NEITHER THIS WARRANT NOR THE COMMON STOCK WHICH MAY BE ACQUIRED UPON THE
EXERCISE HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO UNDER THE ACT AND COMPLIANCE WITH ANY APPLICABLE
STATE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. THE
COMPANY'S SUBSCRIPTION AGREEMENT WITH THE HOLDER CONTAINS ADDITIONAL PROVISIONS
RESTRICTING THE TRANSFER OF THIS WARRANT. A COPY OF SUCH AGREEMENT IS AVAILABLE
FOR INSPECTION AT THE COMPANY'S OFFICE.
VOID AFTER 5:00 P.M. EASTERN TIME, _______ __, 2001.
For the Purchase of
_________ shares of
No. _____________ Common Stock
WARRANT FOR THE PURCHASE OF
SHARES OF COMMON STOCK
OF
THE NETPLEX GROUP, INC.
(A New York corporation)
The Netplex Group, Inc., a New York corporation (the "Company"), hereby
certifies that for value received, _____________________, or his, her or its
registered assigns (the "Registered Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
during the period commencing on _____________ [THE SIX MONTH ANNIVERSARY OF THE
CLOSING OF THE PRIVATE PLACEMENT] and ending on ________________ [FIFTH YEAR
ANNIVERSARY OF CLOSING], __________ shares of Common Stock, $.01 par value, of
the Company ("Common Stock"), at a purchase price equal to $____ per share. The
number of shares of Common Stock purchasable upon exercise of this Warrant, and
the purchase price per share, each as adjusted from time to time pursuant to the
provisions of this Warrant, are hereinafter referred to as the "Warrant Shares"
and the "Purchase Price," respectively.
1
1. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder, in
whole or in part, by the surrender of this Warrant (with the Notice of Exercise
Form attached hereto as Exhibit I duly executed by such Registered Holder) at
the principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful money of the
United States, of an amount equal to the then applicable Purchase Price
multiplied by the number of Warrant Shares then being purchased upon such
exercise.
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above. At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided
in subsection 1(c) below shall be deemed to have become the holder or holders of
record of the Warrant Shares represented by such certificates.
(c) As soon as practicable after the exercise of the purchase
right represented by this Warrant, the Company at its expense will use its best
efforts to cause to be issued in the name of the Registered Holder and delivered
to GKN Securities Corp. or ▇▇▇▇▇▇ Securities Corp., as the case may be, for
deposit in the Registered Holder's securities account or, subject to the terms
and conditions hereof, to such other individual or entity as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in writing:
(i) a certificate or certificates for the number of full
shares of Warrant Shares to which such Registered Holder shall be entitled upon
such exercise plus, in lieu of any fractional share to which such Registered
Holder would otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof, and
(ii) in case such exercise is in part only, a new warrant
or warrants (dated the date hereof) of like tenor, stating on the face or faces
thereof the number of shares currently stated on the face of this Warrant minus
the number of such shares purchased by the Registered Holder upon such exercise
as provided in subsection 1(a) above.
2. ADJUSTMENTS.
(a) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the
outstanding shares of the Company's Common Stock at any time while this Warrant
remains outstanding and unexpired shall be subdivided or split into a greater
number of shares, or a dividend in Common Stock shall be paid in respect of
Common Stock, or a similar change in the Company's capitalization occurs which
affects the outstanding Common Stock, as a class, then the Purchase Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall, simultaneously with the effectiveness of such subdivision or
split or immediately after the record date of such dividend (as the case may
be), be proportionately decreased. If the outstanding shares of Common Stock
shall be combined or reverse-split into a smaller number of shares, the Purchase
Price in effect immediately prior to such combination or reverse split shall,
simultaneously with
2
the effectiveness of such combination or reverse split, be proportionately
increased. When any adjustment is required to be made in the Purchase Price, the
number of shares of Warrant Shares purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(b) RECLASSIFICATION, REORGANIZATION, CONSOLIDATION OR MERGER.
