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EXHIBIT 10.34
[HIGH SPEED ACCESS LOGO]
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.
APRIL 30, 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-00
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 earn on or prior to April 30, 2002, (the
"Calculation Date") the right to subscribe for and purchase from High Speed
Access Corp., a Delaware corporation (the "Company" or "HSA"), at any time
during the Exercise Period, a number of fully paid, nonassessable shares of the
Company's offered in the Qualified Public Offering Common Stock, $0.01 par
value, equal to the "Earned Shares," (as defined below) at the price equal to
the Exercise Price (as 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 controlled, directly or indirectly, by Microsoft. As used in the
foregoing sentence, "controlled" means (i) with
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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) "Cable System(s)" means any radio frequency ("RF") cable
television franchise or hybrid fiber-coaxial RF Plant distribution system ("RF
Plant") serving a geographically proximal group of residences, businesses, or
other locations. Cable Systems include both One-Way Systems and Two-Way Systems.
(c) "Calculation Date" shall mean April 30, 2002.
(d) "Comcast" shall mean Comcast Corp., who directly or through
its affiliates and subsidiaries, own and operate various Cable Systems, and may
in the future own or control other MSOs/Cable Systems. Microsoft shall assist
HSA in marketing HSA's services to the cable systems owned or operated by
Comcast.
(e) "Committed System(s)" shall mean Cable Systems (a)
encompassing not less than 1200 Homes Passed; (b) that Comcast designates and
HSA accepts as Committed Systems, that Comcast reasonably believes will conform
to the specifications to be agreed upon by Comcast and HSA in the Network
Agreement and that are either listed in the Network Agreement or are designated
as Committed Systems and added to the Network Agreement pursuant to the terms
thereof; (c) consistent with HSA's normal network services agreements are
non-cancelable by Comcast except for material default for a period of at least
five (5) years after commencement of service; and (d) are subject to a full
turnkey implementation of HSA Services on a sole and exclusive basis.
(f) "Common Stock" means the shares of common stock of $.01 par
value that the Company is authorized to issue in accordance with its Amended
Certificate of Incorporation as of the date of the Qualified Public Offering and
which is sold to the public in the Qualified Public Offering, and all securities
into which such Common Stock is exchanged or converted.
(g) "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.
(h) "Earned Shares" shall mean the number of shares of Common
Stock determined according to the following formula: (a) Two Hundred Fifty
Thousand (250,000) shares plus (b) the number equal to the product of (i) one
tenth (0.1) and (ii) the amount by which (A) the number of Homes Passed in
Committed Systems on or before the Calculation Date exceeds (B) Two Million Five
Hundred Thousand (2,500,000).
(i) "Exercise Period" means, with respect to any Earned Share, the
period beginning on the date of this Warrant and ending on May 1, 2004.
(j) "Exercise Price" means at the exercise price per share of
Common Stock (adjusted if appropriate pursuant to Section 6) equal to one
hundred twenty-five percent (125%) of the underwriters' "price to public" upon
closing of a Qualified Public Offering.
(k) "Holder" means MICROSOFT CORPORATION, A WASHINGTON
CORPORATION, or any other Person to whom this Warrant is transferred in
accordance with Section 5 hereof.
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(l) "Homes Passed" shall mean residences that are connected (i.e.,
a residence with an installed cable "drop" from Comcast's Cable System or which
is eligible for such cable "drop" by virtue of an Comcast's Cable System passing
such residence) to Comcasts' cable RF Plant for such Cable System, regardless of
whether the persons residing in such residences subscribe to cable TV services.
(m) "Network Agreement" means an executed Network Services
Agreement between HSA and Comcast to be negotiated and executed in the future
substantially in the form of HSA's standard network services agreement.
(n) "Office" means the Company's office at 1000 W. Ormsby Ave,
Suite 210, Louisville, KY 40210, or such other office as the Company may
designate by written notice to the Holder.
(o) "Person" means any person, firm, Company, or other entity.
(p) "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.
