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EXHIBIT 10.22
THE TRANSFER OF THIS WARRANT AND THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE
INVESTMENT AGREEMENT (AS DEFINED BELOW), AND NO TRANSFER OF
THIS WARRANT OR THE SECURITIES REPRESENTED BY THIS CERTIFICATE
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.
THIS WARRANT WAS ORIGINALLY ISSUED ON MARCH 16, 2000 AND HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS
WARRANT MAY NOT BE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT (AND OTHER APPLICABLE
SECURITIES LAWS) OR AN AVAILABLE EXEMPTION THEREFROM.
STOCK PURCHASE WARRANT
Date of Issuance: March 16, 2000 Certificate No. W-F2
For value received, iSKY, INC., a Delaware corporation (the
"Company"), hereby grants to EchoStar Communications Corporation, a Delaware
corporation, or its assigns registered with the Company (the "Holder"), the
right to purchase from the Company a total of up to 7,200,000 shares of the
Company's Series F Preferred Stock, unless the Company's Preferred Stock has
been automatically converted into the Company's Common Stock pursuant to Article
IV.C.5.b of the Company's Amended and Restated Certificate of Incorporation, in
which case this Warrant shall be exercisable for up to 7,200,000 shares of the
Company's Common Stock (such securities that are issuable upon exercise of this
Warrant are hereinafter referred to as the "Warrant Shares"), at a price of
$4.25 per share (the "Exercise Price"), payable in accordance with the terms of
Section 1.b hereof. The Exercise Price and number of Warrant Shares (and the
amount and kind of other securities) for which this Warrant is exercisable shall
be subject to adjustment as provided herein. Capitalized terms used but not
defined herein shall have the meanings ascribed to them in that certain
Securities Purchase Agreement, dated as of March 16, 2000, by and between the
Company and Holder (as such may be amended from time to time, the "Investment
Agreement").
SECTION 1. Exercise of Warrant.
Exercise Period. The purchase rights represented by this
Warrant may be exercised, in whole or in part, at any time and from time to time
in accordance with Schedule A attached hereto.
b. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised
when all of the following items have been delivered to the Company (the
"Exercise Time"):
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(A) a completed Exercise Agreement, as
described in Section 1.c hereof, executed by the Holder and setting forth the
number of Warrant Shares (which must be a whole number of Warrant Shares) to be
purchased in accordance with this Warrant;
(B) this Warrant; and
(C) payment of an amount equal to the
product of the Exercise Price multiplied by the number of Warrant Shares being
purchased upon such exercise (payable as set forth below) (the "Aggregate
Exercise Price").
The Aggregate Exercise Price shall be payable by certified bank check
or wire transfer of immediately available funds to the account of the Company as
follows:
Bank: Norwest Bank Colorado
ABA: 102-0000-76
Account #: 107-801-0289
Account Name: iSKY, Inc.
Such account may be changed upon at least
three (3) days notice from the Company.
(ii) Certificates for Warrant Shares issuable upon
such exercise of this Warrant shall be delivered by the Company to the Holder
within three business days after the date of the Exercise Time together with any
cash payable in lieu of a fraction of a share pursuant to Section 7 hereof.
Subject to Section 3, the certificate or certificates for Warrant Shares so
delivered shall be in such denominations as may be specified in the Exercise
Agreement and shall be registered in the name of the Holder. Unless this Warrant
has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new warrant, identical hereto (except for
appropriate changes to the share numbers or exercise price), representing the
rights formerly represented by this Warrant which have not expired or been
exercised and shall deliver such new Warrant to the Holder concurrently with the
delivery of certificates for the Warrant Shares with respect to which this
Warrant was exercised. The certificates for any Warrant Shares purchased
pursuant to this Warrant may, at the Company's option, bear such legends as are
reasonably necessary in connection with the Act or other applicable rules,
regulations, or laws or agreements by which the Holder is bound.
(iii) The Warrant Shares issuable upon the exercise
of this Warrant shall be deemed to have been issued, and the Holder or any other
person so designated to be named therein shall be deemed for all purposes to
have become the record holder of such Warrant Shares, at the Exercise Time.
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(iv) The issuance of certificates for Warrant Shares
upon exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance of Warrant Shares, except
for any taxes or charges payable in connection with the issuance of Warrant
Shares to any person or entity other than the Holder.
(v) The Company shall not close its books against the
purchase of any Warrant Shares in any manner which interferes with the timely
exercise of this Warrant.
