Ex-4.5
EXHIBIT B
to Securities Purchase Agreement
VOID AFTER 5:00 P.M., NEW YORK CITY
TIME, ON MARCH ___, 2005
(UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase __________ Shares of
Common Stock, par value $.001 per share
Date: March __, 2000
THE NETPLEX GROUP, INC.
INCENTIVE STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, _________________________, or its
registered assigns, is entitled to purchase from THE NETPLEX GROUP, INC., a
corporation organized under the laws of the State of New York (the "Company"),
at any time or from time to time during the period specified in Section 2
hereof, _______________________ (__________) fully paid and nonassessable shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at an exercise price per share (the "Exercise Price") equal to the closing
market price of the Common Stock at the end of business on March 22, 1998. The
number of shares of Common Stock purchasable hereunder (the "Warrant Shares")
and the Exercise Price are subject to adjustment as provided in Section 4
hereof. The term "Incentive Warrants" means this Warrant and the other warrants
of the Company issued pursuant to, and identified as Incentive Warrants in, that
certain Securities Purchase Agreement, dated as of March 31, 2000, by and among
the Company and the other signatories thereto (the "Securities Purchase
Agreement").
24
This Warrant is subject to the following terms, provisions and conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for Shares. Subject
to the provisions hereof, including, without limitation, the limitations
contained in Section 7 hereof, this Warrant may be exercised by the holder
hereof, 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 (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company, of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the holder is effectuating
a Cashless Exercise (as defined in Section 11(c) hereof) pursuant to Section
11(c) hereof, delivery to the Company of a written notice of an election to
effect a Cashless Exercise for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, 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 or, if such date
is not a business date, on the next succeeding business date. 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 a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised (the "Delivery Period"). 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 such holder or such other name as
shall be designated by such holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
2.
3. If, at any time, a holder of this Warrant submits this Warrant, an
Exercise Agreement and payment to the Company of the Exercise Price for each of
the Warrant Shares specified in the Exercise Agreement (including pursuant to a
Cashless Exercise), and the Company fails for any reason to deliver, on or prior
to the fourth business day following the expiration of the Delivery Period for
such exercise, the number of shares of Common Stock to which the holder is
entitled upon such exercise (an "Exercise Default"), then the Company shall pay
to the holder payments ("Exercise Default Payments") for an Exercise Default in
the amount of (a) (N/365), multiplied by (b) the amount by which the Market
Price (as defined in Section 4(l) hereof) on the date the Exercise Agreement
giving rise to the Exercise Default is transmitted in accordance with this
Section 1 (the "Exercise Default Date") exceeds the Exercise Price, multiplied
by (c) the number of shares of Common Stock the Company failed to so deliver in
such Exercise Default, multiplied by (d) .24, where N = the number of days from
the Exercise Default Date to the date that the Company effects the full exercise
of this Warrant which gave rise to the Exercise Default. The accrued Exercise
Default Payment for each calendar month shall be paid in cash or shall be
convertible into Common Stock, at the holder's option, as follows:
4.
(a) In the event holder elects to take such payment in cash, cash
payment shall be made to holder by the fifth (5th) day of the month following
the month in which it has accrued; and
(b)
(c) In the event holder elects to take such payment in Common Stock, the
holder may convert such payment amount into Common Stock at the lower of the
Exercise Price or the Market Price (as defined in Section 4(l)) (as in effect at
the time of conversion) at any time after the fifth (5th) day of the month
following the month in which it has accrued.
(d)
(e) Nothing herein shall limit the holder's right to pursue actual damages for
the Company's failure to maintain a sufficient number of authorized shares of
Common Stock as required pursuant to the terms of Section 3(b) hereof or to
otherwise issue shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof, and the holder shall have the right to pursue
all remedies available at law or in equity (including a decree of specific
performance and/or injunctive relief).
(f)
5. Period of Exercise.
6.
(a) This Warrant is immediately exercisable, at any time or from time to time
on or after the date of initial issuance of this Warrant (the "Issue Date") and
before 5:00 p.m., New York City time, on the fifth (5th) anniversary of the
Issue Date (the "Exercise Period"). The Exercise Period shall automatically be
extended by one (1) day for each day on which the Company does not have a number
of shares of Common Stock reserved for issuance upon exercise hereof at least
equal to the number of shares of Common Stock issuable upon exercise hereof.
(b)
7. Certain Agreements of the Company. The Company hereby covenants and agrees
as follows:
8.
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b)
(c) 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 in full of this Warrant (without giving effect to the
limitations on exercise set forth in Section 7(g) hereof).
(d)
(e) Listing. The Company shall promptly secure the listing of the shares of
Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed or become listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all shares of Common
Stock from time to time issuable upon the exercise of this Warrant; and the
Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
(f)
(g) Certain Actions Prohibited. The Company will not, by amendment of its
charter 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 will 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 economic benefit inuring to the holder hereof
and the exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will 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.
(h)
(i) Successors and Assigns. This Warrant will be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all of the Company's assets.
