THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THIS
WARRANT AND SUCH SECURITIES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THIS WARRANT.
May 8, 2000
NET VALUE HOLDINGS, INC.
COMMON STOCK PURCHASE WARRANT
NET VALUE HOLDINGS, INC., a Delaware corporation (the "Company"), for
value received, hereby certifies that Xxxxx Xxxxxx (the "Holder") is entitled to
purchase from the Company, at any time or from time to time during the period
specified in Section 2 hereof, 332,416 fully paid and nonassessable shares of
Common Stock, par value $.001, of the Company (the "Common Stock"), at an
exercise price equal to $1.00 per share, subject to adjustment hereunder (the
"Exercise Price"), and subject to the other terms herein. As used herein, the
term "Warrant Shares" means the shares of Common Stock issuable upon exercise of
this Common Stock Purchase Warrant (the "Warrant").
1. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, this Warrant may be exercised by the Holder,
in whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the "Exercise Agreement"), to
the Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the Holder hereof), and upon payment to the Company
in cash, by certified or official bank check or by wire transfer to an account
specified by the Company of the Exercise Price for the Warrant Shares specified
in the Exercise Agreement. The Warrant Shares so purchased shall be deemed to be
issued to the Holder as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Exercise Agreement shall have
been delivered, and payment shall have been made for such shares as set forth
above. Certificates for the Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the Holder hereof within five business days after this Warrant
shall have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the Holder hereof and shall be registered
in the name of Holder or such other name as Holder may designate subject to the
transfer restrictions herein and upon payment by Holder of any applicable
transfer taxes. In the event this Warrant is exercised in part, the Company
shall also deliver a new Warrant to the Holder hereof, which Warrant shall be
identical to this Warrant, except that the number of Warrant Shares exercisable
therefor shall be decreased by the number of Warrant Shares so purchased.
2. Vesting and Period of Exercise. This Warrant shall vest immediately
as to 192,275 shares of Common Stock and vest pro rata on a monthly basis over
36 months commencing on the date of this Warrant as to the remaining 140,141
shares of Common Stock, provided that, the Holder hereof shall forfeit and
thereafter be unable to exercise any unvested portion of this Warrant following
a breach by Holder of the provisions of Section 3 of this Warrant. This Warrant
is exercisable at any time or from time to time on or after the vesting dates
listed above, and before 5:00 p.m., eastern time on the fifth anniversary of the
date of this Warrant (the "Exercise Period").
3. Non-Disclosure Covenant. The Company and Holder acknowledge that by
virtue of consulting services performed and to be performed by Holder, and by
virtue of Holder's position as a director of the Company, Holder has been and
will continue to be in a relationship of confidence and trust with the Company
and will come into possession of "Confidential Information" (i) owned or
controlled by the Company and its subsidiaries and affiliate companies (as such
term is defined from time to time in periodic reports which the Company files
with the Securities and Exchange Commission); (ii) in the possession of the
Company and its subsidiaries and affiliate companies and belonging to third
parties; or (iii) conceived, originated, discovered or developed, in whole or in
part, by Holder. As used herein "Confidential Information" means trade secrets
and other confidential or proprietary business, technical, personnel or
financial information of the Company, whether or not Holder's work product, in
written, graphic, oral or other tangible or intangible forms, including but not
limited to specifications, samples, records, data, computer programs, drawings,
diagrams, models, consumer names, ID's or e-mail addresses, business or
marketing plans, studies, analyses, projections and reports, communications by
or to attorneys (including attorney-client privileged communications), memos and
other materials prepared by attorneys or under their direction (including
attorney work product), and software systems and processes that are not readily
available to the public, even such items not specifically marked as a trade
secret or confidential, unless the Company advises Holder otherwise in writing
or unless the information has been shared by the Company with entities not bound
by non-disclosure agreements. In consideration of the fees paid, to be paid or
provided to Holder, including the grant of this Warrant, Holder agrees not to
directly or indirectly use or disclose to anyone, either during the term of his
engagement as a consultant to the Company or after the termination of such
engagement, except in the performance of his duties or with the Company's prior
written consent, any Confidential Information of the Company. This
non-disclosure covenant does not apply to information (i) that is disclosed or
becomes public through another source; or (ii) which Holder is required to
disclose pursuant to court order, subpoena or applicable law (provided that
Holder will use reasonable efforts to provide the Company with prompt notice of
any such requests or requirement so that the Company may seek an appropriate
protective order). Holder agrees that in the event of the termination of his
engagement as a consultant to the Company for any reason, Holder will deliver to
the Company, upon request, all property belonging to the Company, including all
documents and materials of any nature pertaining to Holder's engagement with the
Company and will not take with him any documents or materials of any
description, or any reproduction thereof of any description, containing or
pertaining to any Confidential Information.
