<PAGE>
As filed with the Securities and Exchange Commission on May 9, 2000
Registration No.
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE NETPLEX GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
________________
New York 11-2824578
(State or Other Jurisdiction of (I.R.S. Employer Identification
(incorporation or Organization) Number)
1800 Robert Fulton Drive, Suite 250
Reston, Virginia 20191
(703) 716-4777
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
GENE ZAINO
Chief Executive Officer
The Netplex Group, Inc.
1800 Robert Fulton Drive, Suite 250
Reston, Virginia 20191
(703) 716-4777
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
________________
Copies to:
JOHN L. SULLIVAN, III, ESQ.
WALLACE E. CHRISTNER, ESQ.
Venable, Baetjer and Howard, LLP
2010 Corporate Ridge, Suite 400
McLean, VA 22102
(703) 760-1600
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement is declared effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
<PAGE>
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Proposed
Maximum Maximum
Title Of Shares Amount To Be Aggregate Price Aggregate Offering Amount Of
To Be Registered Registered (1) Per Unit (2) Price (2) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $.001 3,763,876 shares $4.00 $15,055,504 $3,975
per share
========================================================================================================================
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act, this registration statement
also covers an indeterminate number of additional shares as may be issued
as a result of adjustments by reason of any stock split, stock dividend or
similar transaction.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933. The above calculation is
based on the average of the high and low prices of the common stock
on the Nasdaq SmallCap Market on May 5, 2000.
The registrant hereby amends this registration statement on such date
and dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed.
The selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion, dated May 9, 2000
Preliminary Prospectus
The Netplex Group, Inc.
3,763,876 shares
Common Stock
___________________________________
The shareholders on page 9 of this prospectus are offering and selling up
to 3,763,876 shares of our common stock. The selling shareholders may offer and
sell some, all or none of the common stock under this prospectus. The selling
shareholders may determine the prices at which they will sell such common stock,
which may be at market prices prevailing at the time of such sale or some other
price. In connection with such sales, the selling shareholders may use brokers
or dealers which may receive compensation or commission for such sales. We will
not receive any of the proceeds from the sale of our common stock by the selling
shareholders.
Our common stock is publicly traded on the Nasdaq SmallCap Market under the
symbol "NTPL" and on the Boston Stock Exchange under the symbol "NPL". On May 5,
2000, the closing sales price for one share of our common stock on the Nasdaq
SmallCap Market was $4.00.
THE PURCHASE OF OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF THIS PROSPECTUS
BEFORE PURCHASING ANY OF OUR COMMON STOCK FROM THE SELLING SHAREHOLDERS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is May 9, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
INFORMATION ABOUT THE NETPLEX GROUP.................................................... 3
RISK FACTORS........................................................................... 4
FORWARD-LOOKING STATEMENTS............................................................. 7
USE OF PROCEEDS........................................................................ 8
SELLING SHAREHOLDERS................................................................... 8
PLAN OF DISTRIBUTION................................................................... 10
EXPERTS................................................................................ 12
LEGAL MATTERS.......................................................................... 12
WHERE YOU CAN FIND MORE INFORMATION.................................................... 12
MATERIAL CHANGES....................................................................... 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................ 12
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES............................................................................ 13
</TABLE>
We have informed the selling shareholders that the anti-manipulative rules
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including Regulation M, may apply to their sales in the market. We have
furnished the selling shareholders with a copy of these rules. We have also
informed the selling shareholders that they must deliver a copy of this
prospectus with any sale of their shares.
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PROSPECTUS SUMMARY
This summary outlines and highlights information contained in this
prospectus and the information incorporated in this prospectus by reference. You
should read the entire prospectus carefully, including the "Risk Factors"
section and the financial statements and related notes that are incorporated by
reference.
SUMMARY DESCRIPTION OF OUR BUSINESS
Based in Reston, Virginia, and with 16 U.S. operating locations, The
Netplex Group, Inc. is an Internet services company that leverages industry-
specific knowledge, creative ideas, and technology expertise to create
customized e-solutions.
