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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
INVOLVING SAID SECURITIES, (II) THIS CORPORATION RECEIVES AN OPINION OF LEGAL
COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THIS CORPORATION
STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (III) THIS
CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
NO. W-2 WARRANT TO PURCHASE
GRANT DATE: DECEMBER 6, 1996 SHARES OF COMMON STOCK
TELEDESIC CORPORATION
COMMON STOCK WARRANT CERTIFICATE
For good and valuable consideration received, Teledesic Corporation, a
Delaware corporation (the "Company"), grants to __________ (the "Holder") the
right, subject to the terms of this Warrant, to purchase at any time and from
time to time during the period commencing December 6, 1996 and ending on the
Expiration Date, as defined below, at $1.6667(1) per share (the "Basic Exercise
Price"), up to 637,500(1) fully paid and nonassessable shares of Common Stock of
the Company. The Basic Exercise Price and the number of shares that may be
purchased are subject to adjustment under the terms of this Warrant.
1. DEFINITIONS
As used in this Warrant, unless the context otherwise requires:
1.1 "Basic Exercise Price" means the price at which each Warrant Share may
be purchased upon exercise of this Warrant as stated in the first sentence of
this Warrant.
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(1) As adjusted to reflect 3-for-1 stock split effected on January 22, 1997.
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1.2 "Common Stock" means the Common Stock, $.001 par value, of the Company
existing on the Grant Date.
1.3 "Exercise Date" means any date when this Warrant is exercised, in
whole or in part, in the manner indicated in Sections 2.1 and 2.2.
1.4 "Exercise Price" means the Basic Exercise Price; provided, however,
that if an adjustment is required under Section 7 of this Warrant, then
"Exercise Price" means, after each such adjustment, the price at which each
Warrant Share may be purchased upon exercise of this Warrant immediately after
the last such adjustment.
1.5 "Expiration Date" means 5:00 p.m., Seattle time, on December 5, 2016.
1.6 "Grant Date" means the date this Warrant was first granted as stated
at the beginning of this Warrant.
1.7 "Securities Act" means the Securities Act of 1933, as amended from
time to time, and all rules and regulations promulgated thereunder, or any act,
rules or regulations that replace the Securities Act or any such rules and
regulations.
1.8 "Warrant" means this Common Stock Warrant and each subsequent Common
Stock Warrant, if any, for which this Warrant is exchanged.
1.9 "Warrant Shares" means any shares of Common Stock or other securities
issued or subject to issuance upon exercise of this Warrant or upon exchange of
a Warrant Share for Warrant Shares of different denominations.
2. DURATION AND EXERCISE OF WARRANT
2.1 EXERCISE PERIOD
Subject to the provisions of subparagraph 7.1(d) hereof, this Warrant may
be exercised at any time after the Grant Date and on or before the Expiration
Date. After the Expiration Date this Warrant shall become void, and all rights
to purchase Warrant Shares shall thereupon cease.
2.2 METHOD OF EXERCISE
(a) PROCEDURE FOR EXERCISE
This Warrant may be exercised by the Holder, in whole or in part, by (i)
surrendering this Warrant to the Company, (ii) tendering to the Company payment
of the Exercise Price for the Warrant Shares for which exercise is made and
(iii) executing and delivering to the Company the attached Exercise Form. Upon
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exercise, the Holder will be deemed to be the holder of record of the Warrant
Shares for which exercise is made, even though the transfer or registrar books
of the Company may then be closed or certificates representing such Warrant
Shares may not then be actually delivered to the Holder.
(b) NET EXERCISE RIGHTS
Notwithstanding the payment provisions set forth above, the Holder may
elect to receive Warrant Shares in an amount equal to the value (as determined
below) of this Warrant by surrender of this Warrant at the principal office of
the Company, together with notice of such election, in which case the Company
shall issue to the Holder the number of shares of Common Stock determined as
follows:
X = Y (A-B)
-------
A
Where: X = the number of shares of Common Stock to be issued to the Holder
Y = the number of Warrant Shares subject to this Warrant
A = the Fair Market Value (as defined below) of one (1) Warrant
Share
B = the Exercise Price
For purposes of the above calculation, the "Fair Market Value" of a
Warrant Share shall be determined in good faith by the Board of Directors of the
Company; provided, however, that if a public market for the Company's Common
Stock exists at the time of such exercise, then such Fair Market Value shall be
determined by the average of the closing bid and asked prices of the Company's
Common Stock as quoted in the Over-the-Counter Market Summary or the last
reported sale price of the Common Stock or the closing price quoted on the
Nasdaq National Market System or on any exchange on which such Common Stock is
then listed, whichever is applicable, for the five trading days prior to the
date of exercise of this Warrant. Notwithstanding the foregoing, in the event
this Warrant is exercised in connection with the Company's initial public
offering of Common Stock, the Fair Market Value per share shall be the per share
offering price to the public of the Company's initial public offering.
