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EXHIBIT 10.4
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is entered into this __
day of ________, 1999, by and between NEXTRON COMMUNICATIONS, INC., a California
corporation ("Nextron") and US WEST DEX HOLDINGS, INC., a Delaware corporation
("Dex").
WHEREAS, Dex desires to purchase warrants, in the form and under the terms
of the Warrant attached hereto as Exhibit A (the "Warrants"), and Nextron is
willing to sell such Warrants according to the terms and conditions set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the patties agree as follow:
I. Purchase and Sale of Warrants. Nextron shall issue and deliver to Dex
Warrants in the form of Exhibit A hereto to purchase the number of shares of
Series B Preferred Stock of the Company ("Warrant Shares"). Upon the delivery of
the Warrants, Dex shall pay to Nextron $0.01 for each Warrant issued to Dex for
an aggregate purchase price of $6,666.67.
II. Representations and Warranties of Nextron. Nextron represents and warrants
to Dex as follows:
2.1 Organization. Nextron is a corporation duly organized and existing in
good standing under the laws of the State of California, with full corporate
power and authority to own its properties and to carry on its business.
2.2 Power and Authority. Nextron has all requisite power and authority,
corporate or otherwise, to enter into this Agreement and to assume and perform
fully its obligations hereunder. The execution and delivery of this Agreement
and the performance by Nextron of its obligations hereunder have been duly and
validly authorized by all necessary corporate action on the part of the Nextron.
This Agreement is the valid and binding obligation of Nextron, enforceable in
accordance with its terms.
2.3 Consents and Approvals. No filings, authorizations, consents,
approvals, exemptions or other action by or notice to any court or
administrative or governmental body or third party pursuant to, any law,
statute, rule or regulation or any contract, order, judgment or decree to which
the Nextron is subject or by which any of its assets are bound are required to
be obtained or made by Nextron in connection with the consummation of the
transactions contemplated hereby.
2.4 Conflicts. The execution and delivery of this Agreement and the
performance by Nextron of its obligations hereunder do not and will not conflict
with or violate any provision of the Articles of Incorporation or Bylaws of
Nextron.
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III. Representations and Warranties of Dex. Dex represents and warrants to
Nextron as follows:
3.1 Organization. Dex is a corporation duly organized and existing in good
standing under the laws of the State of Delaware, with full corporate power and
authority to own its properties and to carry on its business.
3.2 Power and Authority. Dex has all requisite power and authority,
corporate or otherwise, to enter into this Agreement and to assume and perform
fully its obligations hereunder. The execution and delivery of this Agreement
and the performance by Dex of its obligations hereunder have been duly and
validly authorized by all necessary corporate action on the part of the Dex.
This Agreement is the valid and binding obligation of Dex, enforceable in
accordance with its terms.
3.3 Consents and Approvals. No filings with, notices to, or approvals of
any governmental or regulatory body are required to be obtained or made by Dex
for the consummation by Dex of the transactions contemplated hereby.
3.4 Conflicts. The execution and delivery of this Agreement and the
performance by Dex of its obligations hereunder do not and will not conflict
with or violate any, provision of the Articles of Incorporation or Bylaws of
Dex.
IV. Miscellaneous.
4.1 Transferability. The right to purchase the Warrants may be assigned,
transferred or encumbered, in whole or in part, by the Dex to any Affiliate of
Dex. For purposes of this Agreement, the term "Affiliate" shall mean, with
respect to a person, another person heretofore, now or hereafter, directly or
indirectly, through one or more intermediaries, controlled by, under common
control with or which controls, the person specified, and shall include the
officers, directors, employees and shareholders of the person specified and each
Affiliate thereof.
4.2 Entire Agreement. This Agreement and the exhibits delivered in
connection herewith constitute the entire agreement of the parties with respect
to the subject matter hereof. The representations, warranties and agreements set
forth in this Agreement constitute all of the representations, warranties and
agreements of the parties hereto and upon which the parties have relied, and
except as specifically provided herein, no change, modification, amendment,
addition or termination of this Agreement or any part thereof shall be valid
unless in writing and signed by or on behalf of the party to be charged
therewith.
4.3 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived only by a
written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance.
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4.4 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of such counterparts shall together constitute one and the
same instrument.
4.5 GOVERNING LAW AND SEVERABILITY. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT GIVING AFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISIONS OR
RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF CALIFORNIA. SHOULD ANY CLAUSE, SECTION OR PART OF THIS
AGREEMENT BE HELD OR DECLARED TO BE VOID OR ILLEGAL FOR ANY REASON, ALL OTHER
CLAUSES, SECTIONS OR PARTS OF THIS AGREEMENT SHALL NEVERTHELESS CONTINUE IN
FULL FORCE AND EFFECT.
4.6 Assignment. This Agreement shall be binding upon, and inure to the
benefit of, the parties and their respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed the date and year first above written.
NEXTRON COMMUNICATIONS, INC.,
a California corporation
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: Executive VP Finance &
Operations
U S WEST DEX HOLDINGS, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: President/CEO
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EXHIBIT A
Form of Warrant
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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 AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE SERIES B PREFERRED STOCK
OF
NEXTRON COMMUNICATIONS, INC.