By thoroughly understanding the business dynamics and technology trends of
specific vertical markets, we seek to better understand the business problems
faced by companies within these industries. This allows us to develop and
deliver e-solutions that serve our customers' unique strategic, creative, and
technological business needs. As a result, our e-solutions seek to help our
customers' transition from their existing systems and processes to business
models that are aligned to the demands of the digital age.
e-solutions
Our e-solutions business is divided into five categories: e-Strategy
Consulting, Creative Design, e-Application Development (Internet, intranet,
and extranet), e-Infrastructure Services, and Systems Integration. With
this portfolio of services, we guide customers' initiatives from idea to
implementation. Our services seek to help customers with multiple levels of
e-business transition--from process improvements to enterprise-wide
transformations. We believe that our services position customers to benefit
from integrated and streamlined interactive relationships with their
customers, partners, and stakeholders.
Subsidiary: Contractor's Resources
In addition to our e-solutions offerings, Netplex has a subsidiary,
Contractor's Resources, or CR, which we recast in 1999 as an integrated
online service under the brand name Techcellence(TM). Targeting independent
professionals in the Information Technology industry, Netplex launched
Techcellence as a business-to-business service designed to provide the
financial infrastructure, resources, and business services that help
professionals build careers as independent contractors. In 2000, we
extended our service's scope to target all independent workers, regardless
of industry or profession and rebranded the service as MyBizOffice(TM).
MyBizOffice serves as an on-line "virtual corporate office" for its member
contractors. It provides its members the services of a corporate
administration staff while helping them keep abreast of developments that
affect their independent life and work style.
We believe that our transformation of the traditional CR business model
into an integrated e-business model has increased the business's
flexibility, scalability, geographic scope, and exposure.
We are currently incubating the MyBizOffice brand and "Business Service
Provider" model. In 2000, we intend to invest in the incubation process
through increasing the marketing program, expanding core service offerings,
expanding existing strategic relationships, and exploring additional
strategic relationships.
Our address is 1800 Robert Fulton Drive, Suite 250, Reston Virginia 20191
and our telephone number is (703) 716-4777. Our Web site address is
www.netplexgroup.com.
Netplex was incorporated in New York in 1986 under the name CompLink, Ltd.
In 1996, CompLink acquired, through a reverse merger, The Netplex Group, Inc.
and Contractor's Resources, and changed its name to The Netplex Group, Inc. This
merger provided Netplex with new management and a revised corporate mission. To
better position ourselves to deliver the comprehensive services required to
compete in the e-solutions market, we have acquired several companies during the
last three years. In 1997, we acquired Onion Peel Solutions, LLC. In 1998, we
acquired The PSS Group, Inc., Automated Business Systems of North Carolina,
Inc., Kellar Technology Group, Inc., and the retail technical consulting
business of Applied Intelligence Group, Inc. In 1999, we purchased Dean Liles &
Associates, Inc. These businesses expanded our experience, technical staff,
customer base, market exposure, revenue, and industry-focused expertise.
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RISK FACTORS
Before you invest in shares of our common stock, you should be aware
that there are various risks involved in an investment, including those
described below. We urge you to carefully consider these risk factors, together
with all of the other information included in this prospectus and the
information incorporated in this prospectus by reference, before you decide to
invest in shares of our common stock.
We have incurred operating losses and may never become profitable.
We incurred net losses of $7.4, $2.5 and $2.9 million in the years ended
December 31, 1999, 1998 and 1997 respectively. There can be no assurance that we
will be profitable on a quarterly or annual basis in the future. Our quarterly
operating results in the past have fluctuated and may fluctuate significantly in
the future depending on such factors as the timing and delivery of significant
orders and contracts, new product introductions, and changes in our pricing
policies.
We have negative working capital and may be unable to obtain the necessary
funding to expand and improve our business.
As of December 31, 1999, we had negative working capital of $369,296. With
the influx of cash from the exercise of options and warrants in January and
February, and from two equity financings in March, 2000, we believe that we now
have positive net working capital. We also believe that our existing resources
will be adequate for our cash needs through December 31, 2000. Beyond such
period, we may need to raise substantial additional capital to pay for our
operations. We are uncertain whether additional financing will be available on
acceptable terms or at all. If we raise additional funds by issuing equity
securities, our shareholders will be further diluted. If adequate funds are
unavailable, we may delay, curtail, reduce the scope of, or eliminate the
expansion of our operations and/or our marketing and sales efforts, which could
have a material adverse effect on our financial condition and business
operations.
Currently, we have a line of credit with a bank that expires May 31, 2000,
whereby we can borrow the lesser of $6 million or 80% of eligible accounts
receivable. Additionally, we are required to meet certain financial and other
covenants. We had borrowed $5,126,000 under the line of credit as of December
31, 1999. As of December 31, 1999, we were not in compliance with the covenant
that requires us to maintain tangible net assets of $900,000 through March 30,
2000, and $1,200,000 thereafter. The bank was notified but did not issue a
notice of default. The noncompliance with this covenant was cured by the influx
of cash in January and February from the exercise of options and warrants and
our tangible net asset position was further strengthened by two equity
financings in March, 2000.