(vi) The Company shall at all times reserve and keep
available out of its authorized but unissued capital stock, solely for the
purpose of issuance upon the exercise of this Warrant, the maximum number of
Warrant Shares issuable upon the exercise of this Warrant. All Warrant Shares
which are so issuable shall be, when issued and upon the payment of the
applicable Aggregate Exercise Price, duly and validly issued, fully paid and
nonassessable, and free from all taxes, liens, and charges.
c. Exercise Agreement. Upon any exercise of this Warrant, the Holder shall
deliver to the Company an Exercise Agreement in substantially the form set forth
on EXHIBIT I attached hereto and incorporated herein.
d. Securities Laws Restrictions. Upon any exercise of this Warrant, the
Holder, in its Exercise Agreement, shall represent and warrant to the Company
that the purchase of the Warrant Shares covered hereby is for its own account
and not on behalf of others.
SECTION 2. Adjustment of Exercise Price and Number of Warrant Shares.
In order to prevent dilution of the rights granted under this Warrant, the
Exercise Price and the number of Warrant Shares shall be subject to adjustment
from time to time as provided in this Section 2.
a. Adjustment for Stock Splits and Combinations.
(i) Preferred Stock Warrant Shares. If at the time of the applicable
adjustment the Warrant Shares to be issued upon exercise of this
Warrant are shares of Series F Preferred Stock, then the following
adjustments shall be made: (A) if Company at any time after March 16,
2000 ("Adjustment Date") effects a subdivision of its outstanding
Series F Preferred Stock into a larger number of shares or takes a
record of the holders of Series F Preferred Stock for the purpose of
entitling them to receive a dividend or other distribution of Series F
Preferred Stock, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately decreased, if appropriate,
and (B) if the Company any time after the Adjustment Date combines its
outstanding shares of Series F Preferred Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased, if appropriate. Any
adjustment under this Section 2.a(i) shall
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become effective at the close of business on the date such subdivision
or combination becomes effective.
(ii) Common Stock Warrant Shares. If at the time of the applicable
adjustment the Warrant Shares to be issued upon exercise of this
Warrant are shares of Common Stock, then the following adjustments
shall be made: (A) if Company at any time after the Adjustment Date
effects a subdivision of its outstanding Common Stock into a larger
number of shares or takes a record of the holders of Common Stock for
the purpose of entitling them to receive a dividend or other
distribution of Common Stock, the Exercise Price in effect immediately
prior to such subdivision shall be proportionately decreased, if
appropriate, and (B) if the Company any time after the Adjustment Date
combines its outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased, if appropriate. Any
adjustment under this Section 2.a(ii) shall become effective at the
close of business on the date such subdivision or combination becomes
effective.
b. Adjustment for Common Stock Dividends and Distributions.
(i) Preferred Stock Warrant Shares. If at the time of the applicable
adjustment the Warrant Shares to be issued upon exercise of this
Warrant are shares of Series F Preferred Stock, then the following
adjustment shall be made: if the Company at any time after the
Adjustment Date makes, or fixes a record date for the determination of
holders of Series F Preferred Stock entitled to receive, a dividend or
other distribution payable in additional shares of common stock, in
each such event the Exercise Price then in effect shall be decreased
as of the time of such issuance or, in the event such record date is
fixed, as of the close of business on such record date, by multiplying
the Exercise Price then in effect by a fraction (1) the numerator of
which is the total number of shares of common stock issued and
outstanding (assuming conversion of all outstanding shares of
Preferred Stock of the Company) immediately prior to the time of such
issuance or the close of business on such record date, as applicable,
and (2) the denominator of which is the total number of shares of
common stock issued and outstanding (assuming conversion of all
outstanding shares of Preferred Stock of the Company) immediately
prior to the time of such issuance or the close of business on such
record date, as applicable, plus the number of shares of common stock
issuable in payment of such dividend or distribution; provided,
however, that if such record date is fixed and such dividend is not
fully paid, or if such distribution is not fully made on the date
fixed therefor, the Exercise Price shall be recomputed accordingly as
of the close of business on such record
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date, and thereafter the Exercise Price shall be adjusted pursuant to
this Section 2.b(i) to reflect the actual payment of such dividend or
distribution.
