NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUED OR ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") OR REGISTERED OR QUALIFIED UNDER ANY OTHER APPLICABLE
FEDERAL OR STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE EXERCISED AND THESE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR QUALIFICATION FILED IN
ACCORDANCE WITH THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE ACT WHICH SHALL BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
Void after 3:30 P.M., Denver Time, on September 30, 2005
Warrant to Purchase
720,000 Shares
of Common Stock
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
TELECOM WIRELESS CORPORATION
This Is to Certify That, FOR VALUE RECEIVED,
XXXX X. XXXXXX
or registered assigns ("Holder"), is entitled to purchase, subject to the
provisions of this Warrant, from TELECOM WIRELESS CORPORATION, a Utah
corporation ("Company"), at any time not later than 3:30 P.M., Denver Time,
on September 30, 2005 (the "Expiration Date") up to 720,000 shares of common
stock, having $.001 par value per share, of the Company ("Common Stock") at
exercise prices, subject to adjustment as set forth below, determined as
provided herein. The number of shares of Common Stock to be received upon the
exercise of this Warrant and the price to be paid for a share of Common Stock
are subject to adjustment from time to time as hereinafter set forth. The
shares of the Common Stock deliverable upon such exercise, and as adjusted
from time to time, are hereinafter sometimes referred to as "Warrant Stock"
and the exercise price of a share of Common Stock in effect at any time and
as adjusted from time to time is hereinafter sometimes referred to as the
"Exercise Price."
The Warrant Stock shall be divided into 48 installments of 15,000 shares
each. The first installment shall accrue and this Warrant shall be
exercisable with respect to the shares included therein on October 1, 1999,
and each succeeding installment shall accrue and this Warrant shall be
exercisable with respect to the shares included therein on the first day of
each calendar month thereafter. Except as otherwise provided herein, this
Warrant may be exercised when installments accrue and at any time thereafter
at or before the Expiration Date with respect to all or a part of the shares
covered by such accrued installments. The exercise price with respect to each
accrued installment shall be 50% of the average of the last reported sale
prices of the Common Stock on the OTC Bulletin Board or other trading market
for the 20 trading days prior to the date such installment accrued, provided
that if no sale is made on any such trading day, the last reported sale price
shall be the average of the closing bid and asked prices for such day. Upon a
Change in Control, as defined herein, an additional number of installments
shall accrue and become exercisable as equals the number of accrued and
exercisable installments existing immediately before the Change in Control,
and after such Change in
1
Control the number of shares included in each monthly installment shall
double. "Change in Control" shall mean (i) any transaction or series of
related transactions in which any person or group of persons, other than Xx.
Xxxxx X. Xxxxxxx, directly or indirectly (a) becomes the beneficial owner of
outstanding securities of the Company having more than 50% of the power to
vote upon the election of the Company's directors or (b) acquires more than
50% of the Company's assets, or (ii) the occurrence of any transaction or
event in connection with which all or substantially all of the voting
securities of the Company are exchanged for, converted into, acquired for or
constitute solely the right to receive cash, securities, property or other
assets, or (iii) the conveyance, sale, lease, assignment, transfer or other
disposal of all or substantially all of the Company's property, business or
assets otherwise than in the ordinary course of business. Notwithstanding
anything herein contained to the contrary, no installments shall accrue and
become exercisable (i) from and after termination of that certain Services
Agreement dated August 30, 1999, between the Company and Xx. Xxxx X. Xxxxxx
by the Company for cause or by Xx. Xxxxxx without cause, (ii) from and after
the death, disability, insolvency or bankruptcy of Xx. Xxxxxx, (iii) should
Xx. Xxxxxx engage in any conduct which is dishonest or damages the reputation
or standing of the Company, or be convicted of any criminal act other than
minor traffic offenses, or (iv) upon any act or omission which constitutes a
breach of any express or implied material duty, obligation or covenant of Xx.
Xxxxxx under the Services Agreement.
