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EXHIBIT 10.23
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
No.CS-1 Warrant to Purchase 1,000,000 Shares of Common Stock
(subject to adjustment)
WARRANT TO PURCHASE COMMON STOCK
OF
DARWIN NETWORKS, INC.
This certifies that, for value received, HIGH SPEED ACCESS CORP., a
Delaware corporation , or registered assigns ("Holder"), is entitled, subject to
the terms set forth below, to purchase from DARWIN NETWORKS, INC. (the
"Company"), a Delaware corporation, up to 1,000,000 shares of the Common Stock
of the Company ("Common Stock"), as constituted on the date hereof, upon
surrender of this Warrant, at the principal office of the Company, with the
Notice of Exercise attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States or otherwise as hereinafter
provided, at the Exercise Price as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall include
this Warrant, and any warrants delivered in substitution or exchange therefor as
provided herein. This Warrant is issued in consideration of and in connection
with that certain $500,000 Revolving Credit Note made by the Company in favor of
High Speed Access Corp. dated as of the date hereof (the "Note").
1. Term of Warrant. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable as set forth in Section 2 hereof, in whole or
in part, during the term commencing on the Warrant Issue Date, as hereinafter
defined, and ending at 5:00 p.m., Eastern standard time, on the earlier of (a)
▇▇▇▇▇ ▇▇, ▇▇▇▇ , ▇▇ (▇) the closing of the sale and issuance of shares of Common
Stock of the Company, at a per share price of at least $7.50 and aggregate gross
proceeds of not less than $25 million to the Company in a firmly underwritten
initial public offering, pursuant to an effective registration statement under
the Securities Act of 1933, as amended ("Qualified Public Offering"), and shall
be void thereafter.
2. Warrant Issue Date; Exercise Price. 1,000,000 shares of Common Stock
may be subscribed for under this Warrant on and after the date hereof (the
"Warrant Issue Date") at an exercise price of $5.00 per share (the "Exercise
Price"). The Exercise Price may be adjusted from time to time pursuant to
Section 11 hereof.
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3. Exercise of Warrant.
a. The purchase rights represented by this Warrant are exercisable by
the Holder in whole or in part, but not for less than 10,000 shares at a time
(or such lesser number of shares which may then constitute the maximum number
purchasable; such number being subject to adjustment as provided in Section 11
below), at any time, or from time to time, during the term hereof as described
in Section 1 above, by the surrender of this Warrant and the Notice of Exercise
in the form annexed hereto as Annex A duly completed and executed on behalf of
the Holder, at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company), upon payment (i) in cash or
by check acceptable to the Company, (ii) by cancellation by the Holder of
indebtedness or other obligations of the Company to the Holder, or (iii) by a
combination of (i) and (ii), of the purchase price of the shares to be
purchased.
b. This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all purposes as the holder of
record of such shares as of the close of business on such date. As promptly as
practicable on or after such date and in any event within ten (10) days
thereafter, the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
number of shares issuable upon such exercise. In the event that this Warrant is
exercised in part, the Company at its expense will execute and deliver a new
Warrant of like tenor exercisable for the number of shares for which this
Warrant may then be exercised.
c. Notwithstanding any provisions herein to the contrary, in the event
the Warrant is exercised in connection with a Qualified Public Offering, in lieu
of exercising this Warrant for cash, the Holder may elect to receive shares
equal to the value (as determined below) of this Warrant (or the portion thereof
being exercised) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Notice of Exercise and notice of
such election in which event the Company shall issue to the Holder a number of
shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued
to the Holder
Y = the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being
exercised (at the date of such calculation)
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A = the fair market value of one share of Common Stock (at
the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, the fair market value of one share of
Common Stock shall be the per share offering price to the public in the
Qualified Public Offering.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
5. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
6. Rights of Stockholders. Subject to Sections 9 and 11 of this Warrant,
the Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company that may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance, or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until the Warrant shall have been exercised as
provided herein.