In the case of any reclassification of the Common Stock or any reorganization,
consolidation or merger of the Company with or into another corporation (other
than a merger or reorganization with respect to which the Company is the
continuing corporation and which does not result in any reclassification of the
Common Stock), or a transfer of all or substantially all of the assets of the
Company, or the payment of a liquidating distribution then, as part of any such
reorganization, reclassification, consolidation, merger, sale or liquidating
distribution, the Company shall arrange for the other party to the transaction
to agree to, and lawful provision shall be made, so that the Registered Holder
of this Warrant shall have the right thereafter to receive upon the exercise
hereof (to the extent, if any, still exercisable), the kind and amount of shares
of stock or other securities or property which such Registered Holder would have
been entitled to receive if, immediately prior to any such reorganization,
reclassification, consolidation, merger, sale or liquidating distribution, as
the case may be, such Registered Holder had held the number of shares of Common
Stock which were then purchasable upon the exercise of this Warrant. In any such
case, appropriate adjustment (as reasonably determined by the Board of Directors
of the Company) shall be made in the application of the provisions set forth
herein with respect to the rights and interests thereafter of the Registered
Holder of this Warrant such that the provisions set forth in this Section 2
(including provisions with respect to the Purchase Price) shall thereafter be
applicable, as nearly as is reasonably practicable, in relation to any shares of
stock or other securities or property thereafter deliverable upon the exercise
of this Warrant.
(c) PRICE ADJUSTMENT. No adjustment in the per share exercise
price shall be required unless such adjustment would require an increase or
decrease in the Purchase Price of at least $0.01; provided, however, that any
adjustments which by reason of this paragraph are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 2 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be.
(d) PRICE REDUCTION. Notwithstanding any other provision set
forth in this Warrant, at any time and from time to time during the period that
this Warrant is exercisable, the Company in it sole discretion upon appropriate
notice to the Registered Holder may reduce the Purchase Price or extend the
period during which this Warrant is exercisable.
(e) NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation 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 hereunder by the Company but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 2 and in the taking of all such actions as may be necessary or
appropriate in order to protect against
3
impairment of the rights of the Registered Holder of this Warrant to adjustments
in the Purchase Price.
(f) NOTICE OF ADJUSTMENT. Upon the happening of any event
requiring an adjustment of the exercise price hereunder, the Company shall
forthwith give written notice thereto to the Registered Holder of this Warrant
stating the adjusted exercise price and the adjusted number of shares
purchasable upon the exercise hereof resulting from such event and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based.
3. FRACTIONAL SHARES. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment thereof in cash on the basis of the last sale price of the Warrant
Shares on the over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotations System or on a national securities
exchange on the trading day immediately prior to the date of exercise, whichever
is applicable, or if neither is applicable, then on the basis of the then fair
market value of the Warrant Shares as shall be reasonably determined by the
Board of Directors of the Company.
4. LIMITATION ON SALES. Each holder of this Warrant acknowledges that
this Warrant and the Warrant Shares have not been registered under the
Securities Act of 1933, as now in force or hereafter amended, or any successor
legislation (the "Act"), and agrees not to sell, pledge, distribute, offer for
sale, transfer or otherwise dispose of this Warrant or any Warrant Shares issued
upon its exercise in the absence of (a) an effective registration statement
under the Act as to this Warrant or such Warrant Shares and registration or
qualification of this Warrant or such Warrant Shares under any applicable Blue
Sky or state securities law then in effect or (b) an opinion of counsel,
satisfactory to the Company, that such registration and qualification are not
required. Without limiting the generality of the foregoing, unless the offering
and sale of the Warrant Shares to be issued upon the particular exercise of the
Warrant shall have been effectively registered under the Act, the Company shall
be under no obligation to issue the shares covered by such exercise unless and
until the Registered Holder shall have executed an investment letter in form and
substance satisfactory to the Company, including a warranty at the time of such
exercise that it is acquiring such shares for its own account, and will not
transfer the Warrant Shares unless pursuant to an effective and current
registration statement under the Act or an exemption from the registration
requirements of the Act and any other applicable restrictions, in which event
the Registered Holder shall be bound by the provisions of a legend or legends to
such effect which shall be endorsed upon the certificate(s) representing the
Warrant Shares issued pursuant to such exercise. The Warrant Shares issued upon
exercise thereof shall be imprinted with legends in substantially the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SAID ACT OR
APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN
OPINION OF COUNSEL,
4
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
THE TRANSFER OF THE WARRANT SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT IS RESTRICTED AS SET FORTH IN A
SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.