(ii) Common Stock Warrant Shares. If at the time of the applicable
adjustment the Warrant Shares to be issued upon exercise of this
Warrant are shares of Common Stock, then the following adjustment
shall be made: if the Company at any time after the Adjustment Date
makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of common stock, in each such event the
Exercise Price then in effect shall be decreased as of the time of
such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Exercise
Price then in effect by a fraction (1) the numerator of which is the
total number of shares of common stock issued and outstanding
(assuming conversion of all outstanding shares of Preferred Stock of
the Company) immediately prior to the time of such issuance or the
close of business on such record date, as applicable, and (2) the
denominator of which is the total number of shares of common stock
issued and outstanding (assuming conversion of all outstanding shares
of Preferred Stock of the Company) immediately prior to the time of
such issuance or the close of business on such record date, as
applicable, plus the number of shares of common stock issuable in
payment of such dividend or distribution; provided, however, that if
such record date is fixed and such dividend is not fully paid, or if
such distribution is not fully made on the date fixed therefor, the
Exercise Price shall be recomputed accordingly as of the close of
business on such record date, and thereafter the Exercise Price shall
be adjusted pursuant to this Section 2.b(ii) to reflect the actual
payment of such dividend or distribution.
c. Adjustments for Other Dividends and Distributions.
(i) Preferred Stock Warrant Shares. If at the time of the applicable
adjustment the Warrant Shares to be issued upon exercise of this
Warrant are shares of Series F Preferred Stock, then the following
adjustment shall be made: if the Company at any time after the
Adjustment Date makes, or fixes a record date for the determination of
holders of common stock entitled to receive, a dividend or other
distribution payable in cash, securities, or other property (other
than regular cash dividends payable on the Company's Preferred Stock
or dividends payable in shares of common stock), in each such event
the Exercise Price shall be reduced by the value of such dividend or
distribution payable with respect to one share of common stock. In the
event that such dividend or distribution consists of
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property other than cash or marketable securities, the value of such
dividend or distribution shall be determined in good faith by the
Company's board of directors.
(ii) Common Stock Warrant Shares. If at the time of the applicable
adjustment the Warrant Shares to be issued upon exercise of this
Warrant are shares of Common Stock, then the following adjustment
shall be made: if the Company at any time after the Adjustment Date
makes, or fixes a record date for the determination of holders of
common stock entitled to receive, a dividend or other distribution
payable in cash, securities, or other property (other than regular
cash dividends payable on the Company's Preferred Stock or dividends
payable in shares of common stock), in each such event the Exercise
Price shall be reduced by the value of such dividend or distribution
payable with respect to one share of common stock. In the event that
such dividend or distribution consists of property other than cash or
marketable securities, the value of such dividend or distribution
shall be determined in good faith by the Company's board of directors.
d. Adjustment for Recapitalization and Similar Transactions. If at any
time after the Adjustment Date the Warrant Shares issuable upon exercise of this
Warrant are changed into the same or a different number of shares of any class
or classes of stock or are converted into the right to receive cash, securities,
or other property, whether by recapitalization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for elsewhere in this Section 2) or pursuant to a reorganization, merger,
consolidation, business combination, spinoff, acquisition or similar
transaction, in any such event this Warrant thereafter shall represent the right
to receive, upon exercise hereof, the kind and amount of stock, securities,
and/or other property receivable in connection with such transaction with
respect to the maximum number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to such transaction.
e. Adjustment of Number of Warrant Shares. Upon each adjustment of the
Exercise Price hereunder, the number of Warrant Shares issuable upon exercise of
this Warrant shall be adjusted to equal the number of shares determined by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
f. Notice of Adjustments and Record Date. (i) Whenever an adjustment is
required pursuant to this Section 2, the Company shall forthwith obtain a
certificate signed by the Company's chief financial officer, setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the adjustment to be made pursuant
to this Section 2, after giving effect to such adjustment or
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change. The Company shall promptly cause a signed copy of such certificate to be
delivered to the Holder.
(ii) Upon the Company's taking of a record of the holders of
Series F Preferred Stock or Common Stock for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, including but not limited to any
adjustment provided for in this Section 2, the Company shall mail to the Holder,
at least ten (10) days prior to the record date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, the amount and character of such dividend,
distribution or right, and a preliminary estimate of the calculations to be
provided in the certificate specified in Section 2(f)(i).
SECTION 3. Disposition of Warrant. This Warrant shall not be
transferable by the Holder, except to its direct or indirect wholly owned
subsidiaries without the prior written approval of the Company, which shall not
be unreasonably withheld.