2.3 CERTIFICATES
Within a reasonable time but no more than 30 days after exercise,
certificates for such Warrant Shares shall be delivered to the Holder and,
unless this Warrant has expired, a Warrant representing the number of Warrant
Shares, if any, with respect to which this Warrant shall not have been
exercised, shall be issued to the Holder.
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2.4 SECURITIES ACT COMPLIANCE
Unless the transfer of the Warrant Shares shall have been registered under
the Securities Act, as a condition of its delivery of the certificates for the
Warrant Shares, the Company may require the Holder (including the transferee of
the Warrant Shares in whose name the Warrant Shares are to be registered) to
deliver to the Company, in writing, representations regarding the purchaser's
sophistication, investment intent, acquisition for his or her own account and
such other matters as are reasonable and customary for purchasers of securities
in an unregistered private offering and the Company may place conspicuously upon
each certificate representing the Warrant Shares a legend substantially in the
following form, the terms of which are agreed to by the Holder (including such
transferee):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE
STATE LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID
SECURITIES, (ii) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL
FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THIS CORPORATION
STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (iii)
THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION.
2.5 TAXES
The Company covenants and agrees that it will pay when due and payable any
and all taxes that may be payable in connection with the issuance of this
Warrant, or the issuance of any Warrant Shares upon the exercise of this
Warrant. The Company shall not, however, be required to pay any tax that may be
payable in respect of any subsequent transfer of this Warrant or of the Warrant
Shares.
3. VALIDITY AND RESERVATION OF WARRANT SHARES
The Company covenants that this Warrant and all shares of Common Stock
issued upon exercise of this Warrant will be validly issued, fully paid and
nonassessable. The Company agrees that as long as this Warrant may be exercised,
the Company will have authorized and reserved for issuance upon exercise of this
Warrant a sufficient number of Warrant Shares to provide for exercise in full.
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4. FRACTIONAL SHARES
No fractional Warrant Share shall be issued upon the exercise of this
Warrant. With respect to any fraction of a Warrant Share otherwise issuable upon
any such exercise, the Company shall pay to the Holder an amount in cash equal
to such fraction multiplied by the Exercise Price.
5. LIMITED RIGHTS OF THE WARRANT HOLDER
The Holder shall not, solely by virtue of being the Holder of this
Warrant, have any of the rights of a holder of Common Stock of the Company,
either at law or in equity, until such Warrant shall have been exercised and the
Holder shall be deemed to be the holder of record of Warrant Shares as provided
in this Warrant, at which time the person or persons in whose name or names the
certificate or certificates for Warrant Shares being purchased are to be issued
shall be deemed the holder or holders of record of such shares for all purposes.
6. EXCHANGE OR LOSS OF WARRANT
6.1 EXCHANGE
This Warrant is exchangeable, without expense to the Holder and upon
surrender hereof to the Company, for Warrants of different denominations
entitling the Holder to purchase Warrant Shares equal in total number and
identical in type to the Warrant Shares covered by this Warrant.
6.2 LOSS, THEFT, DESTRUCTION OR MUTILATION
Upon receipt by the Company of satisfactory evidence of the loss, theft,
destruction or mutilation of this Warrant and either (in the case of loss, theft
or destruction) reasonable indemnification or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and deliver
to the Holder, without charge, a new Warrant of like denomination. Any such new
Warrant executed and delivered shall constitute an additional obligation of the
Company, whether or not this Warrant, reportedly lost, stolen, destroyed or
mutilated, shall be at any time presented by anyone to the Company for exercise.
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7. ADJUSTMENT OF EXERCISE PRICE
7.1 GENERAL
If any of the following events shall occur at any time or from time to
time prior to the exercise in full or expiration of this Warrant, the following
adjustments shall be made in the Exercise Price, with the exceptions hereinafter
provided:
(a) RECAPITALIZATION
In case the Company effects a subdivision, combination, reclassification
or other recapitalization of its outstanding shares of Common Stock into a
greater or lesser number of shares of Common Stock, the Exercise Price in effect
immediately after such subdivision, combination, reclassification or other
recapitalization shall be proportionately decreased or increased, as the case
may be.