(a) EXERCISE OF WARRANT. Subject to the provisions of Section (o)
hereof, the accrued and exercisable installments of this Warrant may be
exercised in whole or in part at any time or from time to time not later than
3:30 P.M., Denver Time, on the Expiration Date, or if the Expiration Date is
a day on which banking institutions are authorized by law to close, then on
the next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
shares specified in such form. If this Warrant should be exercised in part
only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the holder to
purchase the balance of the shares purchasable hereunder. Upon receipt by the
Company of this Warrant at the office or agency of the Company, in proper
form for exercise, the Holder shall be deemed to be the holder of record of
the shares of Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such securities shall not then be actually
delivered to the Holder. The Exercise Price shall be paid (i) in cash, (ii)
by certified check or cashier's check, (iii) by previously acquired shares of
Common Stock having a Current Market Value equal to the Exercise Price, (iv)
by previously acquired shares of Common Stock having a Current Market Value
less than the Exercise Price, plus cash or a certified or cashier's check for
the balance of the Exercise Price, or (v) at the Holder's option, by exchange
of this Warrant for the aggregate number of shares of Warrant Stock issuable
upon exercise of this Warrant, less that number of shares of Warrant Stock as
have a then Current Market Value equal to the aggregate Exercise Price of
this Warrant and the Holder shall pay no cash or other consideration in
connection with such exercise other than surrender to the Company of this
Warrant.
(b) RESERVATION OF SHARES. The Company hereby agrees that at all
times there shall be reserved for issuance and/or delivery upon exercise of
this Warrant such number of shares of its Common Stock as shall be required
for issuance or delivery upon exercise of this Warrant.
(c) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the Current Market Value of such fractional share, determined
as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange or
listed on the Nasdaq Stock Market, the Current Market Value shall be
the last reported sale price of the Common Stock on the composite tape
of
2
such exchange or on Nasdaq on the last trading day prior to the date
of exercise of this Warrant or if no such sale is made on such day, the
average closing bid and asked prices for such day on the composite tape
of such exchange or on Nasdaq; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the Current Market Value shall be the
average of the closing bid and asked prices reported by the National
Quotation Bureau, Inc. or the OTC Bulletin Board on the last trading
day prior to the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the Current Market Value shall be an amount, not less than
book value, determined in such reasonable manner as may be prescribed
by the Board of Directors of the Company, such determination to be
final and binding on the Holder.
(d) EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. Subject to Section (o)
herein, but only to the extent of installments which have accrued and are
exercisable, this Warrant is assignable and exchangeable, without expense, at
the option of the Holder, upon presentation and surrender hereof to the
Company or at the office of its stock transfer agent, if any, for other
Warrants of different denominations entitling the holder thereof to purchase
in the aggregate the same number of shares of Common Stock purchasable
hereunder. Any such assignment shall be made by surrender of this Warrant to
the Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay
transfer taxes, if any; whereupon the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant promptly shall be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation hereof at the office of the Company or at the office
of its stock transfer agent, if any, together with a written notice
specifying the names and denominations in which new Warrants are to be issued
and signed by the Holder hereof. The term "Warrant" as used herein includes
any Warrants issued in substitution for or replacement of this Warrant, or
into which this Warrant may be divided or exchanged. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification including a surety bond, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by anyone.
This Warrant is neither assignable nor exchangeable with respect to
installments which have not accrued and are not exercisable, and any actual
or attempted assignment contrary to the provisions of this Warrant shall be
null and void and of no effect whatsoever.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
(f) ANTI-DILUTION PROVISIONS.
(1) STOCK SPLITS AND STOCK DIVIDENDS. In case the Company
shall at any time issue Common Stock by way of dividend or other
distribution on any stock of the Company or subdivide or combine the
outstanding shares of Common Stock, the Exercise Price shall be
proportionately decreased in the case of such issuance (on the day
following the date fixed for determining shareholders entitled to
receive such dividend or other distribution) or decreased in the case
of such subdivision
3
or increased in the case of such combination (on the date that such
subdivision or combination shall become effective).