4. Intentionally Omitted.
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5. Certain Agreements of the Company. The Company covenants as follows:
a. Shares to be Fully Paid. All Warrant Shares shall, upon
issuance in accordance with the terms of this Warrant, be validly issued, fully
paid, and nonassessable and free from all taxes, liens, and charges with respect
to the issue thereof.
b. Reservation of Shares. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.
c. Certain Actions Prohibited. The Company shall not, by
amendment of its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed by it hereunder,
but shall at all times in good faith assist in the carrying out of all the
provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the Holder of this Warrant in order to protect the
exercise privilege of the Holder of this Warrant against impairment, consistent
with the tenor and purpose of this Warrant. Without limiting the generality of
the foregoing, the Company shall take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant.
d. Successors and Assigns. This Warrant shall be binding upon
any entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.
6. Antidilution Provisions. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 6.
a. Subdivision or Combination of Common Stock. If the Company
at any time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the Common Stock into a greater
number of shares, then, after the record date for effecting such subdivision,
the Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares shall be
proportionately increased. If the Company at any time combines (by reverse stock
split, recapitalization, reorganization, reclassification or otherwise) the
Common Stock into a smaller number of shares, then, after the record date for
effecting such combination, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased and the number of Warrant
Shares shall be proportionately decreased.
b. Consolidation, Merger or Sale. In case the Company after
the date hereof (a) shall consolidate with or merge into any other entity and
shall not be the continuing or surviving corporation of such consolidation or
merger, (b) shall permit any other entity to consolidate with or merge into the
Company and the Company shall be the continuing or surviving entity but, in
connection with such consolidation or merger, all outstanding shares of Common
Stock shall be
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changed into or exchanged for stock or other securities of any other entity or
cash or any other property, (c) shall transfer all or substantially all of its
properties or assets to any other person or entity, or (d) shall effect a
capital reorganization or reclassification of the Common Stock (other than a
capital reorganization or reclassification for which adjustment in the Exercise
Price is provided in Section 6(a)), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the Holder, upon the exercise
hereof at any time after the consummation of such transaction, shall be entitled
to receive (at the aggregate Exercise Price in effect at the time of such
consummation for all Common Stock issuable upon such exercise immediately prior
to such consummation), in lieu of the Common Stock issuable upon such exercise
immediately prior to such consummation, the highest amount of securities, cash
or other property to which Holder would have been entitled as a shareholder upon
such consummation if Holder had exercised this Warrant immediately prior
thereto, subject to adjustments (subsequent to such consummation) as nearly
equivalent as possible to the adjustments provided for in this Section 6. The
Company shall not effect any such consolidation, merger, or sale of assets, or
capital reorganization or reclassification unless prior to the consummation
thereof, the continuing or surviving corporation (if other than the Company)
assumes by written instrument the obligations under this Section 6 and the
obligations to deliver to the Holder of this Warrant such securities, cash or
other property as, in accordance with the foregoing provisions, the Holder may
be entitled to acquire.
c. Distribution of Assets. In case the Company shall declare
or make any distribution of its assets to all Holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise, other
than a dividend payable in shares of Common Stock or in cash out of earnings of
the Company, the Holder shall be entitled upon exercise of this Warrant to
receive the amount of cash, securities or other property that would have been
payable to the Holder had Holder been the Holder of such shares of Common Stock
on the record date for the determination of stockholders entitled to such
distribution.
