THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
March 3, 2000
______ shares Warrant No. ____
FORM OF
NET VALUE HOLDINGS, INC.
STOCK PURCHASE WARRANT
Registered Owner: __________
This certifies that, for value received, Net Value Holdings, Inc., a
Delaware corporation (the "Company"), grants the following rights to the
Registered Owner, or assigns, of this Warrant:
1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement. As
used in this Warrant, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms of "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
"Appraiser" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
Delaware generally are authorized or required by law or other government actions
to close.
"Cashless Exercise" has the meaning assigned to it in Section 6(b)
hereof.
"Change of Control Transaction" means the occurrence of any of (i) the
merger or consolidation of the Company with or into another entity, unless the
holders of the Company's securities immediately prior to such transaction or
series of transactions continue to hold at least 50% of such securities
following such transaction or series of transactions, (ii) a sale, conveyance,
lease, transfer or disposition of all or substantially all of the assets of the
Company in one or a series of related transactions or (iii) the execution by the
Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i) or (ii).
"Closing" and "Closing Date" have the meanings set forth in Section 1.3
of the Purchase Agreement.
"Common Stock" means the shares of the Company's Common Stock, par
value $.001 per share.
"Common Stock Deemed Outstanding" means, at any given time, the sum of
the number of shares of Common Stock actually outstanding at such time plus the
number of shares of Common Stock issuable upon the exercise of all options,
rights and warrants and the conversion or exchange of convertible or
exchangeable securities outstanding at such time, whether or not such options,
rights, or warrants, or convertible or exchangeable securities are actually
exercisable, convertible or exchangeable at such time.
"Company" means Net Value Holdings, Inc., a Delaware corporation.
"Excluded Securities" means (i) shares of Common Stock issued or
issuable pursuant to the Purchase Agreement and the Warrants, (ii) shares of
Common Stock deemed to have been issued by the Company in connection with a
transaction set forth on Schedule 5.23 to the Purchase Agreement or (iii) shares
of Common Stock (including options and warrants) issuable upon the exercise of
any options or warrants outstanding on the date hereof and listed in Schedule
2.5(b) of the Purchase Agreement.
"Exercise Period" has the meaning assigned to it in Section 5 hereof.
"Exercise Price" has the meaning assigned to it in Section 4 hereof.
"Mandatory Exercise" has the meaning assigned to it in Section 8
hereof.
"Mandatory Exercise Date" has the meaning assigned to it in Section 8
hereof.
"Mandatory Exercise Period" has the meaning assigned to it in Section 8
hereof.
"Mandatory Exercise Price" has the meaning assigned to it in Section 8
hereof
"OTCBB" means the OTC Bulletin Board of the National Association of
Securities Dealers, Inc.
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"Per Share Market Value" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on (a) the OTCBB, as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (b) such other Subsequent Market on which the Common
Stock is then listed or quoted or, if there is no such price on such date, then
the closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (ii) if the Common Stock is not then publicly traded the
fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the registered owners of a majority of the Underlying
Shares and Warrants then outstanding; provided, however, that, after receipt of
the determination by such Appraiser, the Company shall have the right to select,
in good faith, an additional Appraiser, in which case the fair market value
shall be equal to the average of the determinations by each such Appraiser; and
provided, further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Purchase Agreement" means that certain Series C Preferred Stock
Purchase Agreement, dated March 3, 2000, among the Company and the Purchasers.
"Purchasers" has the meaning set forth in the Purchase Agreement.
"Registered Owner" means the Person identified on the face of this
Warrant as the registered owner hereof or their assigns.
"Registration Statement" has the meaning set forth in Section 5.20 of
the Purchase Agreement.
"Subsequent Market" means the NASDAQ SmallCap Market, the NASDAQ
National Market, the New York Stock Exchange or the American Stock Exchange.
"Trading Day(s)" means any day on which the primary market on which
shares of Common Stock are listed is open for trading.