(b) STOCK DIVIDENDS
If the Company shall declare a dividend on its Common Stock payable in
stock or other securities of the Company or of any other corporation to the
holders of its Common Stock, the Holder shall, without additional cost, be
entitled to receive upon the exercise of this Warrant, in addition to the
Warrant Shares to which such Holder is otherwise entitled upon such exercise,
the number of shares of stock, or other securities that such Holder would have
been entitled to receive if such Holder had been a holder, on the record date
for such dividend, of the number of shares of Common Stock so purchased under
this Warrant.
(c) MERGER OR CONSOLIDATION - NO CHANGE IN CONTROL
In case of any merger, consolidation or reorganization of the Company with
or into one or more corporations that results in holders of the Company's voting
equity securities immediately prior to such event together owning a majority
interest of the voting equity securities of the surviving corporation
immediately following such event, the Holder, upon the exercise of this Warrant
after the record date for determination of stockholders entitled thereto, shall
receive, in lieu of or in addition to any shares of Common Stock of the Company,
the proportionate share of all stock, or other securities (appropriately
adjusted for any subsequent events of the issuer of such stock or securities
that are of the kind that would cause adjustment of the Exercise Price
hereunder) or other property issued, paid or delivered for or on all of the
Common Stock of the Company as would have been allocable to the Warrant Shares
so purchased under this Warrant had this Warrant been exercised immediately
prior to said record date.
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(d) MERGER OR CONSOLIDATION - CHANGE IN CONTROL
In case of any merger, consolidation or reorganization of the Company with
or into one or more other corporations, that results in the holders of the
Company's voting equity securities immediately prior to such event owning
together less than a majority interest of the voting securities of the surviving
corporation immediately following such event, or in case of any sale, lease,
transfer or conveyance to another corporation of all or substantially all the
assets of the Company or proposed liquidation of the Company, then in any such
event the Holder shall be given notice of such proposed action at approximately
the same time and in substantially the same manner as the holders of the
Company's Common Stock. The Holder may attend the meeting of the Company's
shareholders at which such action is considered and voted upon. If the proposed
action is approved according to applicable law by the shareholders of all
corporations or other entities that are parties to the proposed action, the
Holder shall be so notified in writing by the Company by registered or certified
mail at least 10 business days before the effectiveness thereof. Notwithstanding
the period of exercisability stated on the face of this Warrant, this Warrant
shall become forever null and void to the extent not exercised on or before 5:00
p.m., Pacific time, on the tenth business day following the delivery of such
notice.
(e) MINIMUM ADJUSTMENT NOT REQUIRED
Anything in this Section 7.1 to the contrary notwithstanding, the Company
shall not be required, except as hereinafter provided, to make any adjustment of
the Exercise Price in any case in which the amount by which such Exercise Price
would be increased or reduced, in accordance with the foregoing provisions,
would be less than $.001, but in such a case, any adjustment that would
otherwise be required to be made will be carried forward and made at the time
and together with the next subsequent adjustment that, together with any and all
such adjustments so carried forward, shall amount to not less than $.001;
provided, however, that adjustments in the Exercise Price shall be required and
made in accordance with the provisions of this Section 7.1 (other than this
subparagraph) not later than such time as may be required in order to preserve
the tax-free nature of any distribution (within the meaning of Section 305 of
the United States Internal Revenue Code of 1986) to the Holder or the holders of
Common Stock. In the event of any subdivision, combination, reclassification or
other recapitalization of shares of Common Stock, said amount (as theretofore
decreased or increased) shall be proportionately decreased or increased.
7.2 NUMBER OF WARRANT SHARES ADJUSTED
After any adjustment of the Exercise Price pursuant to Section 7.1, the
number of Warrant Shares issuable at the new Exercise Price shall be adjusted to
the number
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obtained by (i) multiplying the number of Warrant Shares issuable upon exercise
of this Warrant immediately before such adjustment by the Exercise Price in
effect immediately before such adjustment and (ii) dividing the product so
obtained by the new Exercise Price.
7.3 NOTICE OF ADJUSTMENT
Whenever events occur requiring the Exercise Price to be adjusted, the
Company shall promptly file with its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, a certificate of its
chief financial officer showing the adjusted Exercise Price, setting forth in
reasonable detail the acts requiring such adjustment, and stating such other
facts as shall be necessary to show the manner and figures used to compute such
adjustment. Such chief financial officer's certificate shall be made available
at all reasonable times for inspection by the Holder. Promptly after each such
adjustment, the Company shall mail a copy of such certificate by certified mail
to the Holder. The Company shall endorse on any Warrant executed and delivered
by the Company a description of each adjustment, if any, under this Section as
the result of events occurring before the execution and delivery of the Warrant.
