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EXHIBIT 10.8
STOCK PURCHASE WARRANT
This Warrant is issued as of this 8th day of October, 1998, by
BUILDNET, INC., a North Carolina corporation (the "Company"), to PETRA CAPITAL,
LLC, a Georgia limited liability company (Petra Capital, LLC and any subsequent
assignee or transferee hereof are hereinafter referred to collectively as
"Holder" or "Holders").
AGREEMENT:
Section 1. Issuance of Warrant, Term.
(a) Petra Capital, LLC ("Petra") and Piedmont Venture Partners
Limited Partnership ("Piedmont") made a loan to the Company in the amount of
$3,000,000 (the "Loan"). The portion of the Loan funded by Petra is evidenced
by a Secured Promissory Note dated October 8, 1998, in the original principal
amount of $2,000,000, payable to the order of Petra (together with any and all
extensions, replacements and renewals thereof, the "Note"), and the Loan was
made pursuant to a Loan and Security Agreement dated October 8, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"). In consideration of the funding of $2,000,000 of the Loan, the
receipt and sufficiency of which are hereby acknowledged, the Company hereby
grants to Holder the right to purchase 30,442 shares of the Company's common
stock (the "Common Stock.
(b) The shares of Common Stock issuable upon exercise of this
Warrant are hereinafter referred to as the "Shares." This Warrant shall be
exercisable at any time and from time to time from the date hereof until
October 7, 2007.
Section 2. Exercise Price. The exercise price (the "Exercise
Price") per share for which ail or any of the Shares may be purchased pursuant
to the terms of this Warrant shall be one cent ($.01).
Section 3. Exercise.
(a) This Warrant may be exercised by the Holder hereof (but only
on the conditions hereafter set forth) as to all or any increment or increments
of one hundred (100) Shares (or the balance of the Shares if less than such
number), upon delivery of written notice of intent to exercise to the Company
at the following address: 0000 Xxxxxxx Xxxx., Xxxxx 000, Xxxxxx, XX 00000,
Attention: Xxxxx Xxxxxxxx, or such other address as the Company shall designate
in a written notice to the Holder hereof, together with this Warrant and
payment to the Company of the aggregate Exercise Price of the Shares so
purchased. The Exercise Price shall be payable, at the option of the Holder,
(i) by certified or bank check, (ii) by the surrender of the Note or portion
thereof having, an outstanding principal balance equal to the aggregate
Exercise Price. Upon exercise of this Warrant as aforesaid, the Company shall
as promptly as practicable, and in any event within fifteen (15) days
thereafter, execute and deliver to the Holder of this Warrant a certificate or
certificates for the total number of whole Shares for which this Warrant is
being exercised in such names and denominations as are requested by such
Holder. If this Warrant shall be exercised with respect to less than all of the
Shares, the Holder shall be entitled to receive a new Warrant covering, the
number of Shares in respect of which this Warrant shall not have been
exercised, which new Warrant shall in all other respects be identical to this
Warrant. The Company covenants and agrees that it will pay when due any and all
state and federal
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issue taxes which may be payable in respect of the issuance of this Warrant or
the issuance of any Shares upon exercise of this Warrant.
(b) In lieu of exercising this Warrant pursuant to Section 3(a)
above, the Holder shall have the right to require the Company to convert this
Warrant (as it may be adjusted pursuant to Section 5 hereof), in whole or in
part and at any time or times into Shares (the "Conversion Right"), upon
delivery of written notice of intent to convert to the Company at its address
in Section 3(a) or such other address as the Company shall designate in a
written notice to the Holder hereof, together with this Warrant. Upon exercise
of the Conversion Right, the Company shall deliver to the Holder (without
payment by the Holder of any Exercise Price) that number of Shares which is
equal to the quotient obtained by dividing (x) the net value of the number of
Shares with respect to which Holder is then exercising the Conversion Right
(determined by subtracting the aggregate Exercise Price for the Shares with
respect to which Holder is then exercising the Conversion Right from a number
equal to the product of (i) the Fair Market Value per Share (as such term is
defined in Section 5(b)) as at such time, multiplied by (ii) that number of
Shares with respect to which Holder is then exercising the Conversion Right),
by (y) the Fair Market Value per Share. Any references in any Warrants to the
"exercise" of this Warrant, and the use of the term exercise herein, shall be
deemed to include (without limitation) any exercise of the Conversion Right.
