Exhibit 4.3
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT THEREFOR OR AN APPLICABLE EXEMPTION FROM REGISTRATION.
ADDITIONALLY, THE SALE OR TRANSFER OF SUCH SECURITIES ARE SUBJECT TO
THE TERMS AND CONDITIONS OF THE INVESTMENT AGREEMENT, DATED AS OF
JANUARY 16, 1995, AMONG CHEMICAL VENTURE CAPITAL ASSOCIATES, A
CALIFORNIA LIMITED PARTNERSHIP, TELEWAY, INC. AND A STOCKHOLDER OF
TELEWAY, INC., AND NO SALE OR OTHER TRANSFER OF SUCH SECURITIES SHALL
BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN MET. COPIES OF
SUCH AGREEMENT ARE ON FILE AND AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICES OF TELEWAY, INC.
TELEWAY, INC.
Warrant for the Purchase of Shares
of Class B Common Stock
FOR VALUE RECEIVED and subject to the terms and conditions
contained herein, Teleway, Inc. hereby certifies that Chemical Venture Capital
Associates, a California limited partnership, and its permitted assigns, are
entitled to purchase, subject to receipt of all required consents and approvals,
from Teleway, Inc. at any time or from time to time during the Exercise Period
(as defined below) any or all of the Warrant Shares (as defined below) for the
Exercise Price (as defined below). The Exercise Price shall not be subject to
adjustment, except as set forth in paragraph 3 hereof.
1. DEFINITIONS.
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Class B Common Stock" shall mean any
shares of Class B Common Stock issued by the Company on or after the
date hereof, other than shares of Class B Common Stock issued pursuant
to this Warrant.
"Aggregate Warrant Price" shall mean, with respect to the
exercise of a portion or all of the Warrants, the Exercise Price
multiplied by the number of Warrant Shares issuable upon such exercise.
"Appraised Value" shall mean, with respect to any Warrant
Shares at a particular date, the fair saleable value of such Warrant
Shares (determined without giving effect to any discount for (i) a
minority interest, (ii) any lack of voting power or (iii) any lack of
liquidity of the Warrant Shares or to the fact that the Company may
have no class of equity securities registered under the Securities and
Exchange Act of 1934, as amended), agreed upon by the Holder and the
Company or, in the absence of such agreement, determined by an
independent investment banking firm of nationally recognized standing
(the fees and expenses of which shall be paid by the Company) selected
by the Holder and reasonably acceptable to the Company (or, if the
Company and the Holder are unable to agree upon an investment banking
firm, mutually selected by an investment banking firm selected by the
Company and an investment banking firm selected by the Holder).
"Book Value" shall mean, at a particular date, the
consolidated book value of the Company as determined in accordance with
GAAP as determined by the Company's independent public accountants (the
fees and expenses of which shall be paid by the Company) as of the last
day of the quarter immediately preceding such date.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed
in New York City.
"Class B Common Stock" shall mean the Class B Common Stock,
par value $.01 per share, of the Company and any capital stock into
which such Class B Common Stock may thereafter be changed, and shall
also include shares of common stock of any successor or acquiring
corporation referred to in paragraph 3(d) received by or distributed to
the holders of such capital stock in the circumstances contemplated by
paragraph 3(d).
"Closing Date" shall mean the date upon which this Warrant is
originally issued.
"Company" shall mean Teleway, Inc., a Delaware corporation, or
any successor corporation by merger or consolidation or otherwise.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in
cash or property, for Additional Shares of Class B Common Stock, either
immediately or upon the occurrence of a specified date or a specified
event.
"Current Market Price" shall mean, in respect of any share of
Class B Common Stock on any date herein specified, the average of the
daily market prices for 30 consecutive Business Days commencing 45 days
before such date. The daily market price for each such Business Day
shall be (i) the last sale price on such day on the principal stock
exchange on which such Class B Common Stock is then listed or admitted
to trading, (ii) if no sale takes place on such day on any such
exchange, the average of the last reported closing bid and asked prices
on such day as officially quoted on any such exchange or, if there is
no such bid and asked prices on such day, on the next preceding date
when such bid and asked prices occurred, (iii) if the Class B Common
Stock is not then listed or admitted to trading on any stock exchange,
the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic quotation System or the
National Quotation Bureau, Inc., (iv) if neither such corporation at
the time is engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in
2
such business, or (v) if there is no such firm, as furnished by any
member of the National Association of Securities Dealers selected by
the Company. If there is no daily market price as described above, the
"Current Market Price" shall mean the per share Book Value.
