Exhibit 7(c)
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER.
WARRANT TO PURCHASE COMMON STOCK
OF
OMNISKY CORPORATION
This Warrant is issued to Omni Holdings, Inc., a Delaware corporation
("Holder"), by OmniSky Corporation, a Delaware corporation (the "Company"), on
June 4, 2001 (the "Warrant Issue Date"). This Warrant is issued pursuant to the
terms of that certain Exchange Agreement dated as of the date hereof (the
"Exchange Agreement") in connection with the Company's issuance to the Holder of
shares of the Company's Common Stock, par value $.001 per share ("Common
Stock"), and this Warrant in exchange for the assignment to the Company by the
Holder of its 50% membership interest in OmniSky International, LLC. All
capitalized terms not defined herein shall have their respective meanings as set
forth in the Exchange Agreement.
1. Purchase of Shares.
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(a) Subject to the terms and conditions hereinafter set forth and set
forth in the Exchange Agreement, the Holder is entitled, upon surrender of this
Warrant at the principal office of the Company (or at such other place as the
Company shall notify the holder hereof in writing), to purchase from the Company
up to a number of shares of fully paid and nonassessable shares of Common Stock
of the Company, as more fully described below.
(b) This Warrant shall be exercisable for that number of shares of
the Company's Common Stock equal to the quotient of (x) $3,000,000, divided by
(y) one hundred twenty percent (120%) of the average of the closing bid prices
of the Common Stock on the NASDAQ National Market for the ten (10) consecutive
trading days immediately preceding the Warrant Issue Date (the "Exercise
Price"). The number of shares of Common Stock issuable pursuant to this Section
1 (the "Warrant Shares") shall be subject to adjustment pursuant to Section 8
hereof.
(c) Notwithstanding anything to the contrary herein, the Company
shall not be required to issue any shares upon exercise of this Warrant if such
issuance would cause the Company to be in violation of applicable federal
securities laws or the rules and regulations of the National Association of
Securities Dealers by virtue of such exercise; provided, however, that the
Company agrees to use its best efforts to make alternative arrangements to
complete the exercise by the Holder hereof in compliance with applicable
securities laws and the rules and
regulations of the National Association of Securities Dealers if such laws and
rules and regulations permit such alternative arrangements.
2. Exercise Price. This Warrant shall entitle the Holder to purchase
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Warrant Shares at a purchase price per share equal to the Exercise Price,
subject to adjustment from time to time pursuant to Section 8 hereof.
3. Exercise Period. This Warrant shall be exercisable, in whole or in
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part, during the term commencing on the Warrant Issue Date and ending on June 4,
2006 (the "Expiration Date"). If this Warrant is not exercised on or before the
Expiration Date, this Warrant shall no longer be exercisable and shall become
null and void.
4. Method of Exercise. While this Warrant remains outstanding and
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exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of this Warrant, together with a duly executed copy
of the form of Notice of Election attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company, by wire transfer of immediately
available funds to an account designated by the Company, of an amount equal to
the aggregate Exercise Price for the number of Shares being purchased.
5. Net Exercise. In lieu of exercising this Warrant pursuant to Section 4,
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the Holder may elect to receive, without the payment by the Holder of any
additional consideration, shares of Common Stock equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such election, in
which event the Company shall issue to the holder hereof a number of shares of
Common Stock computed using the following formula :
Y (A - B)
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X = A
Where: X = The number of shares of Common Stock to be issued to the
Holder pursuant to this net exercise;
Y = The number of Shares in respect of which the net issue
election is made;
A = The Current Market Value (as hereinafter defined) of one
share of the Common Stock at the time the net issue election
is made;
B = The Exercise Price (as adjusted to the date of the net
issuance).
For purposes of this Agreement, the "Current Market Value" of one share of
Common Stock as of a particular date shall be determined as follows: (i) if
traded on a securities exchange or through the NASDAQ National Market, the value
shall be deemed to be the average of the
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closing prices of the securities on such exchange over the twenty (20) day
period ending three (3) days prior to the net exercise election; (ii) if traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the twenty (20) day period ending
three (3) days prior to the net exercise; and (iii) if there is no active public
market, the value shall be the fair market value thereof, as determined in good
faith by the Board of Directors of the Company.
6. Certificates for Shares. Upon the exercise of the purchase rights
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evidenced by this Warrant, one or more certificates for the number of Warrant
Shares so purchased shall be issued as soon as practicable thereafter (with
appropriate restrictive legends, if applicable), and in any event within five
(5) Business Days of the delivery of the Notice of Exercise.