Section 4. Covenants and Conditions. The above provisions are
subject to the following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended ("Securities Act") or any state
securities laws ("Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale. Except for
the Holder's intended transfer to Petra Special Purpose, LLC (the "SPV") and
the subsequent collateral assignment by the SPV, this Warrant may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel, which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the Securities
Act or under any applicable Blue Sky Laws (the Company hereby acknowledges that
Xxxxxxxx & Xxx, PLC is acceptable counsel). Transfer of Shares issued upon the
exercise of this Warrant shall be restricted in the same manner and to the same
extent as the Warrant, and the certificates representing such Shares shall.
subject to Section 6 hereof, bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933), AS AMENDED (THE "ACT"), OR
ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (1) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (11) IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH SECURITIES ACTS OR
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of this
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Warrant and any shares of Common Stock issued upon exercise hereof with
applicable federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment therefor,
be legally and validly issued and outstanding, fully paid and nonassessable,
free from all taxes, liens, charges and preemptive rights (other than any
created by the Holder), if any, with respect thereto or to the issuance
thereof. The Company shall at all times reserve and keep available for issuance
upon the exercise of this Warrant such number of authorized but unissued shares
of Common Stock as will be sufficient to permit the exercise in full of this
Warrant.
Section 5. Adjustment of Exercise Price and Number of Shares
Issuable. The Exercise Price and the number of Shares (or other securities or
property) issuable upon exercise of this Warrant shall be subject to adjustment
from time to time upon the occurrence of any of the events enumerated in this
Section 5.
(a) Common Stock Reorganization. If the Company shall (i)
subdivide or consolidate its outstanding shares of Common Stock (or any class
thereof) into a greater or smaller number of shares, (ii) pay a dividend or
make a distribution on its Common Stock (or any class thereof) in shares of its
capital stock, or (iii) issue by reclassification of its Common Stock (or any
class thereof) any shares of its capital stock (any such event described in
clauses (i), (ii) or (iii) being called a "Common Stock Reorganization"), then
the Exercise Price and the type of securities for which this Warrant is
exercisable shall be adjusted immediately such that the Holder thereafter shall
be entitled to received upon exercise of this Warrant the aggregate number and
type of securities that it would have received if this Warrant had been
exercised immediately prior to such Common Stock Reorganization.
(b) Common Stock Distribution. If the Company shall issue, sell,
distribute or otherwise grant any shares of Common Stock, other than pursuant
to a Common Stock Reorganization (any such issuance, sale, distribution or
grant being herein called a "Common Stock Distribution"), for a consideration
per share less than the Fair Market Value per Share immediately prior to such
Common Stock Distribution, then the Exercise Price shall be reduced to the
price determined by multiplying such Exercise Price by a fraction, the
numerator of which shall be the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such Common Stock Distribution plus the number
of shares issuable upon exercise of this Warrant and any Additional Warrants
issued pursuant to the Loan Agreement plus (B) the quotient obtained by
dividing the aggregate consideration, if any, received by the Company upon such
Common Stock Distribution by such Fair Market Value per Share, and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such Common Stock Distribution plus the number of
shares issuable upon exercise of this Warrant and any Additional Warrants
issued pursuant to the Loan Agreement. "Fair Market Value per Share" as of any
time means the fair market value of the Company as of such time divided by the
number of outstanding shares of Common Stock, as of such time after giving
effect to the exercise of this Warrant and any Additional Warrants issued
pursuant to the Loan Agreement.