"CVCA" shall mean Chemical Venture Capital Associates, a
California limited partnership, and any successor by merger or
consolidation or otherwise.
"Exercise Date" shall mean the date on which the Holder
exercises this Warrant, in whole or in part.
"Exercise Period" shall mean the period commencing on the
Closing Date and ending at 5:00 p.m., New York City time, on the
Termination Date.
"Exercise Price" shall mean a price for each Warrant Share
equal to $.02, subject to adjustment hereafter pursuant only to the
provisions of paragraph 3 of this Warrant.
"Fully Diluted Outstanding" shall mean, when used with
reference to Class B Common Stock, at any date as of which the number
of shares thereof is to be determined, all shares of Class B Common
Stock Outstanding at such date and all shares of Class B Common Stock
issuable pursuant to options, warrants or other rights to purchase or
acquire, or securities convertible into, shares of Class B Common
Stock, outstanding on such date (including any Warrant Shares issuable
pursuant to this Warrant).
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"Holder" shall mean CVCA or any transferee of this Warrant.
"Investment Agreement" has the meaning set forth in
Section 12.
"Outstanding" shall mean, when used with reference to Class B
Common Stock, at any time as of which the number of shares thereof is
to be determined, all issued shares of Class B Common Stock, except
shares then owned or held by or for the account of the Company or any
subsidiary of the Company, and shall include all shares issuable in
respect of outstanding scrip or any certificates representing
fractional interests in shares of Class B Common Stock.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization,
association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal
or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Termination Date" shall mean the earlier of (i) January 16,
2005, and (ii) the date on which all of the Warrant Shares have been
issued to the Holder pursuant to the terms of this Warrant.
3
"Warrant Shares" shall mean any of the shares of Class B
Common Stock issuable upon exercise of this Warrant. The number of
Warrant Shares shall initially be _____ shares of Class B Common Stock,
subject to adjustment thereafter pursuant only to the provisions of
paragraph 3 of this Warrant.
"Warrant Value Per Share" shall mean, with respect to that
portion of this Warrant which is exercisable for one Warrant Share, the
excess of (a) the Appraised Value of one Warrant Share issuable upon
exercise thereof over (b) the Exercise Price.
2. EXERCISE OF WARRANT. This Warrant may be exercised, in
whole at any time or in part from time to time, during the Exercise
Period, by the Holder by the surrender of this Warrant (with the
subscription duly executed) at the address set forth in paragraph 11(a)
hereof, together with proper payment of the Exercise Price. Payment of
the Exercise Price for the Warrant Shares to be issued shall be made by
certified or official bank check payable to the order of the Company.
In lieu of payment of all or part of the Aggregate Warrant Price with
respect to all or part of the Warrant Shares, the Holder may pay the
Exercise Price with respect to such Warrant Shares by surrendering to
the Company that portion of this Warrant having an aggregate Warrant
Value Per Share on the date of exercise equal to the Aggregate Warrant
Price otherwise payable with respect thereto. If this Warrant is
exercised in part, this Warrant must be exercised for a whole number of
shares of the Class B Common Stock, and the Holder is entitled to
receive a new Warrant covering the number of Warrant Shares in respect
of which this Warrant has not been exercised. Upon such surrender of
this Warrant, the Company will issue a certificate or certificates in
the name of the Holder for the number of shares or the Class B Common
Stock to which the Holder shall be entitled. The Company shall not be
required to issue a fractional share of Class B Common Stock upon any
exercise of this Warrant.