d. Notice of Adjustment. Upon the occurrence of any event that
requires any adjustment of the Exercise Price, the Company shall give notice
thereof to the Holder, which notice shall state the Exercise Price resulting
from such adjustment and the increase or decrease, if any, in the number of
Warrant Shares, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
e. Adjustment of Exercise Price. No adjustment of the Exercise
Price shall be made in an amount less than 1% of the Exercise Price in effect at
the time such adjustment is otherwise required to be made, but any such lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to not less than 1% of such Exercise Price. In the
event that any adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up to the nearest cent.
f. No Fractional Shares If any exercise of this Warrant would
result in the issuance of a fractional share of Common Stock, such fractional
share shall be disregarded and the number of shares of Common Stock issuable
upon such exercise shall be the nearest whole number of shares.
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g. Other Notices. In case at any time:
i. the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make any other
distribution (other than dividends or distributions payable in cash out of
retained earnings) to the holders of the Common Stock;
ii. the Company shall offer for subscription pro rata
to all holders of the Common Stock any additional shares of stock of any class
or other rights;
iii. there shall be any capital reorganization of the
Company, or reclassification of the Common Stock or sale of all or substantially
all its assets to another entity; or
iv. there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder notice of (a) the
date on which the books of the Company shall close or a record shall be taken
for determining the holders of Common Stock entitled to receive any such
dividend, distribution or subscription rights, or for determining the holders of
Common Stock entitled to vote in respect of any such transaction, and (b) the
date (or, if not then known, a reasonable approximation thereof by the Company)
when such transaction shall occur. Such notice shall also specify the date on
which the holders of Common Stock shall be entitled to receive such dividend,
distribution or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon consummation of such
transaction. Such notice shall be given at least 30 days prior to the record
date or the date on which the Company's books are closed in respect thereto.
Failure to give any such notice or any defect therein shall not affect the
validity of any action referred to in clauses (i), (ii), (iii) and (iv) above.
h. Certain Events. In case any event shall occur as to which
paragraphs (a), (b) or (c) of this Section 6 are not strictly applicable but the
failure to make any adjustment would not fairly protect the rights represented
by this Warrant in accordance with the essential intent of such provisions, the
Company shall give notice of such event as provided in Section 6(d) and shall
make an appropriate adjustment in the Exercise Price and the number of Warrant
Shares to preserve, without dilution, the rights represented by this Warrant.
7. Tax Obligations. The issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the Holder for
any issuance tax or other costs in respect thereof; provided that the Holder
shall pay all transfer taxes owed upon the issuance of such shares in the name
of any person or entity designed by the Holder. Upon exercise of the Warrant,
the Company shall have the right to require the Holder to remit to the Company
an amount sufficient to satisfy federal, state and local tax withholding
requirements prior to the delivery of any certificate for shares of Common Stock
purchased pursuant to the Warrant, if in the opinion of counsel to the Company,
such withholding is required under applicable tax laws. If the Holder is
obligated to pay the Company an amount required to be withheld under applicable
tax withholding requirements, then he may pay such amount (i) in cash; (ii) in
the discretion of the Compensation Committee of the Board of Directors, through
the delivery to the Company of previously-owned shares of Common Stock having an
aggregate fair market value equal to the tax obligation, provided that the
previously
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owned shares delivered in satisfaction of the withholding obligations must have
been held by the Holder for at least six (6) months; (iii) in the discretion of
the Compensation Committee of the Board of Directors, through the withholding of
shares of Common Stock otherwise issuable to the Holder in connection with the
Warrant exercise; or (iv) in the discretion of the Compensation Committee of the
Board of Directors, through a combination of the procedures set forth in
subsections (i), (ii) and (iii) above.
8. No Rights as a Stockholder. Prior to the exercise of this Warrant,
the Holder hereof, as such, shall not be entitled to any rights of a stockholder
of the Company by virtue of his ownership of this Warrant, including, without
limitation, the right to vote, to consent, to exercise any preemptive right, to
receive any notice of meetings of stockholders for the election of directors of
the Company or any other matter or to receive any notice of any proceedings of
the Company, except as may be specifically provided for herein.
