EXHIBIT 10.12
THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANY
STATE, AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY, AND NOT WITH A VIEW TO
THE DISTRIBUTION THEREOF. EXCEPT AS STATED IN THE SUBSCRIPTION AGREEMENT DATED
AS OF DECEMBER __, 1998, PURSUANT TO WHICH SUCH SECURITIES WERE ISSUED, SUCH
SECURITIES MAY NOT BE SOLD, PLEDGED OR TRANSFERRED UNLESS THERE ARE EFFECTIVE
REGISTRATION STATEMENTS UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH
MAY BE COUNSEL FOR THE COMPANY), REASONABLY SATISFACTORY IN FORM AND CONTENT TO
THE COMPANY, STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES
LAWS.
VALUE AMERICA, INC.
No. 9016
WARRANT TO PURCHASE
3,000 SHARES OF
COMMON STOCK
This certifies that for value received Xxxxxxx Xxxxxxxx, an individual, or
registered its assigns ("Holder") is entitled, subject to the terms set forth
below, at any time from and after December 18, 1999 (the "Vesting Date") and
before 5:00 P.M., Eastern Time, on the Termination Date (as such term is defined
below) to purchase from VALUE AMERICA, INC., a Virginia corporation (the
"Company"), 3,000 shares of the common stock, without par value per share (the
"Common Stock"), of the Company, as constituted on the Vesting Date, upon
surrender hereof, at the principal office of the Company referred to below, with
a duly executed subscription form in the form attached hereto as Exhibit A and
simultaneous payment therefor in lawful money of the United States or otherwise
as hereinafter provided, at the Purchase Price (as such term is defined below).
The number and character of such shares of Common Stock are subject to further
adjustment as provided below.
1. Definitions. As used herein, the terms indicated below shall have the
following meaning:
"Act" shall mean the Securities Act of 1933, as amended.
"Change-in-Control Transaction" shall mean (i) the acquisition by any
unrelated person of beneficial ownership (as that term is used for purposes of
the Act) of 50% or more of the then outstanding shares of Common Stock of the
Company or the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors ("Voting
Securities"). The term "unrelated person" means any person another than (x) the
Company and its subsidiaries, (y) an employee benefit plan or related trust of
the Company, and (z) a person who acquires stock of the Company pursuant to an
agreement with the Company that is approved by the Company's Board of Directors
in advance of the acquisition. For purposes of this subsection, a "person" means
an individual, entity or group, as that term is used for purposes of the Act; or
(ii) approval by the shareholders of the Company of (x) a reorganization, merger
or consolidation with respect to which the individuals and entities who were the
respective beneficial owners of the Voting Securities immediately before such
reorganization, merger or consolidation do not following such transaction
beneficially own, directly or indirectly, more than 50% of the then outstanding
shares of Voting Securities of the Corporation resulting from such
reorganization, merger or consolidation; (y) a complete liquidation or
dissolution of the Company, or (z) any sale, lease, exchange or other
disposition of all or substantially all of the Company's assets to any entity
other than a wholly-owned subsidiary of the Company.
"Common Stock" shall mean the common stock, without par value, of the
Company, and, unless the context otherwise requires, the stock and other
securities and property at the time receivable upon the exercise of this
Warrant.
"Company" shall mean Value America, Inc., a Virginia corporation.
"Evaluation Date" shall mean the earlier of (i) December 31, 1999 or (ii)
the closing date of the first Change-in-Control Transaction occurring after
December 18, 1998.