3. CERTAIN ADJUSTMENTS. The Exercise Price and the kind and
number of shares of Class B Common Stock issuable upon exercise of this
Warrant shall be subject to adjustment as set forth below in this
paragraph 3. The Company shall give the registered Holder notice of any
event described below which requires an adjustment pursuant to this
paragraph 3 in accordance with the provisions of paragraph 4.
(A) ADJUSTMENT OF EXERCISE PRICE. From the Closing
Date (and subject to such further adjustments, from time to
time, pursuant to the other provisions of this paragraph 3),
the Exercise Price shall be $.02 per Warrant Share.
(B) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If
at any time (other than pursuant to Section 6.6(d) of the
Investment Agreement (as defined in Section 12 of this
Warrant)) the Company shall:
(i) fix a record date for the purpose of
determining the holders of its Class B Common Stock
entitled to receive a dividend payable in, or other
distribution of, Additional Shares of Class B Common
Stock;
(ii) subdivide its outstanding shares of
Class B Common Stock into a larger number of shares
of Class B Common stock;
4
(iii) combine its outstanding shares of Class B
Common Stock into a smaller number of shares of Class
B Common Stock; or
(iv) issue any shares of its capital stock or
other securities by reclassification of the Class B
Common Stock (other than pursuant to paragraph 3(d)
below);
then the Exercise Price shall be proportionately decreased in
the case of such a dividend or distribution of Additional
Shares of Class B Common Stock or such a subdivision, or
proportionately increased in the case of such a combination,
or the kind of capital stock or other securities of the
Company which may be purchased shall be adjusted in the case
of such a reclassification of the Class B Common Stock, each
on the record date for such dividend or distribution or
effective date of such subdivision, combination or
reclassification, as the case may be, such that the Holder
shall be entitled to receive, upon exercise of this Warrant,
the aggregate number and kind of shares of Class B Common
Stock which, if the Warrant had been fully exercised
immediately prior to such date, it would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, distribution, subdivision, combination or
reclassification.
(C) CERTAIN OTHER DIVIDENDS AND DISTRIBUTIONS.
If at any time the Company shall fix a record date for the
purpose of determining the holders of its Class B Common Stock
entitled to receive any dividend or other distribution
(including any such distribution made in connection with a
consolidation or merger, but excluding any distribution
referred to in subparagraph (b) above) of:
(i) any evidences of indebtedness, any shares
of its capital stock (including Convertible
Securities but excluding Class B Common Stock) or any
other securities or property of any nature
whatsoever; or
(ii) any warrants or other rights to subscribe
for or purchase any evidences of its indebtedness,
any shares of its stock (including Convertible
Securities) or any other of its securities or its
property of any nature whatsoever (other than normal
cash dividends or cash distributions permitted under
applicable law);
then the Exercise Price shall be adjusted to equal the
Exercise Price in effect prior to such distribution or
dividend multiplied by a fraction, (1) the numerator of which
shall be (A) the Current Market Price per share of the Class B
Common Stock on such record date minus (B) the amount
allocable to one share of Class B Common Stock of the fair
value (as determined in good faith by the Board of Directors
of the Company and supported by an opinion from an investment
banking firm of nationally recognized standing approved by the
Holder, which approval shall not be unreasonably withheld) of
any and all such evidences of indebtedness, shares of stock,
other securities or property or warrants or other subscription
or purchase rights so distributable, and (2) the denominator
of which shall be such Current Market Price per share of Class
B Common Stock. Such adjustments shall be made whenever such a
record date is fixed. A reclassification of the Class B Common
Stock (other than a change in par value, or from par value to
no par
5
value or from no par value to par value) into shares of Class
B Common Stock and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its
Class B Common Stock of such shares of such other class of
stock within the meaning of this subparagraph (c) and, if the
outstanding shares of Class B Common Stock shall be changed
into a larger or smaller number of shares of Class B Common
Stock as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of
the outstandinq shares of class B Common Stock within the
meaning of subparagraph (b).