7. Transfer of Warrant.
a. Warrant Register. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change his or her address as
shown on the Warrant Register by written notice to the Company requesting such
change. Any notice or written communication required or permitted to be given to
the Holder may be delivered or given by mail to such Holder as shown on the
Warrant Register and at the address shown on the Warrant Register. Until this
Warrant is transferred on the Warrant Register of the Company, the Company may
treat the Holder as shown on the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.
b. Transferability and Nonnegotiability of Warrant. This Warrant may
not be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment
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representation letters and legal opinions reasonably satisfactory to the
Company, if such are requested by the Company). Subject to the provisions of
this Warrant with respect to compliance with the Securities Act of 1933, as
amended (the "Act"), title to this Warrant may be transferred by endorsement (by
the Holder executing the Assignment Form annexed hereto as Annex B) and delivery
in the same manner as a negotiable instrument transferable by endorsement and
delivery.
c. Exchange of Warrant Upon a Transfer. On surrender of this Warrant for
exchange, properly endorsed on the Assignment Form and subject to the provisions
of this Warrant with respect to compliance with the Act and with the limitations
on assignments and transfers contained in this Section 7, the Company at its
expense shall issue to or on the order of the Holder a new warrant or warrants
of like tenor, in the name of the Holder or as the Holder (on payment by the
Holder of any applicable transfer taxes) may direct, for the number of shares
issuable upon exercise hereof.
d. Compliance with Securities Laws.
i. The Holder of this Warrant, by acceptance hereof, acknowledges that
this Warrant and the shares of Common Stock to be issued upon exercise hereof
are being acquired solely for the Holder's own account and not as a nominee
for any other party, and for investment, and that the Holder will not offer,
sell or otherwise dispose of this Warrant or any shares of Common Stock to be
issued upon exercise hereof except under circumstances that will not result
in a violation of the Act or any state securities laws. Upon exercise of this
Warrant, the Holder shall, if requested by the Company, confirm in writing,
in a form satisfactory to the Company, that the shares of Common Stock so
purchased are being acquired solely for the Holder's own account and not as a
nominee for any other party, for investment, and not with a view toward
distribution or resale and that the Holder is an "accredited investor" as
defined in Section 501 of the regulations adopted under the Act or that the
shares of Common Stock so purchased may be issued without registration under
the Act and under applicable state securities laws.
ii. All shares of Common Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following form (in
addition to any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND APPLICABLE LAWS.
8. Reservation of Stock. The Company covenants that, during the term this
Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of this Warrant and, from time to time, will
take all steps necessary to amend its Certificate of Incorporation to provide
sufficient reserves of shares of Common Stock issuable upon exercise of
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the Warrant. The Company further covenants that all shares that may be issued
upon the exercise of rights represented by this Warrant and payment of the
Exercise Price, all as set forth herein, will be fully paid, nonassessable, free
of preemptive rights (other than preemptive rights which have been waived) and
free from all taxes, liens and charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously or otherwise
specified herein). The Company agrees that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the exercise of this Warrant.
9. Notices.
a. In case:
i. the Company shall take a record of the holders of its Preferred
Stock or Common Stock (or other securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, or
ii. of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of
all or substantially all of the assets of the Company to another corporation,
or
iii. of any voluntary dissolution, liquidation or winding-up for the
Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Holder or Holders a notice specifying, as the case may be, (A) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(B) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as of which the holders of record of Common
Stock or Preferred Stock (or such stock or securities at the time receivable
upon the exercise of this Warrant) shall be entitled to exchange their shares of
Common Stock or Preferred Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 15 days prior to the date
therein specified.
b. All such notices, advices and communications shall be deemed to
have been received (i) in the case of personal delivery, on the date of such
delivery and (ii) in the case of mailing, on the third business day following
the date of such mailing.