"Fair Market Value" shall mean, as of any date, (i) if a security is listed
on a national securities exchange, the average of the closing prices as reported
for composite transactions during the 20 consecutive trading days preceding the
trading day immediately prior to such date or, if no sale occurred on a trading
day, then the mean between the closing bid and asked prices on such exchange on
such trading day, (ii) if a security is not so listed but is traded on the
Nasdaq National Market ("NNM"), the average of the closing prices as reported on
the NNM during the 20 consecutive trading days preceding the trading day
immediately prior to such date or, if no sale occurred on a trading day, then
the mean between the highest bid and lowest asked prices as of the close of
business on such trading day, as reported on the NNM or (iii) if a security is
not traded on a national securities exchange or the NNM otherwise traded
over-the-counter, the arithmetic average (for consecutive trading days) of the
mean between the highest bid and lowest asked prices as of the close of business
during the 20 consecutive trading days preceding the trading day immediately
prior to such date as quoted on the National Association of Securities Dealers
Automated Quotation system or an equivalent generally accepted reporting
service. If none of (i), (ii) or (iii) of the preceding sentence applies, "Fair
Market Value" shall mean, as of the date in question, the fair market value of a
security as determined by an investment banking firm of national repute selected
by the Company (with the Company bearing the expenses of such investment banking
firm).
"Holder" shall mean the initial purchaser of this Warrant or its registered
assigns.
"Issuance Date" shall mean December 18, 1998.
"Purchase Agreement" shall mean that certain Subscription Agreement, dated
as of December __, 1998, by and between the Company and the initial holder of
this Warrant.
"Purchase Price" shall mean $10.00 per share of Common Stock.
"Stock Purchase Rights" shall mean any options, warrants or subscription
rights entitling a holder to purchase Common Stock or any security convertible
into or exchangeable for Common Stock or to purchase any other stock or security
of the Company.
"Termination Date" shall mean the earlier of (i) December 18, 2008 or (ii)
the date that is one calendar year following the closing the Company's
firmly-underwritten, initial public offering of Common Stock.
"Vesting Date" shall mean December 18, 1999.
"Warrant" or "Warrants" shall mean this warrant and any warrants delivered
in substitution or exchange therefor as provided herein.
2. Exercise. This Warrant may be exercised at any time or from time to time
from and after the Vesting Date and before 5:00 P.M., Eastern Time, on the
Termination Date on any business day, for the full number of shares of Common
Stock called for hereby, by surrendering it at the principal office of the
Company, at 0000 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxxxxxxx, Xxxxxxxx 00000, with the
subscription form duly executed, together with payment in an amount equal to (a)
the number of shares of Common Stock called for on the face of this Warrant
(without giving effect to any further adjustment herein) multiplied (b) by the
Purchase Price. Payment of this amount may be made (1) by payment in cash or by
corporate check, payable to the order of the Company, or (2) by the Company not
issuing that number of shares of Common Stock subject to this Warrant having a
Fair Market Value (as hereinafter defined) on the date of exercise equal to such
sum, as Holder may determine. This Warrant may be exercised for less than the
full number of shares of Common Stock at the time called for hereby, except that
the number of shares receivable upon the exercise of this Warrant as a whole,
and the sum payable upon the exercise of this Warrant as a whole, shall be
proportionately reduced. Upon a partial exercise of this Warrant in accordance
with the terms hereof, this Warrant shall be surrendered, and a new Warrant of
the same tenor and for the purchase of the number of such shares not purchased
upon such exercise shall be issued by the Company to Holder without any charge
therefor. A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of such
shares of record as of the close of business on such date. As soon as
practicable on or after such date, the Company shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of full shares of Common Stock issuable upon such exercise, together
with cash, in lieu of any fraction of a share, equal to such fraction of the
then Fair Market Value on the date of exercise of one full share of Common
Stock.
3. Payment of Taxes. All shares of Common Stock issued upon the exercise of
a Warrant shall be validly issued, fully paid and non-assessable, and the
Company shall pay all taxes and other governmental charges (other than any
application income taxes to be paid by Holder) that may be imposed in respect of
the issue or delivery thereof.
4. Transfer and Exchange. This Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company maintained for
such purpose at its principal office referred to above by Holder in person or by
duly authorized attorney, upon surrender of this Warrant together with a
completed and executed assignment form in the form attached as Exhibit B and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. Upon any partial transfer, the Company will issue and
deliver to Holder a new Warrant or Warrants with respect to the shares of Common
Stock not so transferred. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant when endorsed in blank
shall be deemed negotiable and that when this Warrant shall have been so
endorsed, the holder hereof may be treated by the Company and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented hereby, or to the
transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered Holder hereof as the owner for all purposes.
