1
EXHIBIT 10.4
THIS WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN ACQUIRED IN A TRANSACTION NOT INVOLVING ANY
PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR THE LAWS OF ANY STATE. NEITHER THIS
WARRANT NOR SUCH SECURITIES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT, THE LAWS OF ANY
APPLICABLE STATE, THE PROVISIONS OF THIS WARRANT, OR THE RECEIPT BY THE
ISSUER OF AN OPINION OF COUNSEL, WHICH SHALL BE REASONABLY SATISFACTORY TO
THE ISSUER, TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE ACT AND SUCH STATE SECURITIES LAWS.
JUNE 15, 1999
SECURITIES PURCHASE WARRANT
to Subscribe for and Purchase Common Stock
of
HIGH SPEED ACCESS CORP.
Void If Not Exercised During The Exercise Period Described Herein
Warrant No. R-01
1. Grant of Warrant; Conditional Exercise. THIS CERTIFIES that, for
value received, MICROSOFT CORPORATION, a Washington corporation ("Microsoft"),
or its permitted assigns (the "Holder"), is entitled, subject to the terms and
conditions hereinafter set forth, to subscribe for and purchase from High Speed
Access Corp., a Delaware corporation (hereinafter called the "Company"), during
the Exercise Period, One Hundred Thirty-seven Thousand Five Hundred (137,500)
fully paid, nonassessable shares of the Company's Common Stock, $0.01 par value
(the "Warrant Shares"), at a price equal to the Exercise Price (defined below).
This Warrant may not be exercised unless accompanied by a signed Subscription
Form in the form attached hereto as Exhibit A.
2. Definitions. Unless otherwise defined herein, as used in this
Securities Purchase Warrant, the following terms shall have the meanings
ascribed to them as follows:
(a) "Affiliate" means, with respect to the Holder, any entity
or person controlling or controlled, directly or indirectly, by Microsoft. As
used in the foregoing sentence, "controlled" means with respect to any entity,
the ability to exercise voting power with respect to at least 50% of the
outstanding voting securities of such entity.
(b) "Common Stock" means the shares of common stock of $.01
par value that the Company is authorized to issue in accordance with its Amended
and Restated Certificate of
1
2
Incorporation as of the date hereof, and all securities into which such Common
Stock is exchanged or converted.
(c) "Company" means High Speed Access Corp., a Delaware
corporation, or such successor company as may result from any merger or other
business combination or reorganization of High Speed Access Corp.
(d) "Exercise Period" means, with respect to any Warrant
Share, the period beginning on the date of this Warrant and ending on May 1,
2004.
(e) "Exercise Price" means $16.25 per Warrant Share (adjusted
if appropriate pursuant to Section 6).
(f) "Holder" means Microsoft Corporation, or any other Person
to whom this Warrant is transferred in accordance with Section 5 hereof.
(g) "Office" means the Company's office at 1000 W. Ormsby Ave,
Suite 210, Louisville, Kentucky 40210, or such other office as the Company may
designate by written notice to the Holder.
(h) "Person" means any person, firm, Company, or other entity.
(i) "Receipt" means a written receipt, deliverable by the
Company to the Holder pursuant to Section 4, (a) acknowledging the Company's
receipt of the Exercise Price and the Holder's timely and proper exercise of
this Warrant, and (b) obligating the Company to issue a Stock Certificate to the
Holder within 30 working days after this Warrant's surrender to the Company.
(j) "Secretary" means John G. Hundley or his duly elected and
qualified successor as the Company's Secretary, or any duly elected and
qualified Secretary of the Company.
(k) "Securities Laws" means the Securities Act of 1933, as
amended, or the securities laws of any state, or any similar successor federal
or state statutes and rules and regulations thereunder, all as the same shall be
in effect from time to time.
(l) "Stock Certificate" means an appropriate certificate
issued in the Holder's name representing the Subscribed Shares.
(m) "Subscribed Shares" means, collectively, the number of
whole Warrant Shares that the Holder designates on the Subscription Form as
Warrant Shares that the Holder wishes to purchase upon this Warrant's surrender
to the Company, which shall not exceed 137,500 shares of Common Stock (adjusted,
if appropriate, pursuant to Section 6).
2
3
(n) "Subscription Form" means the subscription form attached
as Exhibit A to this Warrant.
(o) "Warrant" means this Securities Purchase Warrant.