This Warrant (the "Warrant") is issued to U S WEST Dex Holdings, Inc. or
its registered assigns ("Holder") by Nextron Communications, Inc., a California
corporation (the "Company"), on __________, 1999 (the "Warrant Issue Date") for
consideration of stated in the Warrant Purchase Agreement ("Warrant Purchase
Agreement") dated of even date herewith, receipt of which is hereby
acknowledged.
1. Purchase Shares. Subject to the terms and conditions hereinafter set
forth, 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 six hundred sixty-six
thousand six hundred sixty-seven (666,667) shares of Series B Preferred Stock of
the Company (the "Warrant Shares" or "Preferred Stock") at the Exercise Price
(defined below), subject to adjustment as provided in Section 8 below.
2. Exercise Price. The exercise price for the Warrant Shares shall be
$4.00 per Warrant Share, as adjusted from time to time pursuant to Section 8
hereof (the "Exercise Price").
3. Exercise Period. This Warrant shall be exercisable, in whole or in
part, during the term commencing on the Warrant Issue Date and ending on the
earlier of (i) the fifth anniversary of the date hereof, (ii) closing of the
sale and issuance of Common Stock of the Company in a firmly underwritten
initial public offering, pursuant to an effective registration under the
Securities Act of 1933, as amended, with gross proceeds to the Company of at
least $10,000,000 (the "Initial Public Offering") or (iii) immediately preceding
a Change of Control. The term "Change of Control" shall mean (a) the acquisition
of the Company pursuant to a consolidation of the Company with or merger of the
Company with or into any other person in which the Company is not the surviving
corporation (other than a reincorporation);(ii) the sale of all or substantially
all of the assets of the 'company to any other person. In the event of a Change
of Control, the Company shall provide the Holder with forty-five (45) days'
prior written notice of the event constituting the Change of Control. Further,
in the event of a Change of Control whereby (i) the consideration to be received
by Holder in the event of Change of Control in respect of the Series B
Preferred Stock exceeds the exercise price of the Warrant, and (ii) Holder has
not notified the Company of Holder's intent to exercise the Warrant within the
forty-five (45) days' notice provision contained in this Section 3, then, the
Warrant shall be deemed automatically exercised as of the closing of the event
constituting the Change of Control pursuant to provisions of Section 5 hereof,
and the consideration payable in respect of the Warrant Shares shall be
delivered to an escrow agent to be designated by Holder.
4. Method of Exercise. While this Warrant remains outstanding and
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 the Warrant, together with a duly executed copy
of the form of Notice of Exercise attached hereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the aggregate
Exercise Price for the number of Warrant Shares being purchased.
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5. Net Exercise. In lieu of exercising this Warrant pursuant to Section 4,
the Holder may elect to receive, without the payment by the Holder of any
additional consideration, Warrant Shares 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 the Notice of Exercise attached
hereto indicating such election, in which event the Company shall issue to the
holder hereof a number of Warrant Shares computed using the following formula:
Y(A-B)
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X = A
Where: X = The number of Warrant Shares to be issued to the Holder
pursuant to this net exercise;
Y = The number of Warrant Shares in respect of which the net issue
election is made;
A = The fair market value of one Warrant Share 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 Section 5, the fair market value of one Warrant Share 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 closing prices of the securities on such exchange over the
thirty (30) 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 thirty (30)
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; provided,
that, if the Warrant is being exercised upon the closing of the Initial Public
Offering, the value will be the initial "Price to Public" of the number of
shares of Common Stock into which each Warrant Share is convertible as specified
in the final prospectus with respect to such offering.
6. Certificates for Shares. Upon the exercise of the purchase rights
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 thirty
(30) days of the delivery of the subscription notice.
7. Issuance of Shares. The Company covenants that the Warrant Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.
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8. Adjustment of Exercise Price and Kind and Number of Shares. The number
and 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) Subdivisions. Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant (i) subdivide
its Common Stock, by split-up or otherwise, or combine its Common Stock,
(ii) issue additional shares of its Common Stock or other equity
securities as a dividend with respect to any shares of its Common Stock,
or (iii) declare a cash dividend with respect to any shares of its Common
Stock, the number of shares of Common Stock issuable on the exercise of
this Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock or cash dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable
for the total number of Warrant Shares purchasable under this Warrant (as
adjusted) shall remain the same. Any adjustment under this Section 8(a)
shall become effective at the close of business on the date the
subdivision or combination becomes effective, or as of the record date of
such dividend, or in the event that no record date is fixed, upon the
making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In case of
any reclassification, capital reorganization, or change in the Common
Stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 8(a) above), then,
as a condition of such reclassification, reorganization, or change, lawful
provision shall be made, and duly executed documents evidencing the same
from the Company or its successor shall be delivered to the Holder, so
that the Holder shall have the right at any time prior to the expiration
of this Warrant to purchase, at a total price equal to that payable upon
the exercise of this Warrant (subject to adjustment of the Exercise Price
as provided in Section 8, the kind and amount of shares of stock and other
securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number
of shares of Common Stock as were purchasable by the Holder immediately
prior to such reclassification, reorganization, or change. In any such
case appropriate provisions shall be made with respect to the rights and
interest of the Holder so that the provisions hereof shall thereafter be
applicable with respect to any shares of stock or other securities and
property deliverable upon exercise hereof, and appropriate adjustments
shall be made to the purchase price per share payable hereunder, provided
the aggregate purchase price shall remain the same.