7. Reservation and Issuance of Shares. The Company covenants that:
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(a) the Shares, when issued pursuant to the exercise of this Warrant,
will be duly and validly authorized and issued, fully paid and nonassessable and
free from all taxes, liens, and charges with respect to the issuance thereof;
and
(b) the Company shall at all times prior to the Expiration Date
reserve and keep available for issuance upon exercise of this Warrant such
number of its duly authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise of this Warrant in full.
8. Adjustment of Exercise Price and Number of Shares. The number of and
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kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) If at any time or from time to time after the date hereof the
Company shall (i) declare a dividend or make a distribution on the Common Stock
payable in shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class), (ii) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares, (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the Exercise Price in effect at the time of the record date of such dividend,
distribution, subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Holder shall be entitled to receive upon exercise
of this Warrant the aggregate number and kind of shares which, if this Warrant
had been exercised in full immediately prior to such event, the Holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, distribution, subdivision, combination, reclassification or
recapitalization. Any adjustment required by this Section 8(a) shall be made
immediately after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination, reclassification
or recapitalization, to allow the purchase of such aggregate number and kind of
shares .
(b) If at any time or from time to time after the date hereof the
Company shall (i) issue or sell any Common Stock or Common Stock Equivalents (as
hereinafter defined) to all
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holders of any class of Common Stock without consideration or for consideration
per share (determined (1) in the case of Common Stock Equivalents, by dividing
(x) the total amount received or receivable by the Company in consideration of
the sale and issuance of such Common Stock Equivalents plus the minimum
aggregate consideration payable to the Company upon exercise or conversion or
exchange thereof by (y) the total number of shares of Common Stock covered by
such Common Stock Equivalents and (2) in the case of any noncash consideration,
as determined in good faith by the Board of Directors of the Company) less than
the Current Market Value of the Common Stock in effect immediately prior to the
date of such issuance or sale (other than issuances of Common Stock or Common
Stock Equivalents to employees of the Company pursuant to employee benefit plans
covered by a registration statement on Form S-8) or (ii) fix a record date for
the issuance of subscription rights, options or warrants to all holders of
Common Stock entitling them to subscribe for or purchase Common Stock (or Common
Stock Equivalents) at a price (or having an exercise or conversion price per
share) less than the Current Market Value in effect immediately prior to the
record date described below, the Exercise Price shall be adjusted so that the
Exercise Price shall equal the price determined by multiplying the Exercise
Price in effect immediately prior to the date of such sale or issuance (which
date in the event of distribution to shareholders shall be deemed to be the
record date set by the Company to determine shareholders entitled to participate
in such distribution) by a fraction: (1) the numerator of which shall be (A) the
number of shares of Common Stock outstanding on the date of such sale or
issuance plus (B) the number of additional shares of Common Stock which the
aggregate consideration received by the Company upon such issuance or sale (plus
the aggregate of any additional amount to be received by the Company upon the
exercise of such subscription rights, options or warrants) would purchase at the
Current Market Value; and (2) the denominator of which shall be (A) the number
of shares of Common Stock outstanding on the date of such issuance or sale plus
(B) the number of additional shares of Common Stock offered for the subscription
or purchase (or into which the Common Stock Equivalents so offered are
exercisable or convertible). Any adjustments required by this Section 8(b) shall
be made immediately after such issuance or sale or record date, as the case may
be. Such adjustments shall be made successively whenever such event shall occur.
To the extent that shares of Common Stock (or Common Stock Equivalents) are not
delivered after the expiration of such subscription rights, options or warrants,
the Exercise Price shall be readjusted to the Exercise Price which would then be
in effect had the adjustments made upon the issuance of such rights, options or
warrants been made upon the basis of delivery of only the number of shares of
Common Stock (or Common Stock Equivalents) actually delivered. For purposes of
this Agreement, "Common Stock Equivalents" shall mean any securities of the
Company that are convertible into or exercisable or exchangeable for shares of
Common Stock.