"Underlying Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
"Warrant(s)" means the warrants issuable at the Closing, including this
Warrant and the Compensation Warrants (as defined in the Purchase Agreement), if
any.
"Warrant Shares" has the meaning assigned to it in Section 3 hereof.
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2. Issue. Upon tender to the Company pursuant to Section 6 hereof, the
Company, within three (3) Business Days of the date thereof, shall issue to the
Registered Owner, or its designee, up to the number of shares specified in
Section 3 hereof of fully paid and nonassessable shares of Common Stock that the
Registered Owner, or assigns, is otherwise entitled to purchase.
3. Number of Shares. The total number of shares of Common Stock that
the Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant is _____ shares (the "Warrant Shares"), subject to
adjustment from time to time as provided herein. The Company shall at all times
reserve and hold available out of its authorized and unissued shares of Common
Stock or other securities, as the case may be, sufficient shares of Common Stock
to satisfy all conversion, exercise and purchase rights represented by
outstanding convertible securities, options and warrants, including this
Warrant. The Company covenants and agrees that all shares of Common Stock that
may be issued upon the exercise of this Warrant shall, upon issuance, be duly
and validly issued, fully paid and nonassessable, free from all taxes, liens and
charges with respect to the purchase and the issuance of the shares, shall not
have any legend or restrictions on resale, expect as required by Section 7.3 of
the Purchase Agreement and, subsequent to the effectiveness of the Registration
Statement (as defined in the Purchase Agreement), shall be freely tradable.
4. Exercise Price. The initial per share exercise price of this
Warrant, representing the price per share at which each share of Common Stock
issuable upon exercise of this Warrant may be purchased, is $26.58, subject to
adjustment from time to time pursuant to the provisions of Section 7 hereof (the
"Exercise Price").
5. Exercise Period. This Warrant may be exercised, in whole or in part,
from the Closing Date up to and including March 2, 2003 (3 years less 1 day)
(the "Exercise Period"). If not exercised during this period, this Warrant and
all rights granted under this Warrant shall expire and lapse.
6. Tender; Issuance of Certificates.
a. This Warrant may be exercised, in whole or in part, by (a)
delivery of the applicable Exercise Price for the number of Warrant
Shares in respect of which this Warrant is exercisable, (b) delivery of
a duly executed Warrant Exercise Form, a copy of which is attached to
this Warrant as Exhibit A, properly executed by the Registered Owner,
or assigns, of this Warrant and (c) surrender of this Warrant. The
number of Warrant Shares so purchased shall be designated on the
Warrant Exercise Form and shall be deemed to be issued to the
Registered Owner as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Warrant Exercise
Form shall have been delivered and payment shall have been made for
such shares as set forth above. The payment and Warrant Exercise Form
must be delivered to the registered office of the Company or of the
Company's transfer agent, either in person or as set for in Section 13
hereof.
b. In addition to the exercise of all or a part of this
Warrant by payment of the Exercise Price in cash as provided above, and
in lieu of such payment, the Registered Owner shall have the right to
effect a cashless exercise (a "Cashless Exercise"). In the event of a
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Cashless Exercise the Registered Owner may exercise this Warrant in
whole or in part by surrendering this Warrant in exchange for the
number of shares of Common Stock equal to the product of (i) the number
of shares as to which this Warrant is being exercised multiplied by
(ii) a fraction, the numerator of which is the Per Share Market Value
on such date less the Exercise Price then in effect and the denominator
of which is the Per Share Market Value on such date (in each case
adjusted for fractional shares as herein provided).
c. In lieu of physical delivery of this Warrant, provided the
Company's transfer agent is participating in the Depositary Trust
Company ("DTC") Fast Automated Securities Transfer (FAST) program, upon
request of the Registered Owner and in compliance with the provisions
hereof, the Company shall use its best efforts to cause its transfer
agent to electronically transmit the Warrant Shares to the Registered
Owner by crediting the account of the Registered Owner's Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system. The
time period for delivery described herein shall apply to any such
electronic transmittals.
d. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Warrant
Exercise Form, and any cash payments due under Section 15 hereof shall
be delivered to the Registered Owner, or its designee, within three (3)
Business Days after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be
requested by the Registered Owner and shall be registered in the name
of the Registered Owner or such other name as shall be designated by
such Registered Owner. If this Warrant shall have been exercised only
in part then, unless this Warrant has expired, the Company shall, at
its expense and at the time of delivery of such certificates, deliver
to the Registered Owner a new Warrant representing the number of shares
with respect to which this Warrant shall not then have been exercised.