(2) NO ADJUSTMENT FOR SMALL AMOUNTS. The Company shall not be
required to give effect to any adjustment in the Exercise Price unless
and until the net effect of one or more adjustments, determined as
above provided, shall have required a change of the Exercise Price by
at least one cent, but when the cumulative net effect of more than one
adjustment so determined shall be to change the actual Exercise Price
by at least two cents, such change in the Exercise Price shall
thereupon be given effect.
(3) NUMBER OF SHARES ADJUSTED. Upon any adjustment of the
Exercise Price, the holder of this Warrant shall thereafter (until
another such adjustment) be entitled to purchase, at the new Exercise
Price, the number of Shares, calculated to the nearest full share,
obtained by multiplying the number of shares of Common Stock issuable
upon exercise of this Warrant by the Exercise Price in effect
immediately prior to effectiveness of the new Exercise Price and
dividing the product so obtained by the new Exercise Price.
(4) COMMON STOCK DEFINED. Whenever reference is made in this
Section (f) to the issue or sale of shares of Common Stock, the term
"Common Stock" shall mean the Common Stock of the Company of the class
authorized as of the date hereof and any other class of stock ranking
on a parity with such Common Stock. However, subject to the provisions
of Section (i) hereof, shares issuable upon exercise hereof shall
include only shares of the class designated as Common Stock of the
Company as of the date hereof.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of Section (f) hereof, the Company
shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office, and with its stock transfer agent, if any,
an officer's certificate showing the adjusted Exercise Price determined as
herein provided and setting forth in reasonable detail the facts requiring
such adjustment and the calculation thereof. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder
and the Company shall, forthwith after each such adjustment, mail a copy of
such certificate to the Holder.
(h) NOTICES TO HOLDERS. So long as this Warrant shall be outstanding
and unexercised (i) if the Company shall pay any dividend or make any
distribution upon the Common Stock, or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any shares of
stock of any class or any other rights, or (iii) if any capital
reorganization of the Company, reclassification of the capital stock of the
Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then, in any such case, the Company shall cause to be delivered to
the Holder, at least 30 days prior to the date specified in (x) or (y) below,
as the case may be, a notice containing a brief description of the proposed
action and stating the date on which (x) a record is to be taken for the
purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the date, if any,
is to be fixed, as of which the holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the Company (other than a change
4
in par value, or from par value to no par value, or as a result of an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a
subsidiary in which merger the Company is the continuing corporation and
which 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 case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, the Company shall cause effective provision to be made so that
the holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance as if the holder had
exercised this Warrant prior to such transaction. Any such provision shall
include provision for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Warrant. A copy of
such provision shall be furnished to the holder(s) of Warrants within ten
days after execution of the appropriate agreement pertaining to same and, in
any event, prior to any consolidation, merger, sale or conveyance subject to
the provisions of this Section (i). The foregoing provisions of this Section
(i) shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(j) DISSOLUTION. If, at any time prior to the expiration of this
Warrant and prior to the exercise thereof, any dissolution, liquidation or
winding up of the Company shall be proposed, the Company shall cause at least
30 days' notice to be mailed by certified mail to the registered holder of
this Warrant Certificate at his address as it appears on the books of the
Company. Such notice shall specify the date as of which holders of record of
Common Stock shall participate in any distribution or shall be entitled to
exchange their Common Stock for securities or other property, deliverable
upon such dissolution, liquidation or winding up, as the case may be; to the
end that, during such period of 30 days, the holders of this Warrant may
exercise this Warrant and purchase Common Stock (or other stock substituted
therefor as hereinbefore provided) and be entitled in respect of shares so
purchased to all of the rights of the other holders of Common Stock of the
Company. In case of a dissolution, liquidation or winding up of the Company,
all purchase rights under this Warrant shall terminate at the close of
business on the date as of which holders of record of the Common Stock shall
be entitled to participate in a distribution of the assets of the Company in
connection with such dissolution, liquidation or winding up (provided that in
no event shall said date be less than 30 days after completion of service by
certified mail of notice as aforesaid). Any Warrant not exercised prior to
such time shall be void and no rights shall exist thereunder. In any such
case of termination of purchase rights, a statement thereof shall be included
in the notice provided for herein.
