise Price provided by
this Warrant for the shares of Common Stock receivable upon exercise of this
Warrant, the Holder may, at the Holder's option, exercise this Warrant without
making payment of the Exercise Price and, in such case, the Issuer shall, upon
distribution to the Holder, consider the Exercise Price to have been paid in
full and, in making settlement to the Holder, shall obtain receipt of the
Exercise Price by deducting an amount equal to the Exercise Price for the
shares of Common Stock receivable upon exercise of this Warrant from the amount
payable to the Holder. For purposes of this paragraph, the sale of all or
substantially all of the assets of the Issuer and distribution of the proceeds
thereof to the Issuer's shareholders shall be deemed a liquidation.
(f) If an event occurs which is similar in nature to the
events described in this Section 7, but is not expressly covered hereby, the
Board of Directors of the Issuer shall make or arrange for a equitable
adjustment to the number of Warrant Shares and the Exercise Price.
(g) The term "Common Stock" shall mean the Common Stock,
no par value, of the Issuer as the same exists on the date hereof or as such
stock may be constituted from time to time, except that for the purpose of this
Section 7, the term "Common Stock" shall include any stock of any class of the
Issuer which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Issuer and which is not subject to redemption by the Issuer.
(h) The Issuer shall retain a firm of independent public
accountants of recognized standing (who may be any such firm regularly employed
by the Issuer) to make any computation required under this Section 7, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section 7.
7
<PAGE> 9
(i) Whenever the number of Warrant Shares or the Exercise
Price shall be adjusted as required by the provisions of this Section 7, the
Issuer forthwith shall file in the custody of its secretary or an assistant
secretary, at its principal office, and furnish to each Holder hereof, a
certificate prepared in accordance with paragraph (h) above, showing the
adjusted number of Warrant Shares and the Exercise Price and setting forth in
reasonable detail the circumstances requiring the adjustment.
(j) Notwithstanding any other provision, this Warrant
shall be binding upon and inure to the benefit of any successor or successors
of the Issuer.
(k) No adjustment in the Exercise Price in accordance
with the provisions of this Section 7 need be made if such adjustment would
amount to a change in such Exercise Price of less than $.01; provided, however,
that the amount by which any adjustment is not made by reason of the provisions
of this paragraph (k) shall be carried forward and taken into account at the
time of any subsequent adjustment in the Exercise Price and/or in connection
with the exercise of this Warrant.
(l) If an adjustment is made pursuant to this Section 7
and the event to which the adjustment relates does not occur, then any
adjustments made in accordance with this Section 7 shall be readjusted such
that the Exercise Price and the number of Warrant Shares which would be in
effect had the earlier adjustment not been made.
Section 8. Taxes on Issue or Transfer of Common Stock and Warrant.
The Issuer shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of the Warrant Shares or
other securities issuable upon the exercise of this Warrant. The Issuer shall
not be required to pay any tax which may be payable in respect of any transfer
of this Warrant or in respect of any transfers involved in the issue or
delivery of shares or the exercise of this Warrant in a name other than that of
the Holder and the person requesting such transfer, issue or delivery shall be
responsible for the payment of any such tax (and the Issuer shall not be
required to issue or deliver said shares until such tax has been paid or
provided for).
Section 9. Notice of Adjustment. So long as this Warrant shall be
outstanding, (a) if the Issuer shall propose to pay any dividends or make any
distribution upon the Common Stock, (b) if the Issuer shall offer generally to
the holders of Common Stock the right to subscribe to or purchase any shares of
any class of Common Stock or securities convertible into Common Stock or any
other similar rights or (c) if there shall be any proposed capital
reorganization of the Issuer in which the Issuer is not the surviving entity,
recapitalization of the capital stock of the Issuer, consolidation or merger of
the Issuer with or into another corporation, sale, lease or other transfer of
all or substantially all of the property and assets of the Issuer, or voluntary
or involuntary dissolution, liquidation or winding up of the Issuer, or (d) if
the Issuer shall give to its stockholders any notice, report or other
communication respecting any significant or special action or event, then in
such event, the Issuer shall give to the Holder, at least thirty days prior to
the relevant date described below (or such shorter period as is reasonably
possible if thirty days is not reasonably possible), a notice containing a
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description of the proposed action or event and stating the date on which a
record of the Issuer's stockholders is to be taken for any of the foregoing
purposes, and the date or expected date on which any such dividend,
distribution, subscription, reclassification, reorganization, consolidation,
combination, merger, conveyance, sale, lease or transfer, dissolution,
liquidation or winding up is to take place and the date or expected date, if
any is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such event.
Section 10. Registration of Rights. This Agreement is subject to, and
the terms and conditions of that certain Registration Rights Agreement dated
________ __, 1996 between the Holder and the Issuer are incorporated herein as
if fully set forth herein.
Section 11. Notices. All notices or communications hereunder required
or permitted shall be in writing and shall be deemed effectively given upon
personal delivery, on the first business day following mail by overnight
courier, or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company and the
Holder at the addresses set forth below:
Klein Investment Group, L.P.
Attention: Mr. William S. Elkus, Managing Director
11100 Santa Monica Boulevard, Suite 970
Los Angeles, California 90025
Telephone: (310) 444-5600
Telecopy: (310) 444-5601
Norris Communications Corporation
12725 Stowe Drive
Poway, California 92064
Attention: R. Gordon Root
Telephone: (619) 679-1504
Telecopy: (619) 486-3922
or to such other address as the Holder or the Issuer shall have specified to
the other in writing.
Section 12. Governing Law. This Warrant shall be governed by, and
interpreted in accordance with, the laws of the State of California.
Section 13. Survival. This Warrant and the rights and obligations of
the Issuer and the Holder hereunder shall not be terminated by any of the
following events: (a) merger, reorganization or consolidation of the Issuer,
(b) transfer of all or substantially all of the assets of the Issuer or (c) the
voluntary or involuntary dissolution of the Issuer. In the event of any such
merger, reorganization, consolidation or transfer of assets, the surviving or
resulting corporation or transferee of the assets shall be bound by and shall
have the benefit of the provisions of this Warrant, and the Issuer shall take
all actions necessary to ensure that such
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corporation or transferee is bound by the provisions of this Warrant, including
but not limited to, ensuring the corporation or transferee expressly shall
assume by supplemental agreement satisfactory in substance to the Holder and
executed and delivered to the Issuer, the due and punctual performance and
observance of each and every covenant and condition of this Warrant to be
performed or observed by the Issuer.
Dated: , 1996
----------- --
NORRIS COMMUNICATIONS CORP.
By: /SIG/
--------------------------------
Name: /SIG/
------------------------------
Title: CFO
-----------------------------
ATTEST:
/SIG/
- -----------------
Secretary
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Schedule One
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant and
to purchase ______ shares of Norris Communications Corp. Common Stock issuable
upon the exercise of this Warrant, and requests that certificates for such
shares shall be issued in the name of
(Name)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address)
- --------------------------------------------------------------------------------
(United States Social Security or other taxpayer
identifying number, if applicable)
and, if different from the above, be delivered to:
- --------------------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Address)
and, if the number of Warrant Shares so purchased are not all of the Warrant
Shares issuable upon exercise of this Warrant, that a warrant to purchase the
balance of such Warrant Shares be registered in the name of, and delivered to,
the undersigned at the address stated below.
Date:___________________, 199___.
Name of Registered Owner:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
Signature:
- --------------------------------------------------------------------------------
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