(j)
(k) Blue Sky Laws. The Company shall, on or before the date of issuance of any
Warrant Shares, take such actions as the Company shall reasonably determine are
necessary to qualify the Warrant Shares for, or obtain exemption for the Warrant
Shares for, sale to the holder of this Warrant upon the exercise hereof under
applicable securities or "blue sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the holder of this Warrant
prior to such date; provided, however, that the Company shall not be required to
qualify as a foreign corporation or file a general consent to service of process
in any such jurisdiction.
(l)
9. Antidilution Provisions. During the Exercise Period, the Exercise Price
and the number of Warrant Shares issuable hereunder and for which this Warrant
is then exercisable pursuant to Section 2 hereof shall be subject to adjustment
from time to time as provided in this Section 4.
10.
11. 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 or down
to the nearest cent.
12.
(a) Adjustment of Exercise Price. Except as otherwise provided in Sections
4(c) and 4(e) hereof, if and whenever during the Exercise Period the Company
issues or sells, or in accordance with Section 4(b) hereof is deemed to have
issued or sold, any shares of Common Stock for no consideration or for a
consideration per share less than the Market Price (as hereinafter defined) on
the date of issuance (a "Dilutive Issuance"), then effective immediately upon
the Dilutive Issuance, the Exercise Price will be adjusted in accordance with
the following formula:
(b)
(c) E' = E x O + P/M
--------
(d) CSDO
(e)
(f) where:
(g)
(h) E' = the adjusted Exercise Price; (i) E = the then current Exercise
Price;
M = the then current Market Price (as defined in Section 4(1)(ii));
O = the number of shares of Common Stock outstanding immediately prior
to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in Section
4(b) hereof, received by the Company upon such Dilutive Issuance;
and
CSDO = the total number of shares of Common Stock Deemed Outstanding (as
defined in Section 4(l)(i)) immediately after the Dilutive
Issuance.
(a) Effect on Exercise Price of Certain Events. For purposes of determining
the adjusted Exercise Price under Section 4(a) hereof, the following will be
applicable:
(b)
(i) Issuance of Rights or Options. If the Company in any manner issues or
grants any warrants, rights or options, whether or not immediately exercisable,
to subscribe for or to purchase Common Stock or other securities exercisable,
convertible into or exchangeable for Common Stock ("Convertible Securities")
(such warrants, rights and options to purchase Common Stock or Convertible
Securities are hereinafter referred to as "Options") and the price per share for
which Common Stock is issuable upon the exercise of such Options is less than
the Market Price in effect on the date of issuance of such Options ("Below
Market Options"), then the maximum total number of shares of Common Stock
issuable upon the exercise of all such Below Market Options (assuming full
exercise, conversion or exchange of Convertible Securities, if applicable) will,
as of the date of the issuance or grant of such Below Market Options, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon the exercise of such Below Market Options"
is determined by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or granting of all such Below
Market Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Below Market
Options, plus, in the case of Convertible Securities issuable upon the exercise
of such Below Market Options, the minimum aggregate amount of additional
consideration payable upon the exercise, conversion or exchange thereof at the
time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise of all such Below Market Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Below Market Options or upon the exercise, conversion
or exchange of Convertible Securities issuable upon exercise of such Below
Market Options.
(ii)
(iii) Issuance of Convertible Securities.
(iv)
(A) If the Company in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same
are issuable upon the exercise of Options) and the price per share for which
Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
Market Price in effect on the date of issuance of such Convertible Securities,
then the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of all such Convertible Securities will, as of
the date of the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon such exercise, conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
(B) If the Company in any manner issues or sells any Convertible
Securities with a fluctuating conversion or exercise price or exchange ratio (a
"Variable Rate Convertible Security"), then the "price per share for which
Common Stock is issuable upon such exercise, conversion or exchange" for
purposes of the calculation contemplated by Section 4(b)(ii)(A) shall be deemed
to be the lowest price per share which would be applicable (assuming all holding
period and other conditions to any discounts contained in such Convertible
Security have been satisfied) if the Market Price on the date of issuance of
such Convertible Security was 75% of the Market Price on such date (the "Assumed
Variable Market Price"). Further, if the Market Price at any time or times
thereafter is less than or equal to the Assumed Variable Market Price last used
for making any adjustment under this Section 4 with respect to any Variable Rate
Convertible Security, the Exercise Price in effect at such time shall be
readjusted to equal the Exercise Price which would have resulted if the Assumed
Variable Market Price at the time of issuance of the Variable Rate Convertible
Security had been 75% of the Market Price existing at the time of the adjustment
required by this sentence.
(i) Change in Option Price or Conversion Rate. If there is a change at
any time in (i) the amount of additional consideration payable to the Company
upon the exercise of any Options; (ii) the amount of additional consideration,
if any, payable to the Company upon the exercise, conversion or exchange of any
Convertible Securities; or (iii) the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock (in each such case, other
than under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options or
Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
(ii)
(iii) Treatment of Expired Options and Unexercised Convertible Securities.