The timing of our revenues and the introduction and market acceptance of our
products may vary, resulting in significant variations in our operating results.
Our revenues may vary due to:
. the number and dollar value of client engagements commenced and
completed during a quarter;
. the number of working days in a quarter; and
. employee hiring and utilization rates.
The timing of revenues is difficult to forecast because our sales cycle for
new clients is relatively long and may depend on the size and scope of
assignments and general economic conditions. Because a high percentage of our
expenses are relatively fixed, a change in the timing of the beginning or end of
client assignments, particularly at or near the end of any quarter, could cause
operating results to significantly vary from quarter to quarter and result in
reported losses for that quarter. In addition, clients can terminate our
engagement at will, resulting in a higher than expected number of unassigned
persons or higher severance expenses.
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<PAGE>
While we adjust professional staffs to reflect active projects, we must
maintain a sufficient number of senior professionals to oversee existing client
projects and help our sales force secure new client assignments. Because we
perform some work on a fixed-price basis, we also bear the risk of cost overruns
and inflation. New product introductions and market acceptance of new and
enhanced versions of our products or the products of third parties may also
significantly affect our operating results.
The future success of our business depends on the continued services of Gene
Zaino, our Chairman and Chief Executive Officer, Pamela Fredette, our President,
and our ability to attract and retain technical, marketing, sales, and
management personnel.
Our future success depends in large part on the continued services of Gene
Zaino, our Chairman and Chief Executive Officer. We have an employment agreement
with Mr. Zaino that expires in June, 2002. We have a $2,000,000 key person
insurance policy on the life of Mr. Zaino. Our future success also depends in
large part on the continued services of Pamela Fredette, our President. We have
an employment agreement with Ms. Fredette that expires in May, 2002. We have a
$1,000,000 key person life insurance policy on the life of Ms. Fredette.
Our success also depends in large part upon our ability to attract and
retain qualified technical project managers and information technology
personnel. We believe we need to hire additional technical personnel to improve
existing products and services and to develop new products and services and hire
new sales personnel to sell our products and services. The inability to attract
new personnel could have a material adverse effect on our results of operations
and research and development efforts. It is difficult to locate technical,
marketing, sales, and management personnel with the combination of skills and
attributes required to execute our strategy. Although we have attracted and
retained qualified employees, qualified project managers are in particularly
great demand and will remain a limited resource for the foreseeable future. Our
employees can terminate their employment at any time. Accordingly, we may be
unable to continue to retain and attract qualified project managers.
Our business is very competitive and subject to rapid changes.
The market for Netplex's e-solutions is highly competitive. The rapid
growth of the Internet services market has fueled a significant influx of
companies that pose a competitive threat to Netplex's e-solutions business. Many
of these companies have greater resources, greater expertise, or have better
access to capital than Netplex.
In a broad sense, competition for Internet-related services can range from
local Web development companies to large traditional technology providers like
IBM and Microsoft. However, because we target middle-market and larger
organizations with an approach that focuses on solving business problems within
vertical industries, our e-solutions competitors are generally companies that,
like us, deliver a wide variety of Internet-related services.
Companies with which we most commonly compete include AnswerThink, AppNet,
Cysive, iXL Enterprises, Predictive Systems, Proxicom, Sapient, US Interactive,
USWeb/CKS, Xceed, and several others, both public and private. Of these
companies, several have moved into the full-service e-solutions market by
expanding specific core disciplines (such as network engineering or creative
design), while others are start-ups that have been built upon a full-service
solutions delivery model.
Customers also often call upon us to perform individual specialized
services from our portfolio, such as information security, network performance
enhancements, and enterprise application integration. In these cases, we
frequently compete with the "Big 5" consulting firms (such as Deloitte & Touche
and Andersen Consulting).
We believe that the principal competitive factors in the information
technology services industry include:
. responsiveness to client needs;
. speed of project implementation;
. quality of service;
. price;
. project management capability; and
. technical expertise.
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The market for CR's Techcellence service offering is competitive and
changing quickly. We expect that additional companies will emerge in this market
and that competition will therefore intensify. Our competitors in this regard
vary in size and in scope of services.