(D) CONSOLIDATION OR MERGER. In the case of any
consolidation of the Company with or merger of the Company
into another corporation or in case of any sale or conveyance
to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company or such
successor or purchasing corporation, as the case may be, shall
execute with the Holder an agreement that the Holder shall
have the right thereafter upon payment of the Exercise Price
in effect immediately prior to such action to purchase upon
exercise of the warrant the kind and amount of shares and
other securities and property that it would have owned or have
been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such warrant
been exercised immediately prior to such action. In no event
shall the Holder be entitled to receive upon exercise of the
Warrant shares of the surviving corporation unless each other
holder of Class B Common Stock of the Company shall also
receive shares of such surviving corporation in such merger,
consolidation, sale or conveyance. Such agreement shall
provide for adjustments, which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this
paragraph 3. The provisions of this subparagraph (d) shall
similarly apply to successive consolidations, mergers, sales
or conveyances.
(E) ISSUANCE OF SHARES, WARRANTS OR OTHER RIGHTS.
Except for the issuance (i) upon exercise of employee stock
options of shares of Class B Common Stock in amounts not in
excess of the number of such shares referred to in section
7.3(a) of the Investment Agreement or as permitted by Section
6.6(d), (ii) to CVCA pursuant to the exercise of rights set
forth, in Section 7.3 of the Investment Agreement and (iii)
pursuant to Section 7.9(b)(i) of the Investment Agreement, if
at any time the Company shall issue or sell to any Person any
Additional Shares of Class B Common Stock, or warrants or
other similar rights to subscribe for or purchase any
Additional Shares of Class B Common Stock or Convertible
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable (but excluding any
distributions in subparagraphs (b) or (c) above), and the
price per share of such Class B Common Stock or for which
Class B Common Stock is issuable upon the exercise of such
warrants or other rights or upon conversion or exchange of
such Convertible Securities shall be less than the Current
Market Price in effect immediately prior to the time of such
issue or sale, then the Exercise Price shall be adjusted to
equal the Exercise Price multiplied by a fraction (i) the
numerator of which shall be equal to the sum of (A) the number
of shares of Class B Common Stock Outstanding immediately
prior to the issuance of such Additional Shares of Class B
Common Stock and (B) the number of shares of Additional Shares
of Class B Common Stock which the aggregate consideration
received for the total number of Additional Shares of Class B
Common Stock issued would purchase at the Current Market Price
and (ii) the denominator of which shall be the number of
shares
6
of Class B Common Stock Outstanding after the issuance of such
Additional Shares of Class B Common Stock. In the case of the
issuance or sale of warrants or other rights or Convertible
Securities, such adjustment shall be made on the basis that
(i) the maximum number of Additional Shares of Class B Common
Stock issuable pursuant to all such warrants or other similar
rights or necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been
issued and outstanding, (ii) the price per share for such
Additional Shares of Class B Common Stock shall be deemed to
be the lowest possible price per share in any range of prices
per share at which such Additional Shares of Class B Common
Stock are available to such holders, and (iii) the Company
shall be deemed to have received all of the consideration
payable therefor, if any, as of the date of the actual
issuance of such warrants or other similar rights. No further
adjustments of the Exercise Price shall be made upon the
actual issue of such Class B Common Stock upon exercise of
such warrants or other similar rights or upon the actual issue
of such Class B Common Stock upon such conversion or exchange
of such Convertible Securities. For the purposes of this
subparagraph (e), the date as of which the Current Market
Price of Class B Common Stock shall be computed shall be the
earliest of (i) the date on which the Company shall enter into
a firm contract for the issuance of such warrants or other
similar rights or (ii) the date of actual issuance of such
warrants or other similar rights. Such adjustments shall be
made upon the date of the issuance of sale of such warrants or
other similar rights.