(c) Convertible Securities and Option Securities. If the Company
shall issue, sell, distribute or otherwise grant (including by assumption):
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(i) any stock or other securities convertible into or
exchangeable for Common Stock, whether or not the rights to exchange
or convert thereunder are immediately exercisable such convertible or
exchangeable stock or securities being herein called "Convertible
Securities"), or
(ii) any rights to subscribe for or to purchase, or any
warrants or options for the purchase of, Common Stock or Convertible
Securities, whether or not immediately exercisable, other than (A) any
Additional Warrants issued pursuant to the Loan Agreement, or (B)
Permitted Plan Options (as defined below) (such rights, warrants or
options being herein called "Option Securities"),
and the lowest aggregate consideration per share for which Common Stock is
issuable upon the exercise of such Convertible Securities or Option Securities
(and, if applicable, upon conversion or exchange of Convertible Securities
issuable upon exercise of Option Securities) shall be less than the Fair Market
Value per Share at SUCH time, then the Exercise Price shall be reduced to the
price determined by multiplying such Exercise Price by a fraction, the
numerator of which shall be the sum of (A) the number of shares of Common Stock
then outstanding plus the number of shares issuable upon exercise of this
Warrant and any Additional Warrants issued pursuant to the Loan Agreement plus
(B) the quotient obtained by dividing the aggregate consideration, if any,
received or receivable by the Company upon such issuance, sale, distribution or
grant by such Fair Market Value per Share, and the denominator of which shall
be the total number of shares of Common Stock then outstanding plus the number
of shares issuable upon exercise of this Warrant and any Additional Warrants
issued pursuant to the Loan Agreement plus the total maximum number of shares
issuable upon exercise or conversion of such Convertible-Securities or Option
Securities and, in the case of Option Securities to acquire Convertible
Securities, upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Option Securities. If
any of such Convertible Securities or Option Securities shall have terminated,
lapsed or expired prior to exercise, exchange or conversion, the Exercise Price
then in effect shall forthwith be readjusted (effective only with respect to
any exercise of Warrants after such readjustment) to the Exercise Price which
would then be in effect had the adjustment not been made upon the issuance,
sale, distribution or grant of such Convertible Securities or Option
Securities. For purposes hereof, "Permitted Plan Options" shall mean Option
Securities issued pursuant to the Company's 1997 Stock Plan; provided that the
number of shares of Common Stock issuable upon exercise thereof shall not
exceed in the aggregate, the sum of (i) 155,000 shares, less (ii) any shares of
Common Stock issuable upon the exercise of options granted under the Sun Forest
Plan (net of any options thereunder which have been canceled), in each case,
adjusted to account for any stock splits, subdivisions or the like.
(d) Adjustment in Number of Shares. Upon each adjustment to the
Exercise Price pursuant to subsections (a), (b) or (c) this Section 5, this
Warrant shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of Shares obtained by multiplying the
number of Shares previously issuable upon exercise of this Warrant by a
fraction the numerator of which is the Exercise Price prior to adjustment and
the denominator of which is the adjusted Exercise Price.
(e) Non-Cash Consideration. If any shares of Common Stock, Option
Securities or Convertible Securities shall be issued, sold, distributed or
granted for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be deemed to be the fair
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market value of such consideration, as determined in good faith by the
Corporation's Board of Directors. If any shares of Common Stock, Option
Securities or Convertible Securities shall be issued in connection with any
merger in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair market value, as
determined in Good faith by the Corporation's Board of Directors, of such
portion of the assets and business of the non-surviving corporation as shall be
attributable to such Common Stock, Option Securities or Convertible Securities,
as the case may be.
(f) Capital Reorganizations. If there shall be any consolidation,
merger or amalgamation of the Company with another person or entity or any
acquisition of capital stock of the Company by means of a share exchange, other
than a consolidation, merger or share exchange in which the Company is the
continuing corporation or any sale or conveyance of the property of the Company
as an entirety or substantially as an entirety, or any reorganization or
recapitalization of the Company (any such event being called a "Capital
Reorganization", then the Holder of this Warrant shall no longer have the right
to purchase Common Stock, but shall have instead the right to purchase, upon
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property (including cash) which the Holder would have owned or
have been entitled to receive pursuant to such Capital Reorganization if this
Warrant had been exercised immediately prior to the effective date of such
Capital Reorganization. As a condition to effecting any Capital Reorganization,
the Company or the successor or surviving corporation, as the case may be,
shall assume by a supplemental agreement, reasonably satisfactory in form,
scope and substance to the Holder (which shall be mailed or delivered to the
Holder of this Warrant at the last address of such Holder appearing on the
books of the Company) the obligation to deliver to such Holder such shares of
stock, securities, cash or property as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase, and all other obligations
of the Company set forth in this Warrant.