7. Adjustment of Exercise Price.
a. Common Stock Dividends; Common Stock Splits;
Reclassification. If the Company, at any time while this Warrant is
outstanding, (a) shall pay or make a stock dividend on its Common Stock
in shares of Common Stock, (b) subdivide outstanding shares of Common
Stock into a larger number of shares or (c) issue by reclassification
of shares of Common Stock any shares of capital stock of the Company,
then (i) the Exercise Price shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding before such event and the denominator of which shall be the
number of shares of Common Stock outstanding after such event and (ii)
the number of Warrant Shares shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such event. Any adjustment made pursuant to this Section 7(a)
shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or
distribution or, in the case of a subdivision or re-classification,
shall become effective immediately after the effective date thereof.
5
b. Rights; Options; Warrants or Other Securities. If the
Company, at any time while this Warrant is outstanding, shall fix a
record date for the issuance of rights, options, warrants or other
securities (collectively, "Rights") to the holders of its Common Stock
entitling them to subscribe for or purchase, convert into, exchange for
or otherwise acquire shares of Common Stock, or any stock or other
securities convertible into or exchangeable for Common Stock for no
consideration or for a price per share less than the Exercise Price,
then the Exercise Price shall be multiplied by a fraction, the
numerator of which shall be (i) the number of shares of Common Stock
outstanding immediately prior to such record date plus (ii) the number
of shares of Common Stock which the aggregate consideration received by
the Company for the issuance of such Rights and the aggregate
consideration receivable by the Company upon exercise, conversion,
exchange or other acquisition of Common Stock pursuant to such rights
would purchase at the Exercise Price, and the denominator of which
shall be (i) the number of shares of Common Stock outstanding
immediately prior to such record date plus (ii) the number of
additional shares of Common Stock offered for subscription, purchase,
conversion, exchange or acquisition, as the case may be, pursuant to
such Rights. Such adjustment shall be made whenever such rights,
options, warrants or other securities are issued, and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such rights, options, warrants or
other securities. However, upon the expiration of any such Rights, the
issuance of which resulted in an adjustment in the Exercise Price
pursuant to this Section 6(b), if all or any portion of such Rights
shall not have been exercised, the Exercise Price shall immediately
upon such expiration be increased to the price which it would have been
after the issuance of such Rights on the basis of the number of shares
of Common Stock (if any) actually purchased upon the exercise of such
Rights actually exercised.
c. Subscription Rights. If the Company, at any time while this
Warrant is outstanding, shall fix a record date for the distribution to
holders of its Common Stock evidence of its indebtedness or assets or
rights, options, warrants or other securities entitling them to
subscribe for or purchase, convert into, exchange for or otherwise
acquire any security (excluding those referred to in Sections 7(a) and
(b) above), then in each such case the Exercise Price at which this
Warrant shall thereafter be exercisable shall be determined by
multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Per
Share Market Value on such record date less the then fair market value
at such record date of the portion of such assets, evidence of
indebtedness, rights, options, warrants or other securities so
distributed applicable to one outstanding share of Common Stock as
determined by the Board of Directors in good faith, and the denominator
of which shall be the Per Share Market Value as of such record date;
provided, however, that in the event of a distribution exceeding ten
percent (10%) of the net assets of the Company, such fair market value
shall be determined by an Appraiser selected in good faith by the
registered owners of a majority of the Warrants and Underlying Shares
then outstanding; and provided, further, that the Company, after
receipt of the determination by such Appraiser shall have the right to
select in good faith an additional Appraiser meeting the same
qualifications, in which case the fair market value shall be equal to
the average of the determinations by each such Appraiser. Such
adjustment shall be made whenever any
6
such distribution is made and shall become effective immediately after
the record date mentioned above.