(F) ISSUANCE OF CONVERTIBLE SECURITIES. Except for the
issuance of employee stock options for shares of Class B
Common Stock in amounts not in excess of the number of such
shares referred to in Sections 7.3(a) and 6.6(d) of the
Investment Agreement and for issuances of warrants pursuant to
Section 7.3 or 7 9(b)(i) of the Investment Agreement, if at
any time the Company shall issue or sell to any Person any
Convertible Securities (other than securities distributed in a
transaction described in subparagraphs (c) and (e) above),
whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per share for which
Class B Common Stock is issuable upon such conversion or
exchange shall be less than the Current Market Price in effect
immediately prior to the time of such issue or sale, then the
Exercise Price shall be adjusted as provided in subparagraph
(e) above on the basis that (i) the maximum number of
Additional Shares of Class B Common Stock necessary to effect
the conversion or exchange of all such Convertible Securities
shall be deemed to have been issued and outstanding, (ii) the
price per share of such Additional Shares of Class B Common
Stock shall be deemed to be the lowest possible price in any
range of prices at which such Additional Shares of Class B
Common Stock are available to such holders, and (iii) the
Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of
actual issuance of such Convertible Securities. No adjustment
of the Exercise Price shall be made under this subparagraph
(f) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance
of such warrants or other rights pursuant to subparagraph (e)
above. No further adjustments of the Exercise Price shall be
made upon the actual issue of such Class B Common Stock upon
conversion or exchange of such Convertible Securities and, if
any issue or sale of such Convertible Securities is made upon
exercise of any warrant or other right to subscribe for or to
purchase any such
7
Convertible Securities for which adjustments of the Exercise
Price have been or are to be made pursuant to other provisions
of this paragraph 3, no further adjustments of the Exercise
Price shall be made by reason of such issue or sale. For the
purposes of this subparagraph (f), the date as of which the
Exercise Price of Class B Common Stock shall be computed shall
be the earliest of (i) the date on which the Company shall
enter into a firm contract for the issuance of such
Convertible Securities or (ii) the date of actual issuance of
such Convertible Securities. Such adjustments shall be made
upon each issuance of Convertible Securities and shall become
effective immediately after such issuance.
(G) SUPERSEDING ADJUSTMENT. If, at any time after any
adjustment to the Exercise Price shall nave been made pursuant
to subparagraphs (d), (e) or (f) above as the result of any
issuance of warrants, rights or Convertible Securities, and
either
(i) such warrants or rights, or the right of
conversion or exchange in any other Convertible
Securities, shall expire, and all or a portion of
such warrants or rights, or the right of conversion
or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be,
shall not have been exercised; or
(ii) the consideration per share for which
shares of Class B Common Stock are issuable pursuant
to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased
solely by virtue of provisions therein contained for
an automatic increase in such consideration per share
upon the occurrence of a specified date or event;
then such previous adjustment shall be rescinded and annulled
and the Additional Shares of Class B Common Stock which were
deemed to have been issued by virtue of the computation made
in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of
such computation. Thereupon, a recomputation shall be made of
the effect of such rights or options or other Convertible
Securities on the Exercise Price on the basis of
(iii) treating the number of Additional shares
of Class B Common Stock or other property, if any,
theretofore actually issued or issuable pursuant to
the previous exercise of any such warrants or rights
or any such right of conversion or exchange, as
having been issued on the date or dates of any such
exercise and for the consideration actually received
and receivable therefor; and
(iv) treating any such warrants or rights or
any such other Convertible Securities which then
remain outstanding as having been granted or issued
immediately after the time of such increase of the
consideration per share for which shares of Class B
Common Stock or other property are issuable under
such warrants or rights or other Convertible
Securities.
(H) ADUSTMENT OF NUMBER OF WARRANT SHARES. Upon each
adjustment of the Exercise Price, as the case may be, pursuant
to subparagraph (b), (c), (e), (f) or (g)
8
of this paragraph 3, this Warrant shall be deemed to evidence
the right to purchase, at the adjusted Exercise Price, that
number of shares of Class B Common Stock obtained by
multiplying the number of shares of Class B Common Stock
covered by the Warrant immediately prior to such adjustment by
the Exercise Price in effect prior to such adjustment and
dividing the product so obtained by the Exercise Price in
effect after such adjustment.
(I) WHEN ADJUSTMENTS TO BE MADE. No adjustment in the
Exercise Price shall be required by this paragraph 3 if such
adjustment either by itself or with other adjustments not
previously made would require an increase or decrease of less
than 1% in such price. Any adjustment representing a change of
less than such minimum amount which is postponed shall be
carried forward and made as soon as such adjustment, together
with other adjustments required by this paragraph 3 and not
previously made, would result in a minimum adjustment.