(g) Determination of Fair Market Value. Subject to the provisions
set forth below, the fair market value of the Company or of any non-cash
consideration received by the Company upon any Common Stock Distribution shall
be determined in good faith by the Board of Directors of the Company. Upon each
such determination, the Company shall promptly give notice thereof to the
Holder, setting forth in reasonable detail the calculation of such fair market
value and the method and basis of determination thereof (the "Company
Determination"). If the Holder shall disagree with the Company Determination
and shall, by notice to the Company given within thirty (30) days after the
Company's notice of the Company Determination, elect to dispute the Company
Determination, the Company shall, within thirty (30) days after such notice,
engage an investment bank or other qualified appraisal firm acceptable to the
Holder to make an independent determination of the fair market value of the
Company or of any non-cash consideration received by the Company upon any
Common Stock Distribution (the "Appraiser Determination"). The Appraiser
Determination shall be final and binding on the Company and the Holder. The
cost of the Appraiser Determination shall be borne by the Company.
(h) Adjustment Rules. Any adjustments pursuant to this Section 5
shall be made successively whenever an event referred to herein shall occur. No
adjustment shall be made pursuant to this Section 5: (1) in respect of the
issuance from time to time of shares of Common Stock upon the exercise of this
Warrant, (ii) in respect of the issuance from time to time of shares of Common
Stock upon the exercise of the Warrant to be issued to Piedmont, (iii) the
exercise or conversion of any other
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Option Securities or Convertible Securities, or (iii) in respect of the
issuance or exercise of any Additional Warrants (as defined in the Loan
Agreement).
(i) Proceedings Prior to Any Action Requiring Adjustment. As a
condition precedent to the taking of any action which would require an
adjustment pursuant to this Section 5, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that (a) the Company may thereafter validly and legally issue as fully
paid and nonassessable all shares of Common Stock which the Holder of this
Warrant is entitled to receive upon exercise thereof.
(j) Notice of Adjustment. Not less than 10 days prior to the
record date or effective date, as the case may be, of any action which requires
or might require an adjustment or readjustment pursuant to this Section 5, the
Company shall give notice to the Holder of such event, describing such event in
reasonable detail and specifying the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give notice to the Holder of such adjustment and
computation promptly after such adjustment becomes determinable.
Section 6. Transfer of Warrant. Subject to the provisions of
Section 4 hereof, this Warrant may be transferred, in whole or in part, to any
person or business entity, by presentation of the Warrant to the Company with
written instructions for such transfer. Upon such presentation for transfer,
the Company shall promptly execute and deliver a new Warrant or Warrants in the
form hereof in the name of the assignee or assignees and in the denominations
specified in such instructions. The Company shall pay all expenses incurred by
it in connection with the preparation, issuance and delivery of Warrants under
this Section.
Section 7. Warrant Holder Not Shareholder, Rights Offering;
Preemptive Rights. Except as otherwise provided herein, this Warrant does not
confer upon the Holder, as such, any right whatsoever as a shareholder of the
Company. The Company shall not grant any preemptive rights with respect to any
of its capital stock if such preemptive rights are exercisable upon exercise of
this Warrant.
Section 8. Observation Rights, Interim Dividends.
(a) Observation Rights. The Holder of this Warrant shall receive
notice of and be entitled to attend or may send a representative to attend all
meetings of the Company's Board of Directors in a non-voting observation
capacity and shall receive a copy of all correspondence and information
delivered to the Company's Board of Directors, from the date hereof until such
time as the indebtedness evidenced by the Note has been paid in full.
