<PAGE> 1
EXHIBIT 10.21
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 MAY 8, 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: May 8, 2000 Certificate No. W-C1
For value received, iSKY, INC., a Delaware corporation (the
"Company"), hereby grants to Arianespace Investment Limited, or its registered
assigns (the "Holder"), the right to purchase from the Company a total of
3,636,363 shares of the Company's Series C 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 3,636,363
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 $5.50 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 Equity Purchase Agreement, dated as of May 8, 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.
a. 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
during the period (the "Exercise Period") beginning on the first Conversion Date
and shall expire at 5:00 p.m., MST, on the day immediately preceding the first
anniversary of the first Conversion Date (the "Termination Date"); provided,
that in the event that Conversion shall not occur as a result of: (a) the
failure of the Company to request Conversion under the Loan Agreement for any
reason; (b) the voluntary prepayment in full by the Company of the Loans; (c)
the failure by the Company to deliver the documentation relating to, or provide
the evidence of the satisfaction of, the Conversion Conditions as contemplated
by Section 2.02(c) of the Loan Agreement, if the Company, acting in good faith,
would have been able to comply with the delivery obligations
<PAGE> 2
provided for therein; or (d) the failure of the Company to satisfy the
Conversion Conditions set forth in Sections 4.01(b) and 4.01(e) of the Loan
Agreement; and in any such case Arianespace Finance, S.A. shall not be in
default under the Loan Agreement, and the Launch Services Agreement shall not
have been terminated with respect to Launch No.1, then the first Conversion Date
shall be deemed to occur for purposes of this clause on the date of
Launch No. 1.
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"):
(A) a completed Exercise Agreement, as
described in Section 1.c hereof, executed by the Holder and setting forth the
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 (a) in cash or by certified or official bank check payable to the order
of the Issuer or by wire transfer of immediately available funds to the account
of the Company or (b) by delivery of this Warrant Certificate to the Company for
cancellation in accordance with the following formula: in exchange for each
Warrant Share issuable on exercise of each Warrant represented by this Warrant
Certificate that is being exercised, the Holder shall receive such number of
Warrant Shares as is equal to the product of (i) the number of Warrant Shares
issuable upon exercise of the Warrants being exercised at such time multiplied
by (ii) a fraction, the numerator of which is the Fair Market Value per Warrant
Share at such time minus the Exercise Price per Warrant Share at such time, and
the denominator of which is the Fair Market Value per Warrant Share at such
time.
(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 or such other name
or names as shall be designated in such Exercise Agreement. Unless this Warrant
has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new warrant, substantially identical
hereto, 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
2
<PAGE> 3
Company's option, bear such legends as the Company reasonably deems necessary in
connection with the Act or other applicable rules, regulations, or laws.
(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.
(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 shall be required to 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. The Holder may not sell, transfer, or dispose of
this Warrant or any Warrant Shares issued pursuant to this Warrant (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to the Company an opinion of counsel reasonably
acceptable in form and substance to the Company that registration under the Act
or any applicable state securities laws is not required in connection with such
transfer. In addition, in connection with an initial public offering of the
Company's securities, if and to the extent requested by the managing underwriter
or the Company, the Holder shall execute a customary "holdback" agreement (not
to exceed 180 days) in the form requested for such offering by such underwriters
or the Company, as the case may be; provided, however, that the Holder shall not
be required to execute such holdback agreement requested by the Company unless
all of parties to the Amended and Restated Investor Rights Agreement, dated
October 19, 1999, as amended from time to time, are required to execute the same
holdback agreement pursuant to such Agreement and the Company has not waived
such requirement.
3
<PAGE> 4
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 C Preferred Stock, then the following adjustments
shall be made: (A) if Company at any time after February 17, 2000 ("Adjustment
Date") effects a subdivision of its outstanding Series C Preferred Stock into a
larger number of shares or takes a record of the holders of Series C Preferred
Stock for the purpose of entitling them to receive a dividend or other
distribution of Series C 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 C 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 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 C 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 C 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
4
<PAGE> 5
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(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 C 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 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.
5
<PAGE> 6
(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, 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 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 C 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, the Company shall use
reasonable efforts to
6
<PAGE> 7
mail to the Holder, at least ten (10) days prior to the 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, and the amount and character of
such dividend, distribution or right.
SECTION 3. Disposition of Warrant. Subject to Section 1.d hereof, the
transfer restrictions set forth in the Investment Agreement and to compliance
with federal and state securities laws, this Warrant and all rights hereunder
are transferable (subject to any restrictive legends hereon), in whole or in
part, upon surrender of this Warrant to the Company, together with a written
assignment of this Warrant duly executed by the Holder hereof or such holder's
agent or attorney. Such written assignment shall be in the form of the
Assignment Form attached as EXHIBIT II hereto. Upon such surrender, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denominations specified in such instrument of
assignment, and the original Warrant shall promptly be canceled.
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, 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, the Company shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed, or mutilated certificate and dated
the date of such lost, stolen, destroyed, or mutilated certificate.
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. Subject to 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.
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.
* * * * *
7
<PAGE> 8
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/ Thomas E. Moore
---------------------------------
Name: Thomas E. Moore
---------------------------------
Title: President
---------------------------------
Attest:
/s/ David M. Brown
----------------------------------
David M. Brown, Secretary
<PAGE> 9
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 of ______ Warrant Shares covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
The undersigned requests that a certificate for such Warrant
Shares be registered in the name of ______________________________________ 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 __________________ whose
address is _________________________ and whose social security number or other
identifying number is _________, and that such certificate be delivered to
______________ whose address is ___________________.
Signature
--------------------------
Address
----------------------------
<PAGE> 10
EXHIBIT II
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the assignee named below all
the rights of the undersigned under this Warrant with respect to the number of
Warrant Shares covered thereby set forth hereinbelow unto:
<TABLE>
<S> <C> <C>
Number of Shares
Name of Assignee Address of Common Stock
---------------- ------- ---------------
</TABLE>
Dated:
-------------------
--------------------------------
Signature of Registered Holder
--------------------------------
Name of Registered Holder
(Please Print)
Witness:
-------------------------