(c) If at any time or from time to time after the date hereof the
Company shall fix a record date for the issuance or making a distribution to all
holders of the Common Stock (including any such distribution to be made in
connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness, any other securities
of the Company or any cash, property or other assets (excluding a combination,
reclassification or recapitalization referred to in Section 8(a) hereof, cash
dividends or cash distributions paid out of net profits or earned surplus
legally available therefor and in the ordinary course of business or
subscription rights, options or warrants for Common Stock or Common Stock
Equivalents (excluding those referred to in Section 8(b) hereof) (any such non-
excluded event being herein called a "Special Dividend"), (i) the Exercise
Price shall be
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decreased immediately after the record date for such Special Dividend to a price
determined by multiplying the Exercise Price in effect on such record date less
the fair market value (as determined by the Company's Board of Directors) of the
evidences of indebtedness, securities or property, or other assets issued or
distributed in such Special Dividend applicable to one share of Common Stock or
of such subscription rights or warrants applicable to one share of Common Stock
and (B) the denominator of which shall be such Exercise Price then in effect and
(ii) the number of shares of Common Stock subject to purchase upon exercise of
this Warrant shall be increased to a number determined by multiplying the number
of shares of Common Stock subject to purchase immediately before such Special
Dividend by a fraction (x) the numerator of which shall be the Exercise Price in
effect immediately before such Special Dividend and (y) the denominator of which
shall be the Exercise Price in effect immediately after such Special Dividend.
Any adjustment required by this Section 8(c) shall be made successively whenever
such a record date is fixed and in the event that such distribution is not so
made, the Exercise Price shall again be adjusted to be the Exercise Price that
was in effect immediately prior to such record date.
(d) If at any time or from time to time after the date hereof the
Company shall make a distribution to all holders of the Common Stock of stock of
a subsidiary or securities convertible into or exercisable for such stock, then
in lieu of an adjustment in the Exercise Price or the number of Warrant Shares
purchasable upon the exercise of this Warrant, the Holder, upon the exercise
hereof at any time after such distribution, shall be entitled to receive from
the Company, such subsidiary or both, as the Company shall determine, the stock
or other securities to which such Holder would have been entitled if the Holder
had exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided in this Section 8, and the Company shall reserve, for the
life of this Warrant, such securities of such subsidiary or other corporation.
(e) Whenever the Exercise Price payable upon exercise of this Warrant
is adjusted pursuant to paragraph (a) and (b) of this Section 8, the Warrant
Shares shall simultaneously be adjusted by multiplying the number of Warrant
Shares initially issuable upon exercise of this Warrant by the Exercise Price in
effect on the date thereof and dividing the product so obtained by the Exercise
Price, as adjusted.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase and decrease of at least one percent (1%)
in the Exercise Price or the number of Warrant Shares purchasable upon the
exercise of this Warrant; provided, however, that any adjustments which by
reason of this Section 8(f) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 8 shall be made to the nearest cent or to the nearest share, as the case
may be.
(g) In the event that at any time, as a result of any adjustment made
pursuant to Section 8(a) hereof, the Holder thereafter shall become entitled to
receive any shares of capital stock of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 8(a) hereof or this Section 8(g).
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(h) In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in case of any consolidation or merger of the
Company with or into another corporation (other than merger with a subsidiary in
which the Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in the
case of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Company shall provide, in a manner satisfactory to the Holder, as
a condition precedent to such transaction, that the Holder has the right
thereafter, upon payment of the Exercise Price in effect immediately prior to
such action, to receive from such successor or purchasing corporation upon
exercise of this Warrant the kind and amount of shares and other securities and
property which it would have owned or have been entitled to receive after the
happening of such reclassification, change, consolidation, merger, sale or
conveyance had this Warrant been exercised immediately prior to such action.
Such provision shall require adjustments be made in respect of such shares of
stock and other securities and property, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 8. In the
event that in connection with any such reclassification, capital reorganization,
change, consolidation, merger, sale or conveyance, additional shares of Common
Stock shall be issued in exchange, conversion, substitution or payment, in whole
or in part, for, or of, a security of the Company other than Common Stock, any
such issue shall be treated as an issue Common Stock covered by the provisions
of this Section 8. The provisions of this Section 8(h) shall similarly apply to
successive reclassifications, capital reorganizations, consolidations, mergers,
sales or conveyances.
9. Notice of Adjustment. Whenever the number of Warrant Shares or the
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Exercise Price is adjusted as herein provided, the Company shall prepare and
deliver forthwith to the Holder a certificate signed by its President, and by
any Vice President, Treasurer or Secretary, setting forth the adjusted number of
shares of Common Stock purchasable upon the exercise of this Warrant and the
Exercise Price for such shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which adjustment was made.