(b) Interim Dividends. If the Company pays a dividend or makes a
distribution to the holders of its capital stock of any securities (other than
capital stock) or property (including cash and securities of other companies)
of the Company, or any rights, options or warrants to purchase securities
(other than capital stock) or property (including securities of other
companies) of the Company, then, simultaneously with the payment of such
dividend or the making of such distribution, and as a condition precedent to
its right to do so, it will pay or distribute to the Holder of this Warrant an
amount of property (including without limitation cash) and/or securities
(including without limitation
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securities of other companies) of the Company as would have been received by
such Holder had it exercised this Warrant and received all of the Shares of
Common Stock issuable upon the exercise of this Warrant immediately prior to
the record date (or other applicable date) used for determining stockholders of
the Company entitled to receive such dividend or distribution. Anything in
Section 5 to the contrary notwithstanding, no adjustment to the Exercise Price
shall be made for any distribution of Convertible Securities of the Company to
the Holder pursuant to the provisions of this Section 8.
Section 9. Financial Statements and Reports. Unless the Company
is otherwise furnishing such information to the Holder hereof, from the date
hereof until the earlier to occur of (i) the exercise in full of this Warrant
or (ii) its termination, the Company shall deliver to the Holder the following
financial information:
(a) within one hundred twenty (120) days after the end of each
fiscal year of Borrower, (A) audited consolidated financial statements of
Borrower, including a balance sheet as of the close of such fiscal year, an
income statement and statements of changes in stockholders' equity, and of cash
flows for such fiscal year, all in reasonable detail, prepared in accordance
with GAAP consistently applied, and with the report thereon of independent
public accountants, reasonably acceptable to Lender, and (B) unaudited
consolidating financial statements, including a balance sheet as of the close
of such fiscal year, an income statement and statements of changes in
stockholders' equity, and of cash flows for such fiscal year;
(b) within thirty (30) days after the end of each calendar month,
a consolidated balance sheet of Borrower as of the close of such month and
consolidated statements of earnings and retained earnings of Borrower for such
month and for the prior months of the current fiscal year (on a year to date
basis), each compared to the same period in the previous fiscal year, all in
reasonable detail, and unaudited but prepared on the basis of GAAP consistently
applied (except for the absence of footnotes and subject to year-end
adjustments), together with a narrative status report of Borrower's management;
and
(c) with reasonable promptness, such other financial data as
Lender may reasonably request.
Section 10. Certain Notices. In case at any time the Company
shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in stock
or make any special dividend or other distribution to the holders of its Common
Stock;
(c) offer for subscription to the holders of any of its Common
Stock any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the Company,
or consolidate, merge or otherwise combine with, or sell all or substantially
all of its assets to, another corporation; or
(e) voluntarily or involuntarily dissolve, liquidate or wind up
of the affairs of the Company;
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then, in any one or more of said cases, the Company shall give to the Holder,
by certified or registered mail, (i) at least twenty (20) days prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (ii) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least
twenty (20) days' prior written notice of the date when the same shall take
place. Any notice required by clause (i) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto, and any notice required by
clause (ii) shall specify the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.
Section 11. Put Right.
(a) The Company hereby irrevocably grants and issues to Holder
the right and option to sell to the Company (the "Put") this Warrant or the
Shares with respect to which this Warrant is exercisable, in whole or part, at
any time after May 31, 2006 at a purchase price (the "Purchase Price") equal to
the Put Value (as hereinafter defined) of the shares of Common Stock issuable
to Holder upon exercise of this Warrant.
(b) The Company shall pay to the Holder, in cash or certified or
cashier's check, the Purchase Price within thirty (30) days of the receipt of
written notice from the Holder stating its intention to exercise the Put and
the number of shares with respect to which it is then exercising the Put (the
"Put Securities").
(c) The Put Value shall by equal to the fair market value of the
Company (determined pursuant to Section 5(g) of this Warrant) multiplied by a
fraction, the numerator of which shall be the number of Put Securities and the
denominator of which shall be the number of shares of Common Stock then
outstanding (including the Put Securities and after giving effect to the
conversion of any Convertible Securities then outstanding).
[Remainder of Page Intentionally Left Blank]
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[SIGNATURE PAGE TO STOCK PURCHASE WARRANT]
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
BUILDNET, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: CEO
Attest: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: CFO
PETRA CAPITAL, LLC, a Georgia
limited liability company
By: Petra Capital Management,
LLC,
Manager
By: /s/ Petra Capital Management,
LLC
Name: Petra Capital Management,
LLC
Title: Authorized Representative
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