If, within 45 days of the mailing of such certificate, the Holder notifies
the Company in writing of his or her disagreement with the adjusted Exercise
Price contained in the Company certificate, then the Company will promptly
obtain a certificate of a firm of independent certified public accountants of
recognized standing selected by the Company's Board of Directors (who may be the
regular auditors of the Company) covering the same items required by the Company
certificate. The Company will promptly mail a copy of the accountants'
certificate to the Holder of this Warrant. The certificate of the firm of
independent public accountants will be conclusive evidence of the correctness of
the computations with respect to any adjustment of the Exercise Price.
8. REGISTRATION RIGHTS
The Warrant Shares issuable upon exercise of this Warrant shall be
entitled to the registration rights set forth in that certain Investors' Rights
Agreement dated as of March 16, 1994, as amended on November 16, 1994, December
15, 1995, May 13, 1996 and November 15, 1996, between the Company and the
parties listed on the signature pages thereto, and the holder hereof and the
Company hereby agree to be bound by all the provisions of such Agreement which
relate to registration rights, including, without limitation, the provisions of
Section 1 thereof, as if the holder hereof was a "Holder" of "Registrable
Securities" as those terms are defined in such Agreement.
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9. NOTICES TO HOLDER
So long as this Warrant is outstanding, whenever the Company shall expect
to (i) pay any dividend or distribution upon the Common Stock, (ii) effect any
recapitalization, merger, consolidation, reorganization, transfer, sale, lease
or conveyance as referred to in Section 7, or (iii) be involved in any voluntary
or involuntary dissolution, liquidation or winding up of the Company, at least
10 days before the proposed action or any applicable record date, the Company
shall give the Holder written notice describing the proposed action and stating
the date on which (x) a record date is to be fixed for the purpose of such
dividend, distribution or right or (y) such recapitalization, merger,
consolidation, reorganization, transfer, sale, lease, conveyance, dissolution,
liquidation or winding up is to take place and when, if any date is to be fixed,
the record holders of Common Stock shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
recapitalization, merger, consolidation, reorganization, transfer, sale, lease,
conveyance, dissolution, liquidation or winding up.
10. MISCELLANEOUS
10.1 SUCCESSORS AND ASSIGNS
All the covenants and provisions of this Warrant that are by or for the
benefit of the Company or of the Holder shall bind and inure to the benefit of
their respective successors and assigns hereunder.
10.2 NOTICE
Notice or demand pursuant to this Warrant to be given or made by the
Holder to or on the Company shall be sufficiently given or made if sent by
registered or certified mail, postage prepaid, addressed, until another address
is designated in writing by the Company, as follows:
Teledesic Corporation
2300 Carillon Point
Kirkland, Washington 98033
Any notice or demand authorized by this Warrant to be given or made by the
Company to or on the Holder shall be given to the Holder by registered or
certified mail, postage prepaid, addressed at his or her last known address as
it shall appear on the books of the Company, until another address is designated
in writing.
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10.3 APPLICABLE LAW
The validity, interpretation and performance of this Warrant shall be
governed by the laws of the State of Washington.
10.4 HEADINGS
The Section headings herein are for convenience only and are not part of
this Warrant and shall not affect the interpretation thereof.
10.5 AMENDMENT
The terms of this Warrant may be amended only with the written consent of
the Company and the Holder of this Warrant.
TELEDESIC CORPORATION
Dated: December 6, 1996 By
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W. Russell Daggatt, President
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EXERCISE FORM
(To be executed by the Warrant Holder in connection with
the exercise of the Warrant in whole or in part)
TO: TELEDESIC CORPORATION
The undersigned (______________________________________________________________)
Please insert Social Security or other
identifying number of Holder
hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant for, and to purchase thereunder, ___________ shares of Common
Stock provided for therein and
[ ] tenders payment herewith to the order of Teledesic Corporation in the
amount of $_____________.
[ ] tenders the foregoing Warrant for cancellation to the extent necessary
to effect payment therefor in accordance with the net exercise provisions
of Section 2.2 of the Warrant.
The undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name: __________________________________________________________________________
Address: _______________________________________________________________________
Deliver to: ____________________________________________________________________
Address: _______________________________________________________________________
and, if said number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the Shares of Common Stock purchasable under the within Warrant be registered
in the name of, and delivered to, the undersigned at the address stated below.
Address: _______________________________________________________________________
Dated: _______________, 19___ Signature _______________________________________
Note: Signature must correspond with the name as
written upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatever.
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