If, in any case, the total number of shares of Common Stock issuable upon
exercise of any Option or upon exercise, conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise such
Option or to exercise, convert or exchange such Convertible Securities shall
have expired or terminated, the Exercise Price then in effect will be readjusted
to the Exercise Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination (other
than in respect of the actual number of shares of Common Stock issued upon
exercise or conversion thereof), never been issued.
(iv)
(v) Calculation of Consideration Received. If any Common Stock, Options
or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the amount
received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company will be the fair market
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the Market Price thereof as of the date of receipt. In case any Common
Stock, Options or Convertible Securities are issued in connection with any
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair market value of any consideration other than cash or
securities will be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by the Company and reasonably
acceptable to the holder hereof, with the costs of such appraisal to be borne by
the Company.
(vi)
(vii) Exceptions to Adjustment of Exercise Price. No adjustment to the
Exercise Price will be made (i) upon the exercise of any warrants, options or
convertible securities issued and outstanding on the Issue Date and set forth on
Schedule 3(c) of the Securities Purchase Agreement in accordance with the terms
of such securities as of such date; (ii) upon the grant or exercise of any stock
or options which may hereafter be granted or exercised under any employee
benefit plan of the Company now existing or to be implemented in the future, so
long as the issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such
purpose; (iii) upon the issuance of any Prepaid Warrants (as such term is
defined in the Securities Purchase Agreement) or Incentive Warrants issued or
issuable on the Second Closing Date in accordance with the terms of the
Securities Purchase Agreement; or (iv) upon exercise of the Prepaid Warrants and
the Incentive Warrants.
(viii)
(b) Subdivision or Combination of Common Stock. If the Company, at any
time during the Exercise Period, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a greater number of shares, then, after the date of record for
effecting such subdivision, the Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced. If the Company, at any time
during the Exercise Period, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock into a
smaller number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such combination
will be proportionately increased.
(c)
(d) Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Section 4, the number of shares of
Common Stock issuable upon exercise of this Warrant and for which this Warrant
is or may become exercisable shall be adjusted by multiplying a number equal to
the Exercise Price in effect immediately prior to such adjustment by the number
of shares of Common Stock issuable or for which this Warrant is or may become
exercisable (as applicable) upon exercise of this Warrant immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(e)
(f) Consolidation, Merger or Sale.
(g)
(i) In case of any consolidation of the Company with, or merger of
the Company into any other corporation, or in case of any sale or conveyance of
all or substantially all of the assets of the Company other than in connection
with a plan of complete liquidation of the Company at any time during the
Exercise Period, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this Warrant in lieu
of the shares of Common Stock immediately theretofore acquirable upon the
exercise of this Warrant, such shares of stock, securities, cash or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Section 4 hereof will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Warrant and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire. Notwithstanding the foregoing, in the event of any such sale or
conveyance, the holder of this Warrant shall, at its option, have the right to
receive, and, in the event of any such merger, consolidation, sale or conveyance
which involves the receipt of cash consideration by the equity holders of the
Company's capital stock or in which the surviving or continuing entity is not a
publicly traded corporation whose common stock is listed for trading on the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market, the holder of this Warrant shall be entitled to
receive, in connection with such transaction, cash consideration equal to the
fair market value (as determined by the holder of this Warrant) of this Warrant.
(ii)
(iii) No adjustment shall be made to the Exercise Price pursuant to
the provisions of this Section 4 upon the issuance by the Company of any
securities as consideration in a merger, consolidation or acquisition of assets,
or in connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or as consideration for the
acquisition of a business, product or license by the Company.
(iv)
(h) Distribution of Assets. In case the Company shall declare or make
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, stock repurchase by way of
return of capital or otherwise (including any dividend or distribution to the
Company's shareholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "Distribution"), at any time during the
Exercise Period, then the holder of this Warrant shall be entitled upon exercise
of this Warrant for the purchase of any or all of the shares of Common Stock
subject hereto, to receive the amount of such assets (or rights) which would
have been payable to the holder had such holder been the holder of such shares
of Common Stock on the record date for the determination of shareholders
entitled to such Distribution.
(i)
(j) Notice of Adjustment. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(k)
(l) Minimum Adjustment of Exercise Price. No adjustment of the Exercise
Price shall be made in an amount of 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.
(m)
(n) No Fractional Shares. No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(o)
(p) Other Notices. In case at any time:
(q) (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
consistent with the Company's past practices with respect to declaring dividends
and making distributions) to the holders of the Common Stock;
(i) the Company shall offer for subscription pro rata to the holders of
the Common Stock any additional shares of stock of any class or other rights;
(ii)
(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation or entity; or (iv) (v) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
(vi)
(vii) then, in each such case, the Company shall give to the holder of
this Warrant (a) notice of 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 reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable estimate
thereof by the Company) when the same shall take place. 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 such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall be given at
least seventy-five (75) 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 the proceedings referred
to in clauses (i), (ii), (iii) and (iv) above.
(viii)
(b) Certain Events. If, at any time during the Exercise Period, any
event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(g) hereof, and the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the holder shall be neither enhanced nor diminished by such
event.