(q) "Qualified Public Offering" means the initial underwritten
public offering of the Company's Common Shares (as proportionately and
appropriately adjusted to reflect any subdivision, reverse stock split or
adjusted recapitalization of the Company's Common Shares after the date hereof)
and aggregate gross proceeds of not less than $50 million to the Company which
has been made pursuant to a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
(r) "Secretary" means W. Kent Oyler III or his duly elected and
qualified successor as the Company's Secretary, or any duly elected and
qualified Assistant Secretary of the Company.
(s) "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.
(t) "Stock Certificate" means an appropriate certificate issued in
the Holder's name representing the Subscribed Shares.
(u) "Subscribed Shares" means, collectively, the number of whole
Earned Shares that the Holder designates on the Subscription Form as Earned
Shares that the Holder wishes to purchase upon this Warrant's surrender to the
Company.
(v) "Subscription Form" means the subscription form attached as
Exhibit A to this Warrant.
(w) "Warrant" means this Securities Purchase Warrant.
3. Exercise of Warrant.
(a) This Warrant entitles the Holder to subscribe, from
time-to-time and upon the terms and conditions set forth in this Warrant, and
purchase during the Exercise Period, Subscribed Shares in any amount up to the
number of Earned Shares.
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(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 Maximum Number of Earned 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.
In the event the Company has completed a Qualified Public Offering 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 Earned Shares to be
exercised. Upon a Net Issue Exercise, Holder shall be entitled to receive Earned
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:
X = Y x (A-B)
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A
Where X = the number of Earned Shares to be issued to Holder;
Y = the number of Earned 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 on the
trading day 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 Earned 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.
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4. Issuance of Certificate for Subscribed Shares. Upon the Holder's
exercise of this Warrant in accordance with Section 3, the Company shall
promptly deliver to the Holder 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 additional Earned 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 additional Earned Shares.
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 Exercise
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) with the
written consent of the Company in its discretion, in accordance with the
requirements of Section 7 hereof and pursuant to the registration of this
Warrant or the Earned 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 Earned Shares.
6. Adjustments. The Exercise Price and the number of Earned Shares
purchasable hereunder are subject to adjustment from and after the Effective
Date 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.
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(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 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 of securities into a smaller number 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 Earned 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 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.
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(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 determined by the Board of Directors of
the Company in good faith, and with due care for the purpose of any transaction
hereunder. In the event that the Holder disputes such value, the Holder shall be
entitled to select an investment banking firm of recognized standing and paid
for by the Holder to calculate the fair market value, and the Company and the
Holder shall use their good faith best efforts to agree on the appraised value
based on the report of the investment banking firm and Board's determination. In
the event that the Company and the Holder are still unable to reach agreement as
to the fair market value, the Company and the Holder agree to submit such
determination to binding arbitration.
7. Sale of Warrant or Earned Shares. Neither this Warrant nor the Earned
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 Earned
Shares may be sold, transferred, pledged, or hypothecated, in the absence of (i)
an effective registration statement for this Warrant or the Earned 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 Earned Shares prior to any such registration
or qualification of Earned Shares to bear the following legend. If the Holder is
not an affiliate and has met the requirements of Rule 144(k), the Company upon
request will remove the legend from Earned Shares.
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.
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.
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10. Investment Covenant. The Holder by its acceptance of this Warrant
covenants that this Warrant is, and the Earned Shares issued hereunder will be,
acquired for investment purposes, and that the Holder will not distribute this
Warrant or the Earned 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 Warrant is exempt from the registration requirements of
the Securities Act of 1933, as amended.
11. Lock-Up Agreement. The Holder hereby agrees that for a period of six
(6) months after the effective date of the closing of the initial qualified
Public Offering of the Company's Common Stock pursuant to a registration
statement filed under the Act, 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 Earned
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 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.
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IN WITNESS WHEREOF, this Warrant has been executed as of the 30th day
of April, 1999.
HIGH SPEED ACCESS CORP. MICROSOFT CORPORATION
By /s/ HIGH SPEED ACCESS CORP. By /s/ MICROSOFT CORPORATION
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Name: Name:
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Title: Title:
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Date: Date:
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