(p) "Warrant Shares" means, collectively, the number of shares
of Common Stock that this Warrant entitles the Holder to subscribe for and
receive upon the Holder's exercise of this Warrant in accordance with Section 3,
or, as appropriate if the context requires, these same shares of Common Stock as
they may be issued and outstanding in the hands of the Holder after exercise of
this Warrant.
3. Exercise of Warrant.
(a) This Warrant entitles the Holder to purchase during the
Exercise Period, Subscribed Shares in any amount up to 137,500.
(b) To exercise this Warrant an authorized officer of Holder
(or its permitted transferee) shall, during the Exercise Period, on the day the
Holder wishes to exercise this Warrant (the "Exercise Date"):
(1) Complete and certify the Subscription Form by
designating the number of Subscribed Shares to which the Holder (or
such permitted transferee) is entitled to exercise and wishes to
exercise pursuant to such Subscription Form and Section 1 hereof (which
may be less than or equal to the number of Warrant Shares);
(2) Surrender this Warrant to the Secretary at the
Company's Office, and
(3) Upon the surrender of this Warrant to the
Secretary, deliver to the Secretary at the Company's Office a certified
or cashier's check payable to the Company's order in an amount equal to
(i) the number of Subscribed Shares, times (ii) the Exercise Price.
The Holder may at its option, in lieu of tendering a certified or cashier's
check as provided in subparagraph (3) above, exercise this Warrant by
submitting, during normal business hours, a duly executed exercise notice marked
to reflect "Net Issue Exercise," and specifying the number of shares of Warrant
Shares to be exercised. Upon a Net Issue Exercise, Holder shall be entitled to
receive Warrant Shares equal to the value of this Warrant (or the portion
thereof being exercised by Net Issue Exercise) by surrender of this Warrant to
the Company together with notice of such election, in which event the Company
shall issue to Holder a number of shares of the Company's Common Stock computed
as of the date of surrender of this Warrant to the Company using the following
formula:
3
4
X = Y x (A-B)
---------
A
Where X = the number of Warrant Shares to be issued to Holder;
Y = the number of Warrant Shares purchasable under this
Warrant (at the date of such calculation).
A = the Current Market Price of one share of the Company's
Common Stock (at the date of such calculation);
B = the Exercise Price (as adjusted to the date of such
calculation).
As used above, "Current Market Price" means, if the Company's Common Stock is
traded on a national securities exchange, the NASDAQ National Market System or
the over-the-counter market, the average of the last reported price over the
five (5) trading days immediately preceding the date of valuation at which the
Common Stock has traded on such national securities exchange, the NASDAQ
National Market System or the average of the bid and asked prices on the
over-the-counter market on the date of valuation.
(c) Notwithstanding any delay in the actual issuance of a
Stock Certificate or Receipt pursuant to Section 4 hereof, the Warrant Shares
shall be deemed issued for all purposes as of the opening of business on the
Exercise Date and the Holder shall for all purposes be deemed to be the holder
of record of the Subscribed Shares to which the Receipt or the Stock Certificate
pertains.
4. Issuance of Certificate for Subscribed Shares. Upon the Holder's
exercise of this Warrant in accordance with Section 3, the Company shall deliver
to the Holder:
(a) If the Subscribed Shares constitutes all of the Warrant
Shares (and as the Company chooses), either (1) a Stock Certificate, or (2) a
Receipt.
(b) If the Subscribed Shares constitute less than all of the
Warrant Shares (and as the Company chooses), either
(1) (i) a Stock Certificate, together with (ii) a new
Securities Purchase Warrant, containing the same terms and conditions
as this Warrant, evidencing the Holder's continued right to subscribe
(during the Exercise Period) for the remainder of the Warrant Shares;
or
(2) (i) a Receipt, together with (ii) a new
Securities Purchase Warrant, containing the same terms and conditions
as this Warrant, evidencing the Holder's continued right to subscribe
(during the Exercise Period) for the remainder of the Warrant Shares.
4
5
5. Transfer of Warrant.
(a) This Warrant shall be registered on the books of the
Company, which shall be kept at its Office for that purpose, and shall be
transferable in whole or in part but only on such books, by the Holder (or
Holder's duly authorized representative) in person or by duly authorized
attorney substantially in the form of Exhibit B hereof, and only in compliance
with paragraph (b) below. The Company may issue appropriate stop orders to its
Secretary or transfer agent to prevent a transfer in violation of this Section 5
and Section 7.