(c)
(d) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the number of shares of
Common Stock actually outstanding (not including shares of Common Stock held in
the treasury of the Company), plus (x) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Options, the maximum total
number of shares of Common Stock issuable upon the exercise of the Options for
which the adjustment is required (including any Common Stock issuable upon the
conversion of Convertible Securities issuable upon the exercise of such
Options), and (y) in the case of any adjustment required by Section 4(a)
resulting from the issuance of any Convertible Securities, the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of the Convertible Securities for which the adjustment is required, as
of the date of issuance of such Convertible Securities, if any.
(ii) "Market Price," as of any date, (i) means the average of the closing
bid prices for the shares of Common Stock as reported on the Nasdaq SmallCap
Market by Bloomberg Financial Markets ("Bloomberg") for the five (5) consecutive
trading days immediately preceding such date, or (ii) if the Nasdaq SmallCap
Market is not the principal trading market for the shares of Common Stock, the
average of the last sale prices reported by Bloomberg on the principal trading
market for the Common Stock during the same period, or, if there is no sale
price for such period, the last bid price reported by Bloomberg for such period,
or (iii) if the foregoing do not apply, the last sale price of such security in
the over-the-counter market on the pink sheets or bulletin board for such
security as reported by Bloomberg, or if no sale price is so reported for such
security, the last bid price of such security as reported by Bloomberg, or (iv)
if market value cannot be calculated as of such date on any of the foregoing
bases, the Market Price shall be the average fair market value as reasonably
determined by an investment banking firm selected by the Company and reasonably
acceptable to a majority in interest of the holders of Incentive Warrants, with
the costs of the appraisal to be borne by the Company. The manner of determining
the Market Price of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a determination as
to market value must be made hereunder.
(iii)
(iv) "Common Stock," for purposes of this Section 4, includes the Common
Stock and any additional class of stock of the Company having no preference as
to dividends or distributions on liquidation, provided that the shares
purchasable pursuant to this Warrant shall include only Common Stock in respect
of which this Warrant is exercisable, or shares resulting from any subdivision
or combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to in
Section 4(e) hereof, the stock or other securities or property provided for in
such Section.
(v)
2. Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
3.
4. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
5.
6. Transfer, Exchange, Redemption and Replacement of Warrant.
7.
(a) Restriction on Transfer. This Warrant and the rights granted to the
holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Sections 7(f) and (g) hereof and to the provisions
of Sections 2(f) and 2(g) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of that certain Registration Rights Agreement,
dated as of March 31, 1998, by and among the Company and the other signatories
thereto (the "Registration Rights Agreement").
(a) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the holder hereof at the time of such
surrender.
(b)
(c) 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, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d)
(e) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Section 7. The Company shall indemnify
and reimburse the holder of this Warrant for all costs and expenses (including
legal fees) incurred by such holder in connection with the enforcement of its
rights hereunder.
(f)
(g) Warrant 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.
(h)
(i) Exercise or Transfer Without Registration. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant,
this Warrant (or, in the case of any exercise, the Warrant Shares issuable
hereunder), 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, transfer, or exchange, (i) that the holder
or transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
such exercise, transfer, or exchange may be made without registration under the
Securities Act and under applicable state securities or blue sky laws (the cost
of which shall be borne by the Company if the Company's counsel renders such an
opinion and up to $250 of such cost shall be borne by the Company if the
holder's counsel is requested to render such opinion), (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter, or status as an "accredited
investor" shall be required in connection with a transfer pursuant to Rule 144
under the Securities Act.
(j)
(k) Additional Restrictions on Exercise or Transfer. Notwithstanding
anything contained herein to the contrary, unless the holder hereof delivers a
waiver in accordance with the last sentence of this Section 7(g), this Warrant
shall not be exercisable by a holder hereof to the extent (but only to the
extent) that (a) the number of shares of Common Stock beneficially owned by such
holder and its affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised portion of the
Incentive Warrants and the Prepaid Warrants or the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein) and (b) the
number of shares of Common Stock issuable upon exercise of this Warrant (or
portion hereof) with respect to which the determination described herein is
being made, would result in beneficial ownership by such holder and its
affiliates of more than 4.99% of the outstanding shares of Common Stock. To the
extent the above limitation applies, the determination of whether and to what
extent this Warrant shall be exercisable vis-a-vis other securities owned by
such holder shall be in the sole discretion of the holder and submission of this
Warrant for full or partial exercise shall be deemed to be the holder's
determination of whether and the extent to which this Warrant is exercisable, in
each case subject to such aggregate percentage limitation. No prior inability to
exercise the Warrant pursuant to this Section shall have any effect on the
applicability of the provisions of this Section with respect to any subsequent
determination of exerciseability. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G
thereunder, except as otherwise provided in clause (a) hereof. Except as
provided in the immediately succeeding sentence, the restrictions contained in
this Section 7(g) may not be amended without the consent of the holder of this
Warrant and the holders of a majority of the Company's then outstanding Common
Stock. Notwithstanding the foregoing, the holder hereof may waive the
restrictions set forth in this Section 7(g) by written notice to the Company
upon not less than sixty- one (61) days prior notice (with such waiver taking
effect only upon the expiration of such sixty-one (61) day notice period).