(c) Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Exercise Price, the Company shall promptly notify the holder of
such event and of the number of shares of Common Stock or other securities
or property thereafter purchasable upon exercise of this Warrant.
(d) Conversion of Preferred Shares. Should all of the Preferred
Stock outstanding or any portion there outstanding at any time prior to
the expiration of this Warrant be converted into shares of Common Stock,
then this Warrant shall immediately be exercisable for that number of
shares of Common Stock equal to the number of shares of Common Stock that
would have been received if this Warrant had been exercised in full and
the Preferred Stock received thereupon had been simultaneously converted
immediately prior to such event, and the Exercise Price shall be
immediately adjusted to equal to the quotient maintained by dividing (x)
the aggregate exercise price of the maximum number of shares of Preferred
Stock for which this Warrant was exercisable immediately prior to such
conversion by (y) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such conversion.
(e) Issuance of New Warrant. Upon the occurrence of any of the
events listed in this Section 8 that results in an adjustment of the type,
number or exercise price of the securities underlying this Warrant, the
Holder shall have the right to receive a new warrant reflecting such
adjustment upon the Holder tendering this Warrant in exchange. The new
warrant shall otherwise have terms identical to this Warrant.
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9. Covenants and Conditions.
(a) No Impairment. Pursuant to the terms and conditions of this
Warrant, Company shall: (i) reserve an appropriate number of shares of
Company's Common Stock to facilitate the issuance of Warrant Shares to
Holder pursuant to this Warrant, (ii) not amend its articles or take any
other action that would materially impair Company's ability to comply with
the terms of the Warrant or otherwise unfairly impair the rights of the
Holder, and (iii) provide Holder with reasonable notice before Company
undertakes any significant corporate action that would have a material
impact upon Holder's rights under the Warrant or upon the rights of the
holders of Common Stock or Preferred Stock generally.
(b) Registration Rights. The Company covenants that it will not
grant any registration rights to any holder of Preferred Stock of the
Company unless it grants equal rights to the Holder. In addition, if no
registration rights have been granted to any holder of equity securities
upon the consummation by the Company of an initial public offering, then
the Company shall grant to the Holder unlimited piggyback registration
rights on customary terms and conditions (including the Company's
agreement to pay all expenses of such registrations other than
underwriting discounts).
10. Representations and Warranties. Pursuant to the terms and conditions
of this Warrant, Company represents and warrants that Company is: (i) properly
organized and structured pursuant to all applicable corporate laws of the State
of California, (ii) not in violation of any applicable laws, ordinances or
contracts, where such violation would have a material adverse effect on Holder's
rights under this Warrant, and (iii) under the belief that all financial
statements or other material representations made to Holder are complete and
accurate.
11. No Fractional Shares or Scrip. No fractional shares or scrip
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.
12. No Stockholder Rights. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a stockholder with respect to the shares
of Preferred Stock issuable on the exercise hereof, including (without
limitation) the right to vote such shares of Preferred Stock, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
stockholder meetings, and such holder shall not be entitled to any notice or
other communication concerning the business or affairs of the Company. However,
nothing in this Section 12 shall limit the right of the Holder to be provided
the Notices required under this Warrant.
13. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon, the Company and the Holder and
their respective successors and assigns.
14. Amendments and Waivers. Any term of this Warrant may be amended and
the 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. Any waiver or amendment effected
in accordance with this Section shall be binding upon each holder of any shares
of Preferred Stock purchased under this Warrant at the time outstanding
(including securities into which such shares have been converted), each future
holder of all such shares, and the Company.
15. Notices. All notices required under this Warrant and shall be deemed
to 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).
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16. Attorneys' Fees. If any action of law or equity is necessary to
enforce 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.
17. Captions. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
18. Governing Law. This Warrant shall be governed by the laws of the State
of California as applied to agreements among California residents made and to be
performed entirely within the State of California.
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IN WITNESS WHEREOF, Nextron Communications, Inc. caused this Warrant to be
executed by an officer thereunto duly authorized.
NEXTRON COMMUNICATIONS, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
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Address: 0000 Xxx Xxx Xxx #000
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Xxx Xxxx, XX 00000
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Fax Number: 000-000-0000
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NOTICE OF EXERCISE
To:_____________
The undersigned hereby elects to [check applicable subsection]:
________ (a) Purchase _________ shares of Series B Preferred Stock of Nextron
Communications, Inc., 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] of Series B Preferred
Stock of Nextron Communications, Inc. 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:
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By:
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[NAME]
Address:
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Date:
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Name in which shares should be registered:
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