d. Record Date. If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date will be
deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
e. Notice of Adjustment. Whenever the Exercise Price is
adjusted pursuant to this Section 7 the Company shall promptly deliver
to the Registered Owner a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Such notice shall be signed by the chairman,
president or chief financial officer of the Company.
f. Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Company, and the disposition of any shares so
owned or held shall be considered an issue or sale of Common Stock by
the Company.
g. Change of Control; Compulsory Share Exchange. In case of
(A) any Change of Control Transaction or (B) any compulsory share
exchange pursuant to which the Common Stock is converted into other
securities, cash or property (each, an "Event"), lawful provision shall
be made so that the Registered Owner shall have the right thereafter to
exercise this Warrant for shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common
Stock following such Event, and the Registered Owner shall be entitled
upon such Event to receive such amount of shares of stock and other
securities, cash or property as the shares of the Common Stock of the
Company into which this Warrant could have been exercised immediately
prior to such Event (without taking into account any limitations or
restrictions on the exercisability of this Warrant) would have been
entitled; provided, however, that in the case of a transaction
specified in (A), above, in which holders of the Company's Common Stock
receive cash, the Registered Owner shall have the right to exercise the
Warrant for such number of shares of the surviving company equal to the
amount of cash into which this Warrant is then exercisable, divided by
the fair market value of the shares of the surviving company on the
effective date of such Event. The terms of any such Event shall include
such terms so as to continue to give to the Registered Owner the right
to receive the securities, cash or property set forth in this Section
7(g) upon any exercise or redemption following such Event. In any such
case appropriate adjustment shall be made in the application of the
provisions of this Section 7 with respect to the rights of the
Registered Owner after such transaction to the end that the provisions
of this Section 7 (including adjustment of the Exercise Price then in
effect and the number of Warrant Shares issuable upon exercise of this
Warrant) shall be applicable after that Event and be as nearly
7
equivalent as practicable. In the case of an Event specified in (A),
above, the successor corporation or other entity (if other than the
Company) resulting from such Event, or the Person acquiring the
properties and assets, or such other controlling corporation or entity
as may be appropriate, shall expressly assume the obligation to deliver
the cash, securities or other property which the Registered Owner is
entitled to receive hereunder. The provisions of this Section 7(g)
shall similarly apply to successive Events.
h. Issuance's Below Exercise Price. If the Company, at any
time while this Warrant is outstanding:
(i) issues or sells, or is deemed to have issued or
sold, any Common Stock (other than any Excluded Securities);
(ii) in any manner grants, issues or sells any
rights, options, warrants, options to subscribe for or to
purchase Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (other than
any Excluded Securities) (such rights, options or warrants
being herein called "Options" and such convertible or
exchangeable stock or securities being herein called
"Convertible Securities"); or
(iii) in any manner issues or sells any Convertible
Securities (other than Excluded Securities);
for (a) with respect to paragraph (h)(i), above, a price per share, or
(b) with respect to paragraphs h(ii) or h(iii), above, a price per
share (including the consideration per share paid on issuance of the
Option or Convertible Securities) for which Common Stock issuable upon
the exercise of such Options or upon conversion or exchange of such
Convertible Securities is, less than the Exercise Price in effect
immediately prior to such issuance, sale or grant, then, immediately
after such issuance, sale or grant, the Exercise Price shall be reduced
to the amount determined by dividing (1) the sum of (x) the product
derived by multiplying the Exercise Price in effect immediately prior
to such issue or sale by the number of shares of Common Stock Deemed
Outstanding immediately prior to such issue or sale, plus (y) the
consideration, if any, received or deemed to have been received by the
Company upon such issue or sale, by (2) the number of shares of Common
Stock Deemed Outstanding immediately after such issue or sale. No
modification of the issuance terms shall be made upon the actual
issuance of such Common Stock upon exercise, conversion or exchange of
such Options or Convertible Securities. If there is a change at any
time in (i) the exercise price provided for in any Options, (ii) the
additional consideration, if any, payable upon the issuance, conversion
or exchange of any Convertible Securities or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for
Common Stock, then immediately after such change the Exercise Price
shall be adjusted 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 exercise price, additional
consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold; provided that
8
no adjustment shall be made if such adjustment would result in an