(b) The Holder may transfer this Warrant during the Warrant
Period by completing and signing the transfer form (the "Transfer Form") in the
form of transfer form attached as Exhibit B to this Warrant; provided, however,
that without the prior written consent of the Company, this Warrant and all
rights hereunder may be transferred only (i) to an Affiliate, or (ii) in
accordance with the requirements of Section 7 hereof and pursuant to the
registration of this Warrant or the Warrant Shares under the Securities Laws
(except as otherwise limited by any applicable shareholders buy-sell,
registration rights, or voting agreements binding upon the Holder) or subsequent
to any applicable holding period an exemption under Rule 144 or other exemption
from such registration. If at least fifteen (15) working days before the end of
the Exercise Period the Holder completes and signs the Transfer Form and
surrenders this Warrant to the Secretary at the Company's Office, the Company
shall, within ten (10) working days after this Warrant's surrender, issue to the
transferee or transferees identified on the completed Transfer Form one or more
new Securities Purchase Warrants (containing the same terms and conditions as
this Warrant) evidencing the transferee's or transferees' right or rights to
subscribe (during the Exercise Period) for all or part of the Warrant Shares.
6. Adjustments. The Exercise Price and the number of Warrant Shares
purchasable hereunder are subject to adjustment as follows:
(a) Reclassification, etc. If the Company, at any time while
this Warrant, or any portion thereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 6.
(b) Split, Subdivision or Combination of Shares. If the
Company, at any time while this Warrant, or any portion thereof, remains
outstanding and unexpired, shall split, subdivide or combine the securities as
to which purchase rights under this Warrant exist, into a different number of
securities of the same class, then (i) in the case of a split or subdivision,
the Exercise Price for such
5
6
securities shall be proportionately decreased and the securities issuable upon
exercise of this Warrant shall be proportionately increased, and (ii) in the
case of a combination, the Exercise Price for such securities shall be
proportionately increased and the securities issuable upon exercise of this
Warrant shall be proportionately decreased.
(c) Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the security receivable upon exercise of this
Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company that such holder would hold on the date of such
exercise had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such exercise, retained
such shares and/or all other additional stock available by it as aforesaid
during such period, giving effect to all adjustments called for during such
period by the provisions of this Section 6.
(d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 6, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each Holder of this Warrant a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written request, at any time, of any such Holder, furnish or cause to be
furnished to such Holder a like certificate setting forth: (i) such adjustments
and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant.
(e) No Impairment. The Company will not, by any voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 6
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holders of this Warrant against impairment.
(f) Fractional Shares. No fractional shares or scrip
representing fractional Common Shares shall be issued upon the exercise hereof.
Upon exercise by any Holder, such Holder shall be entitled to receive the
aggregate full number of Common Shares in which all the Warrant Shares being
subscribed for by such Holder may exercise and in lieu of any fractional share
to which such Holder would otherwise be entitled, an amount equal to such
fractional share multiplied by the
6
7
then fair market value (as hereafter defined) of Common Shares shall be paid by
the Company in cash to such holder.
(g) Validity of Shares. All Common Shares which may be issued
upon exercise of this Warrant will, upon issuance, be legally and validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issue thereof.
(h) Fair Market Value. For the purposes of this Section 6, if
the Company's Common Shares shall be regularly traded in any market, its "fair
market value" shall be based on (i) if the Common Shares are listed on a
national stock exchange, the closing price on the principal stock exchange where
the Common Shares are listed and traded, or if there is no trading on a given
day, the mean between the closing bid and asked prices on such day on said
exchange, or (ii) if the Common Shares are not so listed, the mean between the
closing bid and asked prices on the over-the-counter market as furnished by a
national quotation service or the principal broker making a market; and in each
case the daily values so obtained shall be averaged over a period of ten (10)
consecutive trading days immediately prior to the date of the determination and
the average so obtained shall be deemed to be the "fair market value" of the
Common Shares hereunder. If the Common Shares are not regularly traded in any
market, its "fair market value" may be currently determined by the Board of
Directors of the Company for the purpose of any transaction hereunder, and such
determination shall be final and binding upon the Holders if it is made in good
faith and with due care.