10. No Fractional Shares or Scrip. No fractional shares or scrip
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representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
11. No Stockholder Rights. Nothing contained in this Warrant shall be
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construed as conferring upon the Holder or its transferee the right to vote or
to receive dividends or to consent or to receive notice as a shareholder in
respect of any meeting of shareholders for the election of directors of the
Company or of any other matter, or any rights whatsoever as shareholders of the
Company. The Company shall give notice to the Holder by certified mail if at
any time prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall authorize the payment of any dividend payable in
any securities upon shares of Common Stock or authorize the making of any
distribution (other than
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a cash dividend or cash distribution paid out of net profits or earned surplus
legally available therefor and in the ordinary course of business) to all
holders of Common Stock;
(b) the Company shall authorize the issuance to all holders of Common
Stock of any additional share of Common Stock or Common Stock Equivalents or of
rights, options or warrants to subscribe for or purchase Common Stock or Common
Stock Equivalents or of any other subscription rights, options or warrants;
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock and
other than a change in the par value of the Common Stock) or any consolidation
or merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of Common Stock
outstanding) or in the case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety.
Such giving of notice shall be initiated at least ten Business Days prior to the
date fixed as a record date or effective date or the date of closing of the
Company's stock transfer books for the determination of the shareholders
entitled to such dividend, distribution or subscription rights, or for the
determination of the shareholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing the stock transfer
books, as the case may be. Failure to provide such notice shall not affect the
validity of any action taken in connection with such dividend, distribution or
subscription rights, or proposed merger, consolidation, sale, conveyance,
dissolution, liquidation or winding up.
12. Investor Representation. The Holder is an institutional "accredited
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investor," as that term is defined in one of Sections (a)(1), (2), (3) or (7) of
Rule 501 under the Securities Act, which forms a part of Regulation D
thereunder, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risk of an investment in
the Warrant and the Warrant Shares. Holdings will acquire the Warrant and, upon
exercise, the Warrant Shares solely for its own account for investment purposes
only and not with a view to, or for, the resale, distribution, subdivision or
fractionalization thereof, or for the account, in whole or in part, of others,
in violation of any securities laws
13. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost,
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stolen, mutilated or destroyed, the Company may, on such terms as to indemnity
or otherwise as it may in its discretion impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as, and in substitution for, this Warrant.
14. Transfers of Warrant. This Warrant and the rights hereunder are not
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transferable without the prior written consent of the Company; provided,
however, that no such consent shall be required if the Holder transfers this
Warrant and the rights hereunder to an Affiliate of the
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Holder; and, provided further, that such transferee shall be subject to the
terms of this Warrant to the same extent as if it were the original hereunder,
including without limitation the representation set forth in Section 12.
15. Successors and Assigns. The terms and provisions of this Warrant and
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the Exchange Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
16. Amendments and Waivers. Any term of this Warrant may be amended and the
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observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the Holder.
17. Notices. All notices required under this Warrant and shall be deemed to
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have been given or made for all purposes (i) upon personal delivery, (ii) upon
confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile; (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
18. Attorneys' Fees. If any action of law or equity is necessary to enforce
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or interpret the terms of this Warrant, the prevailing party shall be entitled
to its reasonable attorneys' fees, costs and disbursements in addition to any
other relief to which it may be entitled.
19. Captions. The section and subsection headings of this Warrant are
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inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
20. Governing Law. This Warrant shall be governed by the laws of the State
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of New York as applied to agreements among Delaware residents made and to be
performed entirely within the State of New York.
IN WITNESS WHEREOF, OmniSky Corporation caused this Warrant to be
executed by an officer thereunto duly authorized.
OMNISKY CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
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NOTICE OF EXERCISE
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To: OmniSky Corporation
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________________ shares of Common Stock of OmniSky
Corporation pursuant to the terms of the attached Warrant and
payment of the Exercise Price per share required under such
Warrant accompanies this notice;
OR
________ (b) Exercise the attached Warrant for [all of the shares] [________
of the shares] [cross out inapplicable phrase] purchasable under
the Warrant pursuant to the net exercise provisions of Section 5
of such Warrant.
The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for its own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.
WARRANTHOLDER:
_________________________________________
By:______________________________________
[NAME]
Address: _________________________________________
_________________________________________
Date:________________
Name in which shares should be registered:
________________________________________
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