This Warrant is exchangeable at such office for Warrants for the same
aggregate number of shares of Common Stock, each new Warrant to represent the
right to purchase such number of shares as the Holder shall designate at the
time of such exchange.
5. A. Adjustment for Dividends in Other Stock and Property;
Reclassifications. In case at any time or from time to time the holders of the
Common Stock (or any shares of stock or other securities at the time receivable
upon the exercise of this Warrant) shall have received, or, on or after the
record date fixed for the determination of eligible shareholders, shall have
become entitled to receive, without payment therefor,
(1) other or additional stock or other securities or property (other
than cash) by way of dividend,
(2) any cash or other property paid or payable out of any source other
than retained earnings (determined in accordance with generally accepted
accounting principles), or
(3) other or additional stock or other securities or property
(including cash) by way of stock-split, spin-off, reclassification,
combination of shares or similar corporate rearrangement,
(other than (x) additional shares of Common Stock or any other stock or
securities into which such Common Stock shall have been changed, (y) any other
stock or securities convertible into or exchangeable for such Common Stock or
such other stock or securities or (z) any Stock Purchase Rights (as hereinafter
defined), issued as a stock dividend or stock-split, adjustments in respect of
which shall be covered by the terms of Section 5.C, 5.D, 5.E or 5.H), then and
in each such case Holder, upon the exercise hereof as provided in Section 1,
shall be entitled to receive the amount of stock and other securities and
property (including cash in the cases referred to in clauses (2) and (3) above)
which such Holder would hold on the date of such exercise if on the Vesting Date
Holder had been the holder of record of the number of shares of Common Stock
called for on the face of this Warrant, as adjusted in accordance with the first
paragraph of this Warrant, and had thereafter, during the period from the
Issuance Date to and including the date of such exercise, retained such shares
and/or all other or additional stock and other securities and property
(including cash in the cases referred to in clause (2) and (3) above) receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by Sections 5.A and 5.B.
B. Adjustment for Reorganization, Consolidation and Merger. In case of any
reorganization of the Company (or any other corporation the stock or other
securities of which are at the time receivable on the exercise of this Warrant)
after the Issuance Date, or in case, after such date, the Company (or any such
other corporation) shall consolidate with or merge into another corporation or
entity or convey all or substantially all its assets to another corporation or
entity, then and in each such case Holder, upon the exercise hereof as provided
in Section 1 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the stock or other securities and property receivable upon the exercise of this
Warrant prior to such consummation, the stock or other securities or property to
which such Holder would have been entitled upon such consummation if Holder had
exercised this Warrant immediately prior thereto, all subject to further
adjustment as provided in Sections 5.A, 5.B, 5.C, 5.D and 5.E; in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
such consummation.
C. Adjustment for Certain Dividends and Distributions. If the Company at
any time or from time to time makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event
(1) the Purchase Price then in effect shall be decreased as of the
time of such issuance or, in the event such record date is fixed, as of the
close of business on such record date, by multiplying the Purchase Price
then in effect by a fraction (A) the numerator of which is the total number
of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date, and (B)
the denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date as the case may be, plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Purchase Price shall be recomputed accordingly as
of the close of business on such record date, and thereafter the Purchase
Price shall be adjusted pursuant to this Section 5.C as of the time of
actual payment of such dividends or distributions; and
(2) the number of shares of Common Stock theretofore receivable upon
the exercise of this Warrant shall be increased, as of the time of such
issuance or, in the event such record date is fixed, as of the close of
business on such record date, in inverse proportion to the decrease in the
Purchase Price.
D. Stock Split and Reverse Stock Split. If the Company at any time or from
time to time effects a stock split or subdivision of the outstanding Common
Stock, the Purchase Price then in effect immediately before that stock split or
subdivision shall be proportionately decreased and the number of shares of
Common Stock theretofore receivable upon the exercise of this Warrant shall be
proportionately increased. If the Company at any time or from time to time
effects a reverse stock split or combines the outstanding shares of Common Stock
into a smaller number of shares, the Purchase Price then in effect immediately
before that reverse stock split or combination shall be proportionately
increased and the number of shares of Common Stock theretofore receivable upon
the exercise of this Warrant shall be proportionately decreased. Each adjustment
under this Section 5.D shall become effective at the close of business on the
date the stock split, subdivision, reverse stock split or combination becomes
effective.
