STOCK PURCHASE WARRANT
This Warrant is issued this 30th day of September, 1998, by THE NETPLEX
GROUP, INC., a New York corporation (the "Company"), to WATERSIDE CAPITAL
CORPORATION, a Virginia corporation ("WSCC"), or its registered assignee,
(together with WSCC the "Holder" or "Holders").
AGREEMENT:
1. Issuance of Warrant; Term.
1.1 For and in consideration of WSCC purchasing from the Company
1,500,000 shares of its Class C Preferred Stock, par value $.01 per share (the
"Preferred Stock"), pursuant to the terms of a Class C Preferred Stock Purchase
Agreement of even date (the "Agreement"), and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Company grants to Holder the right to purchase 150,000 shares (the "Base
Amount") of the Company's common stock (the "Common Stock"); provided that, in
the event that any shares of Preferred Stock are outstanding on the following
dates, the number of shares of Common Stock subject to this Warrant will
increase 100,000 shares on each of March 30, 2000, September 30, 2001, March 30,
2003 and September 30, 2004. Such increase (but not the Base Amount) will be in
an amount less than 100,000 on any such date if any Preferred Stock has at such
date been redeemed by the Company. In such event, the increase on any of the
foregoing dates shall be equal to 100,000 shares multiplied by a fraction, the
numerator of which is the dollar amount of Preferred Stock previously redeemed
by the Company at the time of such adjustment date and the denominator of which
is $1,500,000 plus any accrued but unpaid dividends. In no event will the Base
Amount be reduced pursuant to the foregoing sentence. The shares of Common Stock
issuable upon exercise of this Warrant as adjusted above are referred to as the
"Shares."
1.2 This Warrant will exercisable at any time and from time to time
from the date hereof until September 30, 2008.
2. Exercise Price. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased under this Warrant will be
$1.375 per Share.
3. Exercise. This Warrant may be exercised by the Holder (but only on
the following conditions) as to all or any increment or increments of 100
Shares (or the balance of the Shares if less than such number), on delivery of
written notice of intent to exercise to the Company at the following address:
0000 Xxxxxxxxxx Xxxxx, Xxxxx Xxxxx, XxXxxx, Xxxxxxxx 00000 or such other address
as the Company designates in a written notice to the Holder, together with this
Warrant and payment to the Company of the aggregate Exercise Price of the Shares
so purchased. The Exercise Price will be payable, at the option of the Holder,
(i) by certified or bank check, (ii) by the surrender of a portion of this
Warrant having a fair market value equal to the aggregate Exercise Price. On
exercise of this Warrant, the Company will as promptly as practicable, and in
any event within 15 days thereafter, execute and deliver to the Holder 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 is exercised with respect to less than all of the
Shares, the
Holder is entitled to receive a new Warrant covering the number of Shares in
respect of which this Warrant has not been exercised (less any portion of this
Warrant surrendered under clause (ii) of the second sentence of this Section 3),
and such new Warrant will in all other respects be identical to this Warrant.
The Company will pay when due any and all state and federal issue taxes payable
in respect of the issuance of this Warrant or the issuance of any Shares on
exercise of this Warrant.
4. Covenants and Conditions. The above provisions are subject to the
following:
4.1 Neither this Warrant nor the Shares have been registered under
the 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 and 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 applicable Blue Sky Law
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
acknowledges that Xxxxx & Stant is acceptable counsel). Transfer of the shares
issued on the exercise of this Warrant will be restricted in the same manner and
to the same extent as the Warrant and the certificates representing such Shares
will 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 (I) A REGISTRATION STATEMENT UNDER
THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (II) 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 Holders and the Company will execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of this Warrant and any shares of Common Stock issued
on exercise hereof with applicable federal and state securities laws.
4.2 All Shares issued on exercise of this Warrant will, on issuance and
payment therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights, if
any, with respect thereto or to the issuance thereof. The Company will at all,
times reserve and keep available for issuance on 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.
4.3 The Company will not sell any shares of the Company's capital stock
at a price below the Fair Market Value of such shares (as defined in Section 8),
without the prior written consent of the Holder. If the Company sells shares of
the Company's capital stock in violation of this Section 4.3, the number of
shares issuable on exercise of this Warrant will be equal to the product
obtained by multiplying the number of shares issuable under this Warrant before
such sale by the quotient obtained by dividing (i) the Fair Market Value of the
Shares issued in violation of this Section 4.3 by (ii) the price at which such
Shares were sold.
5. Transfer of Warrant. Subject to the provisions of Section 4, this
Warrant may be transferred by the Holder on presentation of this Warrant to the
Company with written instructions for such transfer. On such presentation for
transfer, the Company will 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 will pay all expenses
incurred by it in connection with the preparation, issuance and delivery of
Warrants under this Section.