10. Amendments.
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a. This Warrant and any term hereof, may be changed, waived,
discharged or terminated only by an instrument signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
b. No waivers of, or exceptions to, any term, condition or provisions
of this Warrant, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
11. Adjustments. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:
a. Merger, Sale of Assets, etc. If at any time while this Warrant, or
any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a merger in which the Company is the
surviving entity but the shares of the Company's capital stock outstanding
immediately prior to the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash, or otherwise, or (iii) a sale
or transfer of the Company's properties and assets as, or substantially as, an
entirety to any other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provisions shall be made so that the
holder of this Warrant shall thereafter be entitled to receive upon exercise of
this Warrant, during the period specified herein and upon payment of the
Exercise Price then in effect, the number of shares of stock or other securities
or property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a holder of the shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 11. The
foregoing provisions of this Section 11.a shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per share consideration payable to the holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
b. Reclassification, etc. If the Company, at any time while this
Warrant, or any portion hereof, remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were subject to the
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purchase rights under this Warrant immediately prior to such reclassification or
other change and the Exercise Price therefor shall be appropriately adjusted,
all subject to further adjustment as provided in this Section 11.
c. Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant, or any portion hereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination.
d. Adjustments for Dividends in Stock or Other Securities or Property.
If while this Warrant, or any portion hereof, remains outstanding and unexpired,
the holders of the securities as to which purchase rights under this Warrant
exist at the time shall have received, or, on or after the record date fixed for
the determination of eligible stockholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then in each
case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security receivable upon exercise of this Warrant on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available to it as aforesaid during such period, giving effect
to all adjustments called for during such period by the provisions of this
Section 11.
e. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 11, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each Holder of this Warrant a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written request, at any time, of any such Holder, furnish or cause to be
furnished to such Holder a like certificate setting forth: (i) such adjustment
and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant.
f. No Impairment. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 11 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
12. Registration Rights. Upon exercise of this Warrant, the Holder shall
have and be entitled to exercise the rights of registration granted to
Registrable Securities under a registration rights agreement substantially in
the form attached hereto as Annex C.
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13. Miscellaneous.
a. This Warrant shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to the conflict of law
principles thereof.
b. This Warrant shall bind the Company, its successors and assigns,
and shall benefit and bind the Holder, the Holder's successors and permitted
assigns.
c. The Section headings in this Warrant have been included solely for
ease of reference and shall not be considered in the interpretation or
construction of this Warrant. All references in this Warrant to "Sections" shall
be construed as references to numbered Sections of this Warrant.
d. Any notice or delivery required or permitted by this Warrant shall
be deemed given or made for all purposes of this Warrant when (1) the notice is
in writing, and (2) the notice or the delivery is delivered by hand or is mailed
by registered mail, return receipt requested, addressed to the intended
recipient at (A) in the Company's case, the Company's principal executive
office, or (B) in the Holder's case, the Holder's address as set forth in the
Company's records or at such other address as the Holder may designate by
written notice to the Company.
IN WITNESS WHEREOF, Darwin Networks, Inc. has caused this Warrant to
be executed by its officers thereunto duly authorized as of March 15, 1999.
DARWIN NETWORKS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
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ANNEX A
NOTICE OF EXERCISE
To: Darwin Networks, Inc.
(1) The undersigned hereby (A) elects to purchase _____ shares of
Common Stock of Darwin Networks, Inc., pursuant to the provisions of Section 3.a
of the attached Warrant, and tenders herewith payment of the purchase price for
such shares in full, or (B) elects to exercise this Warrant for the purchase of
_____ shares of Common Stock, pursuant to the provisions of Section 3.c of the
attached Warrant.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon exercise hereof
are being acquired solely for the account of the undersigned and not as a
nominee for any other party, and for investment, and that the undersigned will
not offer, sell or otherwise dispose of any such shares of Common Stock except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any applicable state securities laws.
(3) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
------------------------------------------
(Name)
------------------------------------------
(Name)
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
------------------------------------------
(Name)
------------------- ------------------------------------------
(Date) (Signature)
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ANNEX B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
The undersigned also represents that, by assignment hereof, the
Assignee acknowledges that this Warrant and the shares of stock to be issued
upon exercise hereof are being acquired for investment and that the Assignee
will not offer, sell or otherwise dispose of this Warrant or any shares of stock
to be issued upon exercise hereof except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws.
Date:
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------------------------------------------
Signature of Holder