(l)
2. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth
in the Registration Rights Agreement, including the right to assign such rights
to certain assignees, as set forth therein.
3.
4. Notices. Any notices required or permitted to be given under the terms of
this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by courier, or by
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
5.
6. If to the Company:
7.
8. THE NETPLEX GROUP, INC.
9. 0000 Xxxxxxxxxx Xxxxx
00. XxXxxx, XX 00000
11. Telecopy: (000) 000-0000
12. Attn: Xxxx Xxxxx, President and CEO
13.
14. with a copy simultaneously transmitted by like means to:
15.
16. Xxxxxxx Xxxxxxx Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Xxxxxxx Xxxxxxxxx
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
1. Governing Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts and
state courts located in the City of New York in the State of New York in any
suit or proceeding based on or arising under this Warrant and irrevocably agrees
that all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives any objection to the laying of venue and
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company further agrees that service of process upon the Company
mailed by certified or registered mail shall be deemed in every respect
effective service of process upon the Company in any such suit or proceeding.
Nothing herein shall affect the holder's right to serve process in any other
manner permitted by law. The Company agrees that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
1. Miscellaneous.
2.
(a) Amendments. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder hereof.
(a) Descriptive Headings. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(b)
(c) Cashless Exercise. Notwithstanding anything to the contrary
contained in this Warrant, if the resale of the Warrant Shares by the holder is
not then registered pursuant to an effective registration statement under the
Securities Act, this Warrant may be exercised at any time after the first
anniversary of the Issue Date until the end of the Exercise Period, by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the holder's intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
"Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for that number
of shares of Common Stock determined by multiplying the number of Warrant Shares
to which it would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the then current Market Price of a share of the
Common Stock on the date of exercise and the Exercise Price, and the denominator
of which shall be the then current Market Price per share of Common Stock.
(d)
(e) Business Day. For purposes of this Warrant, the term "business day"
means any day, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law,
regulation or executive order to close.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
THE NETPLEX GROUP, INC.
By: /s/XXXX X. XXXXX
-------------------------------------
Name: XXXX X. XXXXX
---------------------------------
Title: CHAIRMAN & CEO
--------------------------------
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
To: THE NETPLEX GROUP, INC.
0000 Xxxxxxxxxx Xxxxx
XxXxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Xxxx Xxxxx, President and CEO
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of THE NETPLEX GROUP, INC., a
corporation organized under the laws of the State of New York (the "Company"),
evidenced by the attached Warrant, and herewith makes payment of the Exercise
Price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise dispose
of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws, and agrees that the following legend
may be affixed to the stock certificate for the Common Stock hereby subscribed
for if resale of such Common Stock is not registered or if Rule 144 is
unavailable:
(ii)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT
BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD
OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
(i) The undersigned requests that stock certificates for such shares be
issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder and delivered to the
undersigned at the address set forth below:
(ii)
(iii) Dated:_________________
_____________________________________
(iv) Signature of Holder
(v)
(vi) ________________________________________
(vii) Name of Holder (Print)
(viii)
(ix) Address:
(x) ________________________________________
(xi) ________________________________________
(xii) ________________________________________
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No of Shares
---------------- ------- ------------
, and hereby irrevocably constitutes and appoints
_____________________________________ as agent and attorney-in-fact to transfer
said Warrant on the books of the within-named corporation, with full power of
substitution in the premises.
Dated: _____________________, ____
In the presence of
_____________________
Name: __________________________________
Signature: _____________________________
Title of Signing Officer or
Agent (if any):_________________________
Address: _______________________________
_______________________________
Note: The above signature
should correspond exactly
with the name on the face
of the within Warrant.
Ex-99.1
[NETPLEX LOGO] Corporate Headquarters:
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxx, XX 00000
Tel: 000-000-0000 Fax: 000-000-0000
Netplex Contact: Investor Contact:
Xxxxxx Xxxx, The Netplex Group, Inc. Xxx Xxxxxxxx, Wall Street Investor
000-000-0000 Relations Corp.