7. Sale of Warrant or Warrant Shares. Neither this Warrant nor the
Warrant Shares have been registered under the Securities Act of 1933, as
amended, or under the securities laws of any state. Neither this Warrant nor the
Warrant Shares may be sold, transferred, pledged, or hypothecated, in the
absence of (i) an effective registration statement for this Warrant or the
Warrant Shares, as the case may be, under the Act and such registration or
qualification as may be necessary under the securities laws of any state, or
(ii) an opinion of counsel reasonably satisfactory to the Company that such
registration or qualification is not required. The Company shall cause a
Certificate or Certificates evidencing all or any part of the Warrant Shares
prior to any such registration or qualification of Warrant Shares to bear the
following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state (the "Securities Laws"). These securities may not be offered,
sold, transferred, pledged, or hypothecated in the absence of
registration under applicable Securities Laws, or the availability of
an exemption therefrom. This Certificate will not be transferred on the
books of the Company or any transfer agent acting on behalf of the
Company except upon the receipt of an opinion of counsel, satisfactory
to the Company, that the proposed transfer is exempt from the
registration requirements of all applicable Securities Laws, or the
receipt of evidence, satisfactory to the Company, that the proposed
transfer is the subject of an effective registration statement under
all applicable Securities Laws.
8. Replacement of Warrant. At the request of the Holder and on
production of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant, the Company at its expense
will issue in lieu thereof a new Warrant of like tenor.
7
8
9. No Voting Rights. Except as otherwise provided herein, this Warrant
shall not be deemed to confer upon the Holder any right to vote or to consent to
or receive notice as a stockholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise hereof.
10. Investment Covenant. The Holder by its acceptance of this Warrant
covenants that this Warrant is, and the Warrant Shares issued hereunder will be,
acquired for investment purposes, and that the Holder will not distribute this
Warrant or the Warrant Shares in violation of any state or federal law or
regulations. Holder will also upon execution hereof deliver to the Company an
opinion of Holder's counsel in form and substance reasonably satisfactory to
Company which states the placement of the Warrant to Holder is exempt from the
registration requirements of the Securities Act of 1933, as amended.
11. Lock-Up Agreement. The Holder hereby agrees that until December 9,
1999, the Holder will not, without the prior written consent of the Company,
offer, pledge, margin, sell, contract to sell, grant any option for the sale of,
enter into any hedging or derivatives transaction involving, or otherwise
dispose of, directly or indirectly, any of the Warrant Shares, or the Warrant.
12. Miscellaneous.
(a) This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to the
conflict of law principles thereof.
(b) This Warrant shall bind the Company, its successors and
assigns (including any Successor Company), and shall benefit and bind the
Holder, the Holder's successors and permitted assigns.
(c) The Section headings in this Warrant have been included
solely for ease of reference and shall not be considered in the interpretation
or construction of this Warrant. All references in this Warrant to "Sections"
shall be construed as references to numbered Sections of this Warrant.
(d) Any notice or delivery required or permitted by this
Warrant shall be deemed given or made for all purposes of this Warrant when (1)
the notice is in writing, and (2) the notice or the delivery is delivered by
hand or is mailed by registered mail, return receipt requested, addressed to the
intended recipient at (A) in the Company's case, the Company's Office, or (B) in
the Holder's case, the Holder's address as set forth in the Company's records or
at such other address as the Holder may designate by written notice to the
Company.
8
9
IN WITNESS WHEREOF, this Warrant has been executed as of the date first
above written.
HIGH SPEED ACCESS CORP. MICROSOFT CORPORATION
By /s/ Ron Pitcock By /s/ Microsoft Corporation
-------------------------------- ---------------------------------
Name: Ron Pitcock Name:
----------------------------- ------------------------------
Title: President Title:
---------------------------- -----------------------------
Date: August 3, 1999 Date:
----------------------------- ------------------------------
9
10
Exhibit A
SUBSCRIPTION FORM TO BE EXECUTED
UPON EXERCISE OF THE WARRANT
Date:________________
To HIGH SPEED ACCESS CORP.:
The undersigned, as Holder, hereby subscribes, at the price and upon the other
terms and conditions set forth on in this Securities Purchase Warrant of which
this subscription form is a part, for _________ shares of the common stock, $.01
par value, of High Speed Access Corp.
MICROSOFT CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
Address:___________________________
---------------------------
10
11
Exhibit B
TRANSFER FORM
[To be completed and signed only upon transfer of Warrant before exercise.]
For value received, the undersigned hereby transfers this Warrant
entitling the Holder to subscribe for ________________ shares of the common
stock with $.01 par value of High Speed Access Corp. to
____________________________. The undersigned represents, warrants and covenants
that it has this transfer conforms to the requirements of Section 5 of the
Warrant.
Dated _________________, _______.
----------------------------------
11