(k) SPIN-OFFS. In the event the Company spins-off a subsidiary or
stock held in another corporation as an investment by distributing to the
shareholders of the Company, as a dividend or otherwise, the stock of the
subsidiary or other corporation, the Company shall reserve, for the life of
the Warrant, shares of the subsidiary or other corporation to be delivered to
the holders of the Warrants upon exercise to the same extent as if they were
owners of record of the Warrant Stock on the record date for payment of the
shares of the subsidiary or other corporation.
(l) NOTICE. Any notices or certificates by the Company to the Holder
and by the Holder to the Company shall be deemed delivered if in writing and
delivered personally (including by telex, facsimile, telegram or other
acknowledged receipt) or three business days following deposit in the United
States mails, sent by registered or certified mail, return receipt requested,
addressed as follows:
Holder: Xxxx X. Xxxxxx
00 Xxxxxxx Xxxxx
Xxxxx, Xxx Xxxxxxxxx 00000
5
Company: Telecom Wireless Corporation
0000 XXX Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: President
With a copy (which shall not constitute
notice) to:
Telecom Wireless Corporation
0000 XXX Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Any person may change the address for the giving of notice by notice duly
given effective five (5) business days thereafter.
(m) AMENDMENTS AND WAIVERS. Any term, condition or provision of this
Warrant may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Holders.
(n) ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
among the parties thereto and supersedes any and all prior agreements whether
written or oral regarding the subject matter hereof.
(o) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933.
(1) This Warrant or the Warrant Stock or any other security
issued or issuable upon exercise of this Warrant may not be offered or
sold except in conformity with the Securities Act of 1933, as amended,
and then only against receipt of an agreement of such person to whom
such offer of sale is made to comply with the provisions of this
Section (o) with respect to any resale or other disposition of such
securities.
(2) The Company may cause the following legend to be set forth
on each certificate representing Warrant Stock or any other security
issued or issuable upon exercise of this Warrant unless counsel for the
Company is of the opinion as to any such certificate that such legend
is unnecessary:
The securities represented by this certificate may not be
offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement made under the
Securities Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act the availability of
which is to be established to the satisfaction of the Company.
(3) Notwithstanding anything herein contained to the contrary,
this Warrant shall not be exercisable unless and until the Company is
satisfied that exercise hereof would not result in loss of a claimed
securities registration exemption in connection with any other actual
or proposed transaction the effect of which would be materially adverse
to the Company.
6
(p) APPLICABLE LAW. This Warrant shall be governed by, and construed
in accordance with, the laws of the State of Colorado.
TELECOM WIRELESS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Authorized Officer
[SEAL] Date: 10/17/99
------------------------
7
PURCHASE FORM
Dated
----------------
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ______ shares of Common Stock and hereby
makes payment of $______ in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF UNITS
Name
--------------------------------------------------------
(please typewrite or print in block letters)
Address
-----------------------------------------------------
Signature
---------------------------------------------------
Social Security or Employer I.D. No.
------------------------
ASSIGNMENT FORM
FOR VALUE RECEIVED, _______________________ hereby sells, assigns
and transfers unto
Name
-----------------------------------------------------------------
(please typewrite or print in block letters)
Address
--------------------------------------------------------------
the right to purchase Common Stock represented by this Warrant to the extent
of _________ Shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ____________________, attorney, to
transfer the same on the books of the Company with full power of substitution
in the premises.
Signature:
-------------------------
Dated:
-----------------------------
8