xxxxx@xxxxxxxxxxxx.xxx 000-000-0000
xxxxx@xxxxxxxxxxxx.xxx xxxxxxxxx@XxxxXxxxxxXX.xxx
For Immediate Release
Netplex Ends Year with 86 Percent Increase
in e-Business Solutions Revenue
o e-Business Fourth Quarter Revenue Increased 34 Percent Over Previous Year
o Company Takes $2.9 Million Write-Down of Acquisition-Related Assets
o Company Recently Agreed to Terms for a $10 Million Private Placement
RESTON, Va.--March 28, 2000--The Netplex Group, Inc. (Nasdaq: NTPL) today
announced results for its fourth quarter ended December 31, 1999. The Company
reported revenue of $22.1 million compared to $18.0 million for the fourth
quarter of 1998. Revenue for the Company's e-Solutions group totaled $12 million
(including inter-company e-consulting services provided to Contractor's
Resources of $568,000), a thirty-four percent increase over the previous year's
fourth quarter level of $9.0 million. The Company also reported a loss for the
fourth quarter of $6.2 million, which includes a $2.9 million charge for
write-downs of intangible and other assets related to prior acquisitions; a $1.1
million investment in infrastructure development within its Contractor's
Resources subsidiary; and other one-time charges and adjustments totaling
$906,000. This compares with a net profit of $89,000 for the same period in
1998. Excluding these items, and before interest, taxes, depreciation and
amortization (EBITDA), the loss for the current fourth quarter was $238,000
compared to an EBITDA of $593,000 for the same period in the previous year.
For the full year, the Company reported revenue of $87.8 million, an increase of
43% over the previous year level of $61.3 million. Revenue from Netplex's
e-Solutions business increased 86 percent, reaching $49.2 million. The Company's
Contractor's Resources subsidiary reported gross revenue of $38.6 million
compared to $34.9 million for the same period in 1998.
"The results this quarter reflect a number of positive developments within
Netplex, that we expect will produce outstanding long-term benefits for
shareholders," commented Xxxx Xxxxx, Netplex's chairman and CEO. "In preparation
for a strategically planned promotion of Contractor's Resources Internet-based
Techcellence service, we developed and installed an infrastructure to support a
significantly larger base of members. In addition, we are building a marketing
capability designed to reach the independent contractor marketplace, which the
Department of Labor currently estimates to represent about 2 million
professionals.
We also utilized Netplex's e-Solutions resources in the development of the
Techcellence web initiative. The missed revenue associated with this development
work is estimated at $568,000, while the related costs were $170,000. These
investments are critical to achieving the level of success that we have planned
for Contractor's Resources' Techcellence business and, while this investment has
impeded our near-term bottom-line results, we believe its mid- to long-term
impact has the potential to be an enormous contributor to Netplex's future."
The Company's pro-forma financial information, after giving effect to the
inclusion of the unbilled revenues related to the development of the
Techcellence Web initiative and associated costs, the investment in
infrastructure for Contractor's Resources, and the special adjustments related
to the write-down of intangibles and other one-time charges mentioned above, is
as follows:
Fourth Quarter Full Year
------------------------------------------------------------------------------------------------------------
1999 1998 % Chg 1999 1998 % Chg
------------------------------------------------------------------------------------------------------------
Revenue:
------------------------------------------------------------------------------------------------------------
e-Business Solutions 12,015 8,975 34% 49,729 $26,398 88%
------------------------------------------------------------------------------------------------------------
Contractor's Resources 10,670 8,997 19% 38,624 34,881 11%
------------------------------------------------------------------------------------------------------------
Total 22,685 17,972 26% 88,353 61,279 44%
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Gross Profit:
------------------------------------------------------------------------------------------------------------
e-Business Solutions 4,218 2,906 45% 15,940 8,671 84%
------------------------------------------------------------------------------------------------------------
Contractor's Resources 390 448 (13)% 1,564 1,325 18%
------------------------------------------------------------------------------------------------------------
Total 4,608 3,354 37% 17,504 9,996 75%
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Operating income 937 1,196 (22)% 5,382 1,744 209%
------------------------------------------------------------------------------------------------------------
Corporate expenses 1,175 603 95% 3,952 3,055 29%
------------------------------------------------------------------------------------------------------------
EBITDA (238) 593 -- 1,430 (1,311) --
------------------------------------------------------------------------------------------------------------
Interest taxes and depr. 656 504 30% 2,963 1,238 139%
------------------------------------------------------------------------------------------------------------
Write-downs of acquisition-related
assets 2,869 -- -- 2,869 -- --
------------------------------------------------------------------------------------------------------------
Techcellence development and
infrastructure costs 1,142 -- -- 1,717 -- --
------------------------------------------------------------------------------------------------------------
Inter-co gross profit elim. 398 -- -- 398 -- --
------------------------------------------------------------------------------------------------------------
One-time charges 906 -- -- 906 -- --
------------------------------------------------------------------------------------------------------------
Net operating income (6,209) 89 -- (7,423) (2,549) --
------------------------------------------------------------------------------------------------------------
To provide a consistent and accurate reflection of Netplex's gross profits, the
"non-productive" time of billable professionals has been included in cost of
sales, thereby slightly reducing the gross margin rates, while providing a
corresponding reduction in operating expenses. The Company believes the new
format provides a more accurate measurement of productivity.
44
The Contractor's Resources consecutive quarter growth was 17%, which reflects
new membership growth as well as increased revenue per member. Since introducing
Contractor's Resources Internet service, Techcellence(TM) in January, there have
been over 10,000 unique visitors who have spent an average of 22 minutes
visiting the site. Netplex's marketing efforts to date have been concentrated in
the Washington D.C. region. The Company intends to expand its marketing efforts
to other areas where demographics include a high concentration of independent IT
professionals. To augment this effort Netplex intends to aggressively expand its
strategic marketing partnership program with Web-based technology marketplaces
such as job boards, online job fairs, B2B e-commerce sites focused on the
service sector, etc.