Notwithstanding the foregoing, any adjustment carried forward
shall be made no later than ten Business Days prior to the
Termination Date. All calculations under this subparagraph (i)
shall be made to the nearest cent. For the purpose of any
adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its
occurrence.
(J) FRACTIONAL INTERESTS. In computing adjustments
under this paragraph 3, fractional interests in Class B Common
Stock shall be taken into account to the nearest whole share.
(K) WHEN ADJUSTMENTS NOT REQUIRED. If the Company
shall fix a record date for the purpose of determining the
holders of its Class B Common Stock entitled to receive a
dividend or distribution and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan
to pay or deliver such dividend or distribution, then
thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
(L) CERTAIN LIMITATIONS. Subject to the provisions of
paragraph 6, there shall be no adjustment of the Exercise
Price hereunder to the extent that such adjustment would cause
the Exercise Price to be less than the par value per share of
the Class B Common Stock, which par value shall not at any
time while this Warrant is outstanding exceed $.01.
4. NOTICES OF ADJUSTMENTS. Whenever the Exercise Price or
the number of Warrant Shares shall be adjusted pursuant to paragraph 3, the
Company shall forthwith deliver to the Holder a certificate prepared by the
Company, setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which the Board of Directors of the Company determined the fair
value of any evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights), specifying the
number of Warrant Shares then issuable hereunder, the Exercise Price after
giving effect to such adjustment and (if such adjustment was made pursuant to
paragraph 3(b)) describing the number and kind of any other shares of stock for
which the Warrant is exercisable. In the
9
event that the Holder shall disagree with any such adjustment or with the terms
of any new agreement to be entered into pursuant to paragraph 3(d), it shall
notify the Company thereof and any disagreement shall be resolved by an
investment banking firm of nationally recognized standing mutually agreeable to
the Company and the Holder, or if the Company and the Holder are unable to agree
upon an investment banking firm, an investment banking firm selected by an
investment banking firm chosen by the Company and an investment banking firm
chosen by the Holder.
5. RESERVATION OF WARRANT SHARES. The Company agrees that,
upon commencement of the Exercise Period and prior to the expiration of this
Warrant, the Company will at all times have authorized and in reserve, and will
keep available, solely for issuance or delivery upon the exercise of this
Warrant, the shares of the Class B Common Stock and other securities and
properties as from time to time shall be receivable upon the exercise of this
Warrant, free and clear of all restrictions on sale or transfer and free and
clear of all preemptive rights.
6. FULLY PAID STOCK; TAXES. The shares of Class B Common
Stock represented by each and every certificate for Warrant Shares delivered on
the exercise of this Warrant shall, at the time of such delivery, be validly
issued and outstanding, fully paid and nonassessable, and not subject to
preemptive rights, and the Company will take all such actions as nay be
necessary to assure that the par value or stated value, if any, per share of the
Class B Common Stock is at all times equal to or less than the then Exercise
Price (after giving effect to all adjustments thereto notwithstanding the
provisions of paragraph 3(1)). The Company further covenants and agrees that it
will pay, when due and payable, any and all federal and state stamp, original
issue or similar taxes which may be payable in respect of the issuance of any
Warrant Shares or certificate therefor.
7. TRANSFERABILITY. This warrant is not transferable or
assignable by the Holder (other than to a majority-owned subsidiary or the
Holder). Any such permitted transfer or assignment may only be effected in
accordance with applicable securities laws or pursuant to exemptions therefrom.
The Company may treat the registered holder of this Warrant as it appears on the
Company's books at any time as the Holder for all purposes.
8. LOSS, ETC., OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity or bond reasonably satisfactory to the Company,
if lost, stolen or destroyed, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver to the Holder a new
Warrant of the like date, tenor and denomination.
9. HOLDERS RIGHTS AS A STOCKHOLDER. This Warrant shall not
confer upon the Holder the right to vote or to consent to or receive notice as a
stockholder of the Company, as such.