9. Transfer, Exchange, and Replacement of Warrant.
a. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, shall execute and
deliver, in lieu thereof, a new Warrant of like tenor.
b. Cancellation; Payment of Expenses. Upon the surrender of
this Warrant in connection with any transfer or replacement as provided in this
Section 9, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes and all other expenses (other than legal expenses, if any,
incurred by the Holder) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 9.
c. Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
d. Exercise or Transfer Without Registration. If, at the time
of the surrender of this Warrant in connection with any exercise or transfer of
this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares), shall not be registered under the Securities Act and under applicable
state securities or blue sky laws, the Company may require, as a condition of
allowing such exercise or transfer, that the Holder furnish to the Company a
written opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise or transfer may be made without
registration under the Securities Act and applicable state securities or blue
sky laws.
e. Restrictions on Transfer of Shares of Common Stock. The
Holder hereby agrees not to pledge, encumber, sell, assign or transfer
(collectively, "Transfer") the shares of Common Stock which the Holder owns as
of the date of this Warrant until such time as the Board
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of Directors, in consultation with an investment banking firm engaged by the
Company, determines that any such Transfer would not have an adverse effect on
the public trading market for the Common Stock, provided that these restrictions
on transfer shall lapse 18 months after the date of this Warrant. The Company
may place a restrictive legend setting forth these restrictions on transfer on
any stock certificates representing these shares of Common Stock. The Company
may also place stop transfer orders on these stock certificates with its
transfer agent as long as these restrictions on transfer remain effective.
10. Notices. All notices, requests, and other communications required
or permitted to be given or delivered hereunder to the Holder shall be in
writing, and shall be personally delivered, or shall be sent by certified or
registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to the Holder at the address shown for the Holder on the books of the
Company, or at such other address as the Holder shall have furnished to the
Company. All notices, requests and other communications required or permitted to
\be given or delivered hereunder to the Company shall be in writing, and shall
be personally delivered, or shall be sent by certified or registered mail or by
recognized overnight mail courier, postage prepaid and addressed, to Net Value
Holdings, Inc., Xxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, XX 00000, Attention:
Chief Executive Officer, Fax: (000) 000-0000, or to such other address as the
Company shall have furnished to the Holder. Any such notice, request or other
communication may be sent by facsimile, but shall in such case be subsequently
confirmed by a writing personally delivered or sent by certified or registered
mail or by recognized overnight mail courier as provided above. All notices,
requests and other communications shall be deemed to have been given either at
the time of the receipt thereof at the address specified in this Section 10 or,
if mailed by registered or certified mail or with a recognized overnight mail
courier, upon deposit with the United States Post Office or such overnight mail
courier, postage prepaid and properly addressed.
11. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO ITS OR ANY OTHER JURISDICTION'S CONFLICTS OF LAW.
12. Miscellaneous.
a. Amendments. This Warrant may only be amended by an
instrument in writing signed by the Company and the Holder.
b. Headings. The headings of the sections and paragraphs of
this Warrant are for reference purposes only, and shall not affect the meaning
or construction of any of the provisions hereof.
c. Entire Agreement. This Warrant contains the entire
agreement between the parties with respect to the grant or award of securities
by the Company to the Holder, and the vesting and exercise periods of these
securities, and supersedes all prior agreements and understandings, oral or
written, between the parties hereto regarding such subject matter including, but
not limited to, Amendment No. 2 to Merger Agreement and Plan of Reorganization
dated as of July 22, 1999, and
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letter agreements between the parties dated August 31, 1999, September 13, 1999
and January 23, 2000.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
NET VALUE HOLDINGS, INC.
By: ________________________________
Xxxxxx X. Xxxxx
Chief Executive Officer
AGREED TO AND ACCEPTED:
__________________________
Xxxxx Xxxxxx
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FORM OF EXERCISE AGREEMENT
Dated: ________, ____.
To:_____________________________
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by certified or official bank check in the
amount of $_________. Please issue a certificate or certificates for such shares
of Common Stock in the name of and pay any cash for any fractional share to:
Name:________________________________
Signature:___________________________
Address:_____________________________
_____________________________
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
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