In December, Netplex announced its alliance with XxxxxxXxxxxxx.xxx, an online
community that enhances the relationship between contractors, staffing
companies, and corporations by matching IT contractors with projects. Netplex is
actively pursuing additional online relationships for its Techcellence service.
The objective of these relationships is to both drive membership interest as
well as enhance its service offerings to further strengthen its membership
satisfaction and retention rate. As it creates these relationships, Netplex is
committed to managing the growth of the Techcellence infrastructure in order to
preserve the existing high degree of member satisfaction.
"Netplex's e-business consecutive quarterly revenue growth does not reflect the
build-up of sales and marketing professionals that was accomplished during the
fourth quarter, which will begin to show signs of progress towards the second
quarter 2000," added Xxxxxx Xxxxxxxx, Netplex's President. "We upgraded the
quality of our sales team to support our strategic plans to escalate the value
of Netplex's sales mix. During this process, we disengaged our sales effort
focused on lower-end projects, and added highly experienced technical personnel
to improve Netplex's quality of business. We are targeting larger contract value
services projects to improve our product mix, which, in addition to lengthening
our normal sales cycle, requires a more qualified sales force. Our efforts are
showing signs of great progress. Netplex's prospect-adjusted pipeline has grown
from $15 million at the end of the fourth quarter, to $26 million today, which
includes seven deals valued in excess of $1 million each."
During the quarter, Netplex added Xxxx Xxxxxxxx to its management team as
Executive Vice President of its e-Infrastructure Services division. Over the
course of the last two quarters, Netplex has increased its sales force to 28
professionals, an increase of 12 from the end of 1998.
Financing
Today, the Company also signed an agreement for a $10 million private financing
consisting of convertible preferred stock, which was placed with two
institutional investors. The preferred stock earns dividends at the rate of
seven percent per year, is convertible at 120% of market, and includes
additional warrants. "This financing strengthens our balance sheet and provides
Netplex with record levels of liquidity to enable us to fund our future
expansion," commented Xxxxxx Xxxx, Netplex's chief financial officer.
Conference Call
45
Netplex management has scheduled a conference call to provide further insights
regarding the financial results and to respond to investor questions, today,
Tuesday, March 28 at 4:30 p.m. (EDT). The dial-in number is:
0-000-000-0000
Reservation #: 14794429
The conference will be recorded and will be available for replay for 24 hours
beginning at 6:30 p.m. The dial-in and reservation numbers are:
1-800-633-8284
Reservation #: 14794429
The conference call can also be accessed through the Internet at Vcall
(xxx.xxxxx.xxx).
About The Netplex Group, Inc.
Netplex (Nasdaq: NTPL) (xxx.xxxxxxxxxxxx.xxx) creates e-business solutions that
combine industry-specific business strategies; interactive digital marketing;
user-centric applications and data systems; and secure, high-performance
Internet systems infrastructure. Netplex's complete spectrum of "industrial
strength" e-solutions positions customers with vision, confidence, and
continuing competitive advantage.
About Contractor's Resources
Contractor's Resources ("CR") is a business-to-business (B2B) service designed
to provide the financial infrastructure, resources, and business services that
help Information Technology (IT) professionals build careers as independent
contractors. Launched by Netplex in 1999 as an integrated online service under
the brand name Techcellence(TM), Contractor's Resources serves as a "virtual
corporate office" for its member contractors by providing the services of a full
corporate administration staff. These services include contract review, time
sheet administration, billing and collections, health benefits, retirement
plans, wealth-building financial strategies, and tax administration.
Netplex and the Netplex logo are trademarks of The Netplex Group, Inc.
Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing are "forward-looking statements" (within
the meaning of the Private Securities Litigation Reform Act of 1995) that
involve a number of risks and uncertainties. It is possible that the assumptions
made by management--including, but not limited to, those relating to contract
awards, service offerings, market opportunities, results, performance or
expectations--may not materialize. Actual results may differ materially from
those projected or implied in any forward-looking statements. In addition to the
above factors, other important factors including the risks associated with
unforeseen technical difficulties, the ability to meet customer requirements,
market acceptance of service offerings, changes in technology and standards,
dependencies on key employees, customer satisfaction, availability of technical
talent, dependencies on certain technologies, delays, market acceptance and
competition, as well as other risks described from time to time in the Company's
filings with the Securities Exchange Commission, press releases, and other
communications.