After the Registration Statement referenced in Section 6 hereinafter is
declared effective by the Securities and Exchange Commission, if any Registered
Holder shall deliver to the Company the certificate representing the Warrant
Shares, then the Company shall within three days after receipt by the Company of
the foregoing, issue a new certificate representing and in exchange for the
aforementioned certificate, which new certificate shall be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SECURITIES MAY BE SOLD PURSUANT TO THE REGISTRATION
STATEMENT PROVIDED THAT THE HOLDER COMPLIES WITH THE
PROSPECTUS DELIVERY REQUIREMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND THE SALE IS IN COMPLIANCE WITH
THE PLAN OF DISTRIBUTION SET FORTH IN THE PROSPECTUS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTION AS SET FORTH IN A
SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY.
5. CERTAIN DIVIDENDS. If the Company pays a dividend or makes a
distribution on the Common Stock (determined in accordance with generally
accepted accounting principles) except for a stock dividend payable in shares of
Common Stock (a "Property Dividend"), then the Company will pay or distribute to
the Registered Holder of this Warrant, upon the exercise hereof, in addition to
the Warrant Shares purchased upon such exercise, the Property Dividend which
would have been paid to such Registered Holder if it had been the owner of
record of such shares of Warrant Shares immediately prior to the date on which a
record is taken for such Property Dividend or, if no record is taken, the date
as of which the record holders of Common Stock entitled to such dividends or
distribution are to be determined.
6. REGISTRATION RIGHTS OF WARRANT HOLDER; EXTRA WARRANTS. The Company
has agreed to register the Warrant shares issuable hereunder on a Registration
Statement under the Act ("Registration Statement") with the Securities and
Exchange Commission as discussed in Section 7 of the Subscription Agreement
between the Company and the Registered Holder.
5
7. NOTICES OF RECORD DATE. In case:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon the exercise of
this Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution (other than a dividend or distribution payable
solely in capital stock of the Company or out of funds legally available
therefor), or to receive any right to subscribe for or purchase any shares of
any class or any other securities, or to receive any other right, or
(b) 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 (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying, as the case may be, (i)
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 (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) 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, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least ten (10) days prior to the
record date or effective date for the event specified in such notice, provided
that the failure to mail such notice shall not affect the legality or validity
of any such action.
8. RESERVATION AND MAINTENANCE OF LISTING OF STOCK. The Company will at
all times reserve and keep available, solely for issuance and delivery upon the
exercise of this Warrant, such shares of Warrant Shares and other stock,
securities and property, as from time to time shall be issuable upon the
exercise of this Warrant and shall use its best efforts to list and maintain the
quotation of the Warrant Shares on the same system or exchange as the Company's
outstanding Common Stock.
9. REDEMPTION OF WARRANTS BY THE COMPANY.
(a) REDEMPTION. The Warrants may be redeemed, at the option of the
Company, as a whole at any time prior to the Expiration Date, at the executive
office of the Company, upon the notice referred to in Section 9(b), at the price
of $.01 per Warrant ("Redemption Price"), provided that (i) the last sale price
of the Common Stock has been at least [$____] {200% of the Purchase Price}
("Trigger Price") on each of the twenty (20) consecutive trading days ending on
the third business day prior to the date on which notice of redemption is
6
given, the satisfaction of which condition shall be certified by the Company,
and (ii) the Registration Statement is effective and current.