6. Warrant Holder Not Shareholder; Rights, Rights Offering; Preemptive
Rights; Preference Rights. Except as otherwise provided, this Warrant does not
confer on the Holder, as such, any right whatsoever as a shareholder of the
Company. Notwithstanding the foregoing, if the Company offers to all of the
Company's shareholders the right to purchase any securities of the Company,
then, for such purpose, all shares of Common Stock that are subject to this
Warrant shall be deemed to be outstanding and owned by the Holder and the Holder
shall be entitled to participate in such rights offering. The Company will not
grant any preemptive rights with respect to any of its capital stock without the
prior written consent of the Holder. The Company will not issue any securities
which entitle the holder thereof to obtain any preference over holders of Common
Stock on the dissolution, liquidation, winding-up, sale, merger, or
reorganization of the Company without the prior written consent of the Holder.
7. Adjustment on Changes in Stock.
7.1 If all or any portion of this Warrant is exercised after any stock
split, stock dividend, recapitalization, combination of shares of the Company or
other similar event, occurring after the date hereof, then the Holder exercising
this Warrant will receive, for the aggregate price paid on such exercise, the
aggregate number and class of shares that the Holder would have received if this
Warrant had been exercised immediately before such stock split, stock dividend,
recapitalization, combination of shares or other similar event. If any
adjustment under this Section 7.1 would create a fractional share of Common
Stock or a right to acquire a fractional Share such fractional Share be
disregarded and the number of Shares subject to this Warrant will be the next
higher number of shares, rounding all fractions upward. Whenever there is an
adjustment under this Section 7.1, the Company will forthwith notify the Holder
of such adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
7.2 If all or any portion of this Warrant is exercised after any
merger, consolidation, exchange of shares, separation, reorganization or
liquidation of the Company or other
similar event, occurring after the date hereof and, as a result of, shares of
Common Stock are changed into the same or a different number of shares of the
same or another class or classes of securities of the Company or another entity,
then the Holder exercising this Warrant will receive, for the aggregate price
paid on such exercise, the aggregate number and class of shares that the Holder
would have received if this Warrant had been exercised immediately before such
merger, consolidation, exchange of shares, separation, reorganization or
liquidation or other similar event. If any adjustment under this Section 7.2
would create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share will be disregarded and
the number of shares subject to this Warrant will be the next higher number of
shares, rounding all fractions upward. Whenever there is an adjustment pursuant
to this Section 7.2, the Company will forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
8. Fair Market Value.
The Fair Market Value of the Shares will be determined as follows:
8.1 The Company and the Holder will each appoint an independent,
experienced appraiser who is a member of a recognized professional association
of business appraisers. The two appraisers will determine the value of the
shares of Common Stock that would be issued on the exercise of the Warrant,
without taking into consideration that such shares would constitute a minority
interest, and would lack liquidity but assuming that the sale would be between a
willing buyer and a willing seller, both of whom have full knowledge of the
financial and other affairs of the Company, and neither of whom is under any
compulsion to sell or to buy.
8.2 If the highest of the two appraisals is not more than 10% more than
the lowest of the appraisals, the Fair Market Value will be the average of the
two appraisals. If the highest of the two appraisals is 10% or more than the
lowest of the two appraisals, then a third appraiser shall be appointed by the
two appraisers, and if they cannot agree on a third appraiser, the American
Arbitration Association will appoint the third appraiser. The third appraiser,
regardless who appoints him or her, must have the substantially same
qualifications as the first two appraisers.
8.3 The Fair Market Value after the appointment of the third appraiser
will be the mean of the three appraisals.
8.4 The fees and expenses of the appraisers will be paid by the
Company.
Notwithstanding the foregoing, if shares of the Company's Common Stock
are trading on the Nasdaq SmallCap Market, Nasdaq NMS, AMEX, or the NYSE, the
Fair Market Value of the Shares will be calculated by reference to the average
of the closing prices over the 20 trading days prior to the valuation date.
9. Governing Law. This warrant will be governed by the laws of the
Commonwealth of Virginia.
10. Severability. If any provision(s) of this Warrant or the
application thereof to any person or circumstances is invalid or unenforceable
to any extent, the remainder of this Warrant and the application of such
provisions to other persons or circumstances, will not be affected and will be
enforced to the greatest extent permitted by law.
11. Counterparts. This Warrant may be executed in any number of
counterparts and be different parties to this Warrant in separate counterparts,
each of which when so executed will be deemed to be an original and all of which
taken together will constitute one and the same Warrant.
12. Jurisdiction and Venue. The Company consents to the jurisdiction of
the Circuit Court of the City of Norfolk, Virginia, for the purpose of any suit,
action or other proceeding arising out of any of its obligations arising under
this Agreement or with respect to the transactions contemplated hereby, and
expressly waives any and all objections it may have as to venue in such court.
IN WITNESS, the parties have set their hands as of the date first above
written.
THE NETPLEX GROUP, INC., a New York corporation
By__________________________________
Xxxx X. Xxxxx, President
WATERSIDE CAPITAL CORPORATION, a Virginia corporation
By__________________________________
Its___________________________________