# # #
46
Consolidated Operating Results by Segment
47
Year Ended December 31,
----------------------------------------------
1999 1998 1997
-------------- -------------- --------------
Operating revenues
e-Information Services $ 11,044,166 $ 3,533,025 $ --
-------------- -------------- --------------
e-Infrastructure Services 20,437,959 17,459,183 6,346,530
e-Infrastructure Product Resales 17,679,075 5,406,410 2,073,254
-------------- -------------- --------------
e-infrastructure 38,117,034 22,865,593 8,419,784
-------------- -------------- --------------
e-Business Solutions 49,161,200 26,398,618 8,419,784
Contractor's Resources 38,624,064 34,880,542 32,048,350
-------------- -------------- --------------
Operating revenues 87,785,264 61,279,160 40,468,134
-------------- -------------- --------------
Gross profit
e-Information Services 5,442,115 1,690,505 --
-------------- -------------- --------------
e-Infrastructure Services 5,915,833 5,468,254 2,337,358
e-Infrastructure Product Resales 4,184,097 1,511,650 949,518
-------------- -------------- --------------
e-infrastructure 10,099,930 6,979,904 3,286,876
-------------- -------------- --------------
e-Business Solutions 15,542,045 8,670,409 3,286,876
Contractor's Resources 1,373,887 1,324,682 1,096,104
-------------- -------------- --------------
Gross profit 16,915,932 9,995,091 4,382,980
-------------- -------------- --------------
Gross profit percentage
e-Information Services 49.3% 47.8% --
-------------- -------------- --------------
e-Infrastructure Services 28.9% 31.3% 36.8%
e-Infrastructure Product Resales 23.7% 28.0% 45.8%
-------------- -------------- --------------
e-infrastructure 26.5% 30.5% 39.0%
-------------- -------------- --------------
e-Business Solutions 31.6% 32.8% 39.0%
Contractor's Resources 3.6% 3.8% 3.4%
-------------- -------------- --------------
Gross profit percentage 19.3% 16.3% 10.8%
-------------- -------------- --------------
Operating Expenses
e-Information Services 3,305,752 709,826 --
e-Infrastructure Services and Product Resales 7,784,245 6,715,607 3,166,492
-------------- -------------- --------------
e-Business Solutions 11,089,997 7,425,433 3,166,492
Contractor's Resources 3,086,904 1,144,143 1,169,120
-------------- -------------- --------------
Operating expenses 14,176,901 8,569,576 4,335,612
-------------- -------------- --------------
Operating income
e-Information Services 2,136,363 1,299,363 --
e-Infrastructure Services and product Resales 2,315,685 264,297 (829,134)
-------------- -------------- --------------
e-Business Solutions 4,452,048 1,563,660 (829,134)
Contractor's Resources (1,713,017) 180,539 (73,016)
-------------- -------------- --------------
Operating income 2,739,031 1,744,199 (902,150)
-------------- -------------- --------------
Corporate Expenses 5,530,469 3,055,308 1,480,453
-------------- -------------- --------------
EBITDA (2,791,438) (1,311,109) (2,382,603)
Interest, taxes, depreciation
& amortization 4,632,385 1,237,615 491,000
-------------- -------------- --------------
Net operating income(loss) $ (7,423,823) $ (2,548,724) $ (2,873,603)
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49
THE NETPLEX GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
Assets 1999 1998
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Current assets:
Cash and cash equivalents $ 4,220,148 $ 870,465
accounts receivable, net of allowance for doubtful
accounts of $342,000 and $589,000, respectively 12,513,823 11,654,743
Prepaid expenses and other current assets 923,762 772,242
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Total current assets 17,657,733 13,297,450
Property and equipment, net 1,891084 1,704,975
Other assets 775,290 213,174
Goodwill and other intangible assets, net 6,092,610 5,435,024
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Total assets $ 26,416,717 $ 20,650,623
============== =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,294,404 $ 2,545,730
Line of credit 5,126,245 4,041,000
Notes payable - 300,000
Accrued expenses and other current liabilities 9,305,229 6,418,326
Capital lease obligation, current portion 107,890 97,315
Deferred revenues 193,262 835,827
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Total current liabilities 18,027,030 14,238,198
Obligation for non-compete agreement 850,000 --
Capital lease obligations, net of current portion 195,504 57,901
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Total liabilities 19,072,534 14,296,099
Commitments and contingencies
-------------- -------------
Minority interest in subsidiary 481,877 --
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Stockholders' equity:
Preferred Stock:
Class A Cumulative, $.01 par value, 2,000,000 shares authorized, 109,961 and
987,753 shares outstanding at December 31, 1999 and
1998 respectively 1,099 9,875
Class B, $.01 par value; 1,500,000 shares authorized, 643,770 shares
issued and outstanding at December 31, 1998 -- 6,438
Class C Cumulative, $.01 par value; 2,500,000 shares authorized;
1,500,000 share issued and outstanding at December 31, 1999 and
1998, respectively 15,000 15,000
Common Stock: $.001 par value, 40,000,000 shares authorized,
16,137,250 and 10,204,735 shares Issued and outstanding at
December 31, 1999 and 1998, respectively 16,137 10,204
Additional paid in capital 21,762,418 13,821,531
Accumulated deficit (14,932,347) (7,508,524)
-------------- -------------
Total stockholders' equity 6,862,306 6,354,524
-------------- -------------
Total liabilities and stockholders' equity $ 26,416,717 $ 20,650,623
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50