10. SURRENDER. The Holder may at any time surrender all or a
portion of this Warrant for cancellation by transmitting same to the Company at
its address set forth elsewhere herein accompanied by a written notice setting
forth the Holders intentions to surrender the
10
Warrant (or such portion) for cancellation and upon such transmittal by the
Holder, this Warrant (or such portion) shall become null and void and of no
further force and effect.
11. NOTICES. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
(a) the Company at 1600 Stewart Avenue, Westbury, New York
11590, Attention: James F. McCann or Glenn Reed; or
(b) the Holder at , Attention: .
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three Business Pays after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a copy
shall in no way adversely affect the effectiveness of such notice, demand,
request, approval, declaration, delivery or other communication.
12. INVESTMENT AGREEMENT. The Holder, the Company and
certain stockholders of the Company have entered into an Investment Agreement,
dated as of January 16, 1995 (as amended, supplemented or otherwise modified
from time to time, the "Investment Agreement"), which includes certain
provisions relating to this warrant and the Warrant Shares.
13. MISCELLANEOUS.
(a) REMEDIES. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate.
Accordingly, it is agreed that the Holder shall be entitled to an injunction,
restraining order or other equitable relief to prevent breaches of this Warrant
and to enforce specifically the terms and provisions hereof in any court of
competent jurisdiction in the United States or any state thereof, Such remedies
shall be cumulative and non-exclusive and shall be in addition to any other
rights and remedies the parties may have under this Warrant.
(b) NO INCONSISTENT AGREEMENTS. The Company will not
on or after the date of this Warrant enter into any agreement with respect to
its securities which is inconsistent with the rights granted to The Holder in
this Warrant or otherwise conflicts with the provisions hereof. The rights
granted to the Holder hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any such agreements.
11
(c) SUCCESSORS AND ASSIGNS. Subject to the provisions
of paragraph 7 hereof, this Warrant shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties, including without
limitation and without the need for an express assignment, subsequent Holders of
Warrant Shares.
(d) SEVERABILITY. In the event that any one Or more
of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
(e) AMENDMENTS AND WAIVERS. The provisions of this
Warrant, including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent of
the Holder.
(f) ENTIRE AGREEMENT. The provisions of this Warrant
are intended by the parties as a final expression of their agreement and are
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, agreements, warranties, or undertakings,
other than those set forth or referred to herein, including with respect to the
registration rights granted by the Company with respect to the Warrant Shares.
(g) HEADINGS. The headings of this Warrant have been
inserted as a matter of convenience and shall not affect the construction
hereof.
(h) APPLICABLE LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State Of New York. Each party
hereto agrees to submit to the non-exclusive jurisdiction of the courts of the
City of New York in the State of New York in any action or proceeding arising
out of or relating to this Agreement.
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed in its name by its President thereunto duly authorized.
DATED:
TELEWAY, INC.
By:
--------------------------------
Name:
Title:
ACCEPTED BY:
CHEMICAL VENTURE CAPITAL ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
By:
--------------------------------
Name:
Title:
13
SUBSCRIPTION
The undersigned, ________, pursuant to the provisions of the
foregoing Warrant, hereby agrees to subscribe for and purchase shares of the
Class B Common Stock of, TELEWAY, INC., covered by said Warrant, and makes
payment therefor in full at the price per share provided by said warrant.
Dated: _________________, 199_ ________________________________________
(Signature)
________________________________________
(Address)
________________________________________
ASSIGNMENT
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto
the foregoing Warrant and all rights evidenced thereby and does irrevocably
constitute and appoint , attorney, to transfer said Warrant of the books of
TELEWAY, INC.
Dated: _________________, 199_ ________________________________________
(Signature)
________________________________________
(Address)
________________________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, hereby assigns and transfers unto the
right to purchase shares of the Class B Common Stock of TELEWAY, INC. by the
foregoing Warrant and the rights evidenced thereby, and does irrevocably
constitute and appoint , attorney, to transfer said warrant on the books of
TELEWAY, INC.
Dated: _________________, 199_ ________________________________________
(Signature)
________________________________________
(Address)
________________________________________
14