increase of the Exercise Price then in effect. However, upon the
expiration of any such Options or Convertible Securities, the issuance
of which resulted in an adjustment in the Exercise Price pursuant to
this Section 6(h), if all or any portion of any such Options or
Convertible Securities shall not have been exercised, the Exercise
Price shall immediately upon such expiration be increased to the price
which it would have been after the issuance of such Options or
Convertible Securities on the basis of the Company offering for
subscription, purchase, conversion, exchange or acquisition only that
number of shares of Common Stock (if any) actually purchased upon the
exercise of such Rights actually exercised.
i. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 7(h), the
following shall be applicable:
(i) Calculation of Consideration Received. If any
Common Stock, Options or Convertible Securities are issued or
sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the net
amount received by the Company therefor, without deducting any
expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to
underwriters, dealers or others performing similar services in
connection with such issue or sale. In case any Common Stock,
Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration
other than cash received by the Company will be the fair value
of such consideration, except where such consideration
consists of securities listed or quoted on a national
securities exchange or national quotation system, in which
case the amount of consideration received by the Company will
be the arithmetic average of the closing sale price of such
security for the five (5) consecutive Trading Days immediately
preceding the date of receipt thereof. In case any Common
Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair
value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The
fair value of any consideration other than cash or securities
listed or quoted on a national securities exchange or national
quotation system will be determined jointly by the Company and
the registered owners of a majority of the Underlying Shares
and Warrants then outstanding. If such parties are unable to
reach agreement within ten (10) days after the occurrence of
an event requiring valuation (the "Valuation Event"), the fair
value of such consideration will be determined within
forty-eight (48) hours of the tenth (10th) day following the
Valuation Event by an Appraiser selected in good faith by the
Company and agreed upon in good faith by registered owners of
a majority of the Underlying Shares and Warrants then
outstanding. The determination of such Appraiser shall be
binding upon all parties absent manifest error.
(ii) Integrated Transactions. In case any Option is
issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated
9
transaction in which no specific consideration is allocated to
such Options by the parties thereto, the Options will be
deemed to have been issued for an aggregate consideration of
$.001.
j. Notice of Certain Events. If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock;
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common Stock;
(iii) the Company shall authorize the granting to the
holders of its Common Stock rights, options or warrants to
subscribe for or purchase any shares of capital stock of any
class or of any rights;
(iv) the approval of any shareholders of the Company
shall be required in connection with any reclassification of
the Common Stock or any Change of Control Transaction; or
(v) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the
affairs of the Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of exercise of this Warrant, and shall cause
to be delivered to the Registered Owner, at least 30 (thirty) calendar
days prior to the applicable record or effective date hereinafter
specified, a notice (provided such notice shall not include any
material non-public information) stating (a) the date on which a record
is to be taken for the purpose of such dividend, distribution,
redemption, or granting of options, rights or warrants, or if a record
is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (b) the date on which such
reclassification or Change of Control Transaction is expected to become
effective or close, and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their
shares of Common Stock for securities, cash or other property
deliverable in connection with such reclassification or Change of
Control Transaction; provided, however, that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect
the validity of the corporate action required to be specified in such
notice. Nothing herein shall prohibit the Registered Owner from
exercising this Warrant during the 30-day period commencing on the date
of such notice.
k. Rounding. All calculations under this Section 7 shall be
made to the nearest cent or the nearest l/l00th of a share, as the case
may be.
l. Other Events. If any event occurs that would adversely
affect the rights of the Registered Owner of this Warrant but is not
expressly provided for by Section 7 hereof
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(including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate
adjustment in the Exercise Price so as to protect the rights of the
Registered Owner; provided, however, that no such adjustment will
increase the Exercise Price.
m. Increase in Exercise Price. In no event shall any provision
in this Section 7 cause the Exercise Price to be greater than the
Exercise Price on the date of issuance of this Warrant.