(b) DATE FIXED FOR AND NOTICE OF REDEMPTION. Notice of redemption
shall be mailed by first class mail, postage prepaid, by the Company or the
Company's agent at its discretion not less than 30 days from the date fixed for
redemption to the registered holders of the Warrants to be redeemed at their
last address as they shall appear on the registration books. Any notice mailed
in the manner herein provided shall be conclusively presumed to have been duly
given whether or not the registered holder received such notice.
(c) EXERCISE AFTER NOTICE OF REDEMPTION. The Warrants may be
exercised in accordance with Section 1 of this Agreement at any time after
notice of redemption shall have been given by the Company pursuant to Section
9(b) hereof and prior to the date fixed for redemption. On and after the
redemption date, the record holder of the Warrants shall have no further rights
except to receive, upon surrender of the Warrants, the Redemption Price.
(d) If there is any adjustment in the Purchase Price pursuant to
Section 2 hereof, then the Trigger Price will be adjusted correspondingly.
10. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
11. TRANSFERS, ETC; RESTRICTIONS AGAINST TRANSFER.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its, his or her address as shown on the warrant register by written
notice to the Company requesting such change.
(b) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
(c) The holder hereof has agreed with the Company and the Placement
Agents not to sell, transfer or otherwise dispose of this Warrant, the Extra
Warrants, the Common Stock underlying each of the foregoing, until one year from
the date of this Warrant, without the prior written consent of GKN Securities
Corp.
7
12. NO RIGHTS AS SHAREHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a shareholder of the Company.
13. CHANGE OR WAIVER. Any term of this Warrant may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of the change or waiver is sought.
14. HEADINGS. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
15. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York as such laws are applied to
contracts made and to be fully performed entirely within that state between
residents of that state.
16. JURISDICTION AND VENUE. The Company (i) agrees that any legal suit,
action or proceeding arising out of or relating to this Warrant shall be
instituted exclusively in New York State Supreme Court, County of New York or in
the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum, and (iii) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding, and the Company further agrees to accept
and acknowledge service or any and all process which may be served in any such
suit, action or proceeding in New York State Supreme Court, County of New York
or in the United States District Court for the Southern District of New York and
agrees that service of process upon it mailed by certified mail to its address
shall be deemed in every respect effective service of process upon it in any
suit, action or proceeding.
17. MAILING OF NOTICES, ETC. All notices and other communications under
this Warrant (except payment) shall be in writing and shall be sufficiently
given if delivered to the addressees in person, by Federal Express or similar
receipt delivery, by facsimile delivery or, if mailed, postage prepaid, by
certified mail, return receipt requested, as follows:
Registered Holder: To his or her address on page 1 of this Warrant.
The Company: The Netplex Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Placement Agent: GKN Securities Corp.
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ Securities, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any of them, by notice to the others may designate
from time to time. Time shall be counted to, or from, as the case may be, the
delivery in person or by mailing.
THE NETPLEX GROUP, INC.
By:
--------------------------------------------------
▇▇▇▇ ▇▇▇▇▇, President and Chief Executive Officer
9
NOTICE OF EXERCISE
TO: The Netplex Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
1. The undersigned hereby elects to purchase _____ shares of the Common
Stock of The Netplex Group, Inc., pursuant to terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full, together
with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares
of the Common Stock in the name of the undersigned or in such other name as is
specified below:
3. The undersigned represents that it will sell the shares of Common
Stock pursuant to an effective Registration Statement under the Securities Act
of 1933, as amended, or an exemption from registration thereunder.
(Name)
(Address)
(Taxpayer Identification Number)
[PRINT NAME OF REGISTERED HOLDER]
By:
-----------------------------
Title:
---------------------------
Date:
---------------------------
10