SECTION 4. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Holder shall be satisfactory)
of the ownership and the loss, theft, destruction, or mutilation of any
certificate evidencing this Warrant or this Warrant itself, and in the case of
any such loss, theft, or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or, in the case of any such mutilation upon
surrender of such certificate or this Warrant, the Company shall (at its
expense) execute and deliver in lieu of such certificate or this Warrant a new
certificate or Warrant of like kind representing the same rights represented by
such lost, stolen, destroyed, or mutilated certificate or Warrant and dated the
date of such lost, stolen, destroyed, or mutilated certificate or Warrant.
SECTION 5. Amendment and Waiver. Except as otherwise provided herein,
the provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Holder.
SECTION 6. Ownership. Except for any transfer in compliance with
Section 3 hereof, the Company may deem and treat the Holder as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone) for all purposes and shall not be affected by any notice to the
contrary.
SECTION 7. Fractions of Shares. The Company may, but shall not be
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant in whole or in part. As to any fraction of a Warrant Share which the
Company elects not to issue, the Company shall make a cash payment in respect of
such fraction in an amount equal to the same fraction of the fair market value
of a Warrant Share on the date of such exercise.
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SECTION 8. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER
OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
SECTION 9. Notice. All notices, demands, or other communications to be
given or delivered under or by reason of the provisions of this Warrant will be
in writing and shall be deemed to have duly given or delivered (a) when
delivered personally, (b) three (3) days after it is mailed by certified or
registered mail, return receipt requested and postage prepaid, (c) sent by
facsimile transmission with written electronic confirmation of delivery of such
facsimile to the addressee thereof followed by (a), (b) or (d), or (d) sent via
a nationally recognized overnight courier for next business day delivery to the
recipient in each case addressed to the party to whom such notice is to be
given. Any party hereto from time to time may change its address or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and attested by its duly authorized officers under its corporate seal and to be
dated the date hereof.
iSKY, INC., a Delaware corporation
By: /s/ DAVID M. BROWN
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Name: David M. Brown
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Title: Vice President
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EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-____), hereby exercises this Warrant to
purchase ______ Warrant Shares covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
The undersigned hereby represents and warrants to the Company
that the purchase of the Warrant Shares covered hereby is for its own account
and not on behalf of others.
The undersigned requests that a certificate for such Warrant
Shares be registered in the name of the Holder whose address is
______________________________________ and whose social security number or other
identifying number is ___________, and that such certificate be delivered to
_________________ whose address is ___________________________________. If said
number of Warrant Shares is less than all of the Warrant Shares purchasable
hereunder, the undersigned requests that a new Warrant evidencing the right to
purchase the remaining balance of Warrant Shares for which this Warrant is
exercisable be registered in the name of Holder and that such certificate be
delivered to ______________ whose address is _________________________________.
Signature ____________________
Address ______________________
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SCHEDULE A
EchoStar shall receive Warrants to purchase 7.2 million shares of Common Stock
of iSKY at a price of $4.25 per share, as follows:
(a) One (1) million Warrants will become exercisable upon delivery
to iSKY of a production-ready Joint Box that meets the design
and specifications referenced in Section 1 of the Marketing,
Joint Box Production and Warrants Agreement dated March 13,
2000, between iSKY, Inc., and EchoStar Communications
Corporation (the "Joint Box Agreement"), and will expire one
year after commercial launch of the iSKY data service.
(b) Five (5) increments of one (1) million Warrants each will
become exercisable upon attainment of each increment of
100,000 EchoStar-Generated Subscribers, up to an aggregate of
500,000 EchoStar-Generated Subscribers (and 5 million
Warrants). Each increment of 1 million Warrants expires one
year after such increment becomes exercisable.
(c) Increments of 100,000 Warrants each shall become exercisable
on the last day of each calendar quarter during the second
through the fourth year (inclusive) after commercial
acceptance of iSKY's first satellite, in which quarter all net
new EchoStar-Generated Subscribers comprise 75% or more of
EchoStar's net new Ka-Band data subscribers. Each such
increment of 100,000 Warrants shall expire one year after such
increment becomes exercisable. The maximum number of Warrants
to which EchoStar shall be entitled under subsection (c) of
the Joint Box Agreement is 1.2 million Warrants (for a total
of 12 calendar quarters).
All defined terms herein shall have the meaning ascribed to them in the Joint
Box Agreement.
