"As part of our agreement with Qwest, we issued three warrants to a wholly-
owned subsidiary of Qwest to purchase 2,375,000 shares of our common stock at
an exercise price of $14.00 per share. The 2,375,000 shares subject to the
warrants were vested when we issued the warrants. One of the warrants is
exercisable as to 1,000,000 shares. Another warrant becomes exercisable as to
1,000,000 shares at the earlier of Qwest meeting specified milestones during
the term of our procurement contract or on September 18, 2005, which is five
years from the date of the warrant. The third warrant becomes exercisable as
to the remaining 375,000 shares at the earlier of Qwest meeting a milestone
during the term of our procurement contract or on April 10, 2007, which is six
years from the date of the warrant. The first warrant expires September 18,
2005, the second warrant expires the later of six months after the last day
the warrant becomes exercisable or September 18, 2005, and the third warrant
expires the later of six months after the last day the warrant becomes
exercisable or April 10, 2007. Until this offering is completed, if we issue
common stock or rights to acquire common stock at a price below $14.00 per
share, other than in this offering, the exercise price of the warrant will be
reduced to the lower price. |