E. No Dilution or Impairment. The Company will not, by amendment of its
certificate of incorporation or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrants, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Warrants
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any share of stock
receivable upon the exercise of the Warrants above the amount payable therefor
upon such exercise, and (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and non-assessable shares upon the exercise of all Warrants at the time
outstanding.
F. Accountants' Certificate as to Adjustment. In each case of an adjustment
in the number of shares of Common Stock or the number or type of other stock,
securities or property receivable on the exercise of the Warrants, the Company
at its expense shall cause independent public accountants of recognized standing
selected by the Company (who may be the independent public accountants then
auditing the books of the Company) to compute such adjustment in accordance with
the terms of the Warrants and prepare a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based.
The Company will forthwith mail a copy of each such certificate to each holder
of a Warrant at the time outstanding.
G. Notices of Record Date. In case
(1) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend or
other distribution, or any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any other right,
or
(2) of any capital reorganization of the Company, any reclassification
of the capital stock of the Company, any consolidation or merger of the
Company with or into another corporation, or any conveyance of all or
substantially all of the assets of the Company to another corporation, or
(3) of any voluntary dissolution, liquidation or winding-up of the
Company,
then, and in each such case, the Company will mail or cause to be mailed to each
holder of a Warrant at the time outstanding a notice specifying, as the case may
be, (a) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (b) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is expected to take place, and the time, if any is to be fixed, as of
which the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of the Warrants) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up, such
notice shall be mailed at least 30 days prior to the date therein specified.
H. Stock Purchase Rights. If at any time or from time to time, the Company
grants or issues Stock Purchase Rights to the record holders of the Common
Stock, the Holder shall be entitled to acquire, upon the terms applicable to
such Stock Purchase Rights, the aggregate Stock Purchase Rights which Holder
could have acquired if Holder had been the record holder of the maximum number
of shares of Common Stock issuable upon exercise of this Warrant on both (x) the
record date for such grant or issuance of such Stock Purchase Rights, and (y)
the date of the grant or issuance of such Stock Purchase Rights.
6. Loss or Mutilation. Upon receipt by the Company of evidence satisfactory
to it (in the exercise of reasonable discretion) of the ownership of and the
loss, theft, destruction or mutilation of any Warrant and (in the case of loss,
theft or destruction) of indemnity satisfactory to it (in the exercise of
reasonable discretion), and (in the case of mutilation) upon surrender and
cancellation thereof, the Company will execute and deliver in lieu thereof a new
Warrant of like tenor.
7. Reservation of Common Stock. The Company shall at all times reserve and
keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants.
8. Purchase Agreement. This Warrant has been issued pursuant to the
Purchase Agreement and the transferability of this Warrant and the Common Stock
issuable upon the exercise hereof are subject to the Purchase Agreement.
9. Notices. All notices and other communications from the Company to the
holder of this Warrant shall be mailed by first-class registered or certified
mail, postage prepaid, to the address furnished to the Company in writing by the
last holder of this Warrant who shall have furnished an address to the Company
in writing.
10. Change; Waiver. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. Headings. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.
12. Law Governing. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the Commonwealth of
Virginia without reference to the choice of law provisions of any jurisdiction.
IN WITNESS WHEREOF, the undersigned has executed this warrant as of
December 31, 1998
VALUE AMERICA, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: EVP & CFO
EXHIBIT A TO WARRANT
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant and purchases _______ of the number of shares of Common Stock of Value
America, Inc., purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant.
DATED:__________________
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(Signature of Registered Owner)
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(Street Address)
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(City) (State) (Zip)
EXHIBIT B TO WARRANT
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:
Name of Assignee Address No. of Shares
and does hereby irrevocably constitute and appoint __________________________
Attorney to make such transfer on the books of Value America, Inc., maintained
for the purpose, with full power of substitution in the premises.
DATED:__________________
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(Signature)
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(Witness)