8. Mandatory Exercise. If, at any time during the Exercise Period, the
Per Share Market Value equals or exceeds $39.87 (the "Mandatory Exercise Price")
for any period of thirty (30) consecutive Trading Days (ending no earlier than
the day that the Registration Statement has been declared effective by the
Securities and Exchange Commission) (the "Mandatory Exercise Period"), then so
long as (i) any Registration Statement required to be filed and be effective
pursuant to the Purchase Agreement is then in effect and (ii) the Company has a
sufficient number of authorized shares of Common Stock reserved for issuance
upon full exercise of the Warrants, the Registered Owner shall be required to
exercise this Warrant in full (the "Mandatory Exercise") in accordance with the
provisions of Section 6 hereof upon written notice from the Company of
satisfaction of the foregoing requirements. This Warrant shall be exercised
pursuant to the Mandatory Exercise on no later than the fifth (5th) Trading Day
following the receipt of such notice from the Company (such date that this
Warrant is exercised pursuant to the Mandatory Exercise, the "Mandatory Exercise
Date").
9. [INTENTIONALLY OMITTED.]
10. Registration on Company Books. This Warrant shall be numbered and
shall be registered upon issuance in a warrant register maintained the Company.
The Company may deem and treat the Registered Owner of this Warrant as the
absolute owner thereof, unless the Registered Owner shall have presented this
Warrant to the Company for transfer and the transferee shall have been entered
in the register as a subsequent holder. The ownership of this Warrant shall be
proven by such register, absent manifest error.
11. Registration Rights. The Company will undertake the registration of
the Common Stock into which this Warrant is exercisable at such times and upon
such terms pursuant to Section 5.20 of the Purchase Agreement.
12. Reservation of Underlying Shares; Listing. The Company covenants
that it will at all times reserve and keep available out of its authorized
shares of Common Stock, free from preemptive rights, solely for the purpose of
issue upon exercise of this Warrants as herein provided, such number of shares
of the Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants into Common Stock. 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 upon which
shares of Common Stock are then listed (subject to official notice of issuance
upon exercise of this Warrant) and shall maintain, so long as
11
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.
13. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 5:00 p.m.
Eastern time where such notice is to be received), or the first Business Day
following such delivery (if received after 5:00 p.m. Eastern time where such
notice is to be received) or (b) on the second Business Day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications are (i) if to the Company or the Company's
transfer agent to the address set forth in the Purchase Agreement (with copies
to the Company's counsel), and (ii) if to the Registered Owner to the addresses
set forth on the Purchase Agreement (with copies to the Registered Owner's
counsel) or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
14. Compliance With Governmental Requirements. The Company covenants
that if any shares of Common Stock required to be reserved for purposes of
exercise this Warrant requires registration with or approval of any governmental
authority under any federal or state law, or any national securities exchange,
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.
15. Fractional Shares. Upon any exercise hereunder, the Company shall
not be required to issue stock certificates representing fractions of shares of
Common Stock, but may if otherwise permitted make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
16. Payment of Tax Upon Issue of Transfer. The issuance of certificates
for shares of the Common Stock upon exercise of this Warrant shall be made
without charge to the Registered Owner hereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of this Warrant and the Company shall not be required to issue
or deliver such certificates unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.
17. Warrants Owned by Company Deemed Not Outstanding. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, warrants which are owned by the Company or
any other obligor thereof shall be disregarded and deemed not to be outstanding
for the purpose of any such determination; provided, that any
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Warrants owned by the Registered Owner shall be deemed outstanding for purposes
of making such a determination.
18. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.
19. No Rights as Stockholder. This Warrant shall not entitle the
Registered Owner to any rights as a stockholder of the Company, including
without limitation, the right to vote, to receive dividends and other
distributions, or to receive notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent exercised into
shares of Common Stock in accordance with the terms hereof.
20. 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 Registered Owner
in order to protect the exercise privilege of the Registered Owner 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 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.
21. Shareholder Rights Plan. In the event that the Company shall
distribute "poison pill" rights pursuant to a "poison pill" shareholder rights
plan (the "Shareholder Rights"), the Company shall, in lieu of making any
adjustment pursuant to Section 7 hereof, make proper provision so that each
Registered Owner who exercises this Warrant after the record date for such
distribution and prior to the expiration or redemption of the Shareholder Rights
shall be entitled to receive upon such exercise, in addition to the shares of
Common Stock issuable upon such exercise, a number of Shareholder Rights to be
determined as follows: (i) if such exercise occurs on or prior to the date for
the distribution to the holders of Shareholder Rights of separate certificates
evidencing such Shareholder Rights (the "Distribution Date"), the same number of
Shareholder Rights to which a holder of a number of shares of Common Stock equal
to the number of shares of Common Stock issuable upon such exercise at the time
of such exercise would be entitled in accordance with the terms and provisions
of and applicable to the Shareholder Rights; and (ii) if such exercise occurs
after the Distribution Date, the same number of Shareholder Rights to which a
holder of the number of shares into which this Warrant was exercisable
immediately prior to the Distribution Date would have been entitled on the
Distribution Date, in accordance with the terms and provisions of such
Shareholder Rights, and in each case subject to the terms and conditions of the
Shareholder Rights.
22. Successors and Assigns. This Warrant shall be binding upon and
inure to the benefit of the Registered Owners and its assigns, and shall be
binding upon any entity succeeding to the
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Company by merger or acquisition of all or substantially all the assets of the
Company. The Company may not assign this Warrant or any rights or obligations
hereunder without the prior written consent of the Registered Owner. The
Registered Owner may assign this Warrant without the prior written consent of
the Company.
23. Governing Law. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware, as
applied to agreements under seal made, and entirely to be performed, within
Delaware, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this Warrant
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
24. Remedies. In the event of a breach by the Company of any of their
obligations under this Warrant, the Registered Owner, in addition to being
entitled to exercise all rights granted by law and under the Purchase Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Warrant and hereby further agree that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
25. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen or destroyed, the Company, upon request of the
Registered Owner, shall issue and deliver in exchange and substitution for and
upon cancellation of such mutilated Warrant (upon surrender thereof), or in the
event that this Warrant is lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest upon any indemnification
undertaking by the Holder to the Company in customary form as reasonably
required by the Company.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
NET VALUE HOLDINGS, INC.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
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EXHIBIT A
Warrant Exercise Form
---------------------
TO: NET VALUE HOLDINGS, INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Net Value Holdings, Inc., pursuant to
Warrant No. ___ heretofore issued to ___________________ on ____________, ____ ;
(2) encloses either (a) a cash payment of $__________ or (b) a Warrant
representing _____ shares of Common Stock valued at the Per Share Market Price
of $ _____ on ________, ____, for these shares at a price of $____ per share (as
adjusted pursuant to the provisions of the Warrant); and (3) requests that a
certificate for the shares be issued in the name of the undersigned, or the
undersigned's designee, and delivered to the undersigned, or the undersigned's
designee, at the address specified below.
Date:
Investor Name:
Taxpayer Identification Number:
By:
Printed Name:
Title:
Address:
Cashless Exercise (Y or N):
Note: The above signature should correspond exactly with the
name on the face of this Warrant Certificate or with the name
of assignee appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.
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