We must respond quickly to technological developments, introductions of new
competitive products and services, and evolving industry standards to remain
competitive.
The information technology services industry is characterized by rapid
technological developments, frequent introductions of new products and services,
and evolving industry standards. In order to remain competitive in this rapidly
evolving industry, we must continually improve the performance, features and
reliability of our services. We cannot assure you that we will be able to
respond quickly, cost effectively and sufficiently to any such developments. Our
inability to respond quickly to any such developments could cause us to lose
substantial market share and could have a material adverse effect on our
business, operating results, and financial condition.
We may not be able to manage our growth effectively.
Although we have streamlined our operations, our long-term success will
depend in part on our ability to manage growth. If we are unable to hire a
sufficient number of employees with the appropriate levels of experience to
effectively manage our growth, our business, financial condition, and results of
operations could be materially and adversely affected.
Our stock price may be subject to significant volatility.
Our stock price may be subject to significant volatility, particularly on a
quarterly basis. Any shortfall in revenue or earnings from levels expected by
securities analysts or others could have an immediate and significant adverse
effect on the trading price of our common stock in any given period.
Additionally, we may not learn of, or be able to confirm, revenue or earnings
shortfalls until late in the fiscal quarter or following the end of the quarter,
which could result in an even more immediate and adverse effect on the trading
of our common stock.
We may be liable for legal violations committed by consultants we employ.
Technical services firms face legal uncertainties, including the extent of
liability for violations of employment and discrimination laws. Our liability
can include violations of employment and discrimination laws committed by
consultants we provide to our customers. We believe we comply in all material
respects with all applicable rules, regulations and licensing requirements.
We may be unable to satisfy guarantees that we make to our customers due to
rapid changes in our business.
Occasionally, we must guarantee to our customers that the integrated system
that we are consulting on will operate properly when completed. Due to rapid
changes in technology or other unforeseen developments, we may be unable to
comply with such guarantees.
We have a significant number of outstanding warrants, options and shares of
preferred stock that could adversely impact the price of our common stock and
our ability to obtain additional funding.
As of March 31, 2000, we have outstanding:
. options and warrants to purchase an aggregate of 4,375,660 shares of
our common stock, not including the prepaid warrants, at a weighted
average exercise price of $2.29 per share;
. shares of convertible Series A preferred stock that are immediately
convertible into 80,597 shares of common stock;
. Series C preferred stock that is convertible after September 28, 2003
into the number of shares equal to $2,300,000 plus accrued but unpaid
dividends ($57,500 at March 31, 2000), divided by 25% of the 20 day
average trading price of the common stock immediately prior to
conversion, which if converted as of March 31, 2000, would result in
the issuance of 646,441 shares of common stock;
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. 10,000 shares of our Series D preferred stock outstanding and
associated warrants that are convertible into a total of 2,300,000
shares of common stock, assuming a conversion and exercise price of
$6.82608; however, the actual number of shares of common stock
issuable upon conversion and exercise of these convertible preferred
shares and warrants will not be determined until May 16, 2000, and is
subject to adjustment, which could result in an increase in the number
of shares of common stock and a decrease in conversion and exercise
price, depending on factors which we cannot predict at this time,
including, among other factors, the future market price of our common
stock; and
. prepaid warrants exercisable into 1,174,341 shares of common stock.
The exercise of all of the outstanding warrants, including the prepaid
warrants, options and/or conversion of the outstanding convertible preferred
stock would dilute the then-existing shareholders' percentage ownership of our
common stock, and any sales in the public market could adversely affect
prevailing market prices for our common stock. Moreover, because the holders of
outstanding warrants, options and preferred stock will likely exercise or
convert these securities our ability to obtain additional equity capital could
be adversely affected since we probably could obtain any needed capital on terms
more favorable than those provided by the conversion of these securities. We
lack control over the timing of any exercise or the number of shares issued or
sold if exercises or conversions occur.
We will be penalized if we fail to register shares underlying our Series D
convertible preferred stock, the warrants issued to Series D preferred
shareholders, and the prepaid warrants, incentive warrants and placement agent
warrants that we issued in March, 2000.
We will incur penalties and costs under the terms of the Series D
convertible preferred stock, the warrants issued to Series D preferred
shareholders, and the prepaid, incentive and placement agent warrants, all
issued in the private placements in March, 2000, if we are unable to register
the shares of common stock issuable upon the conversion of the Series D
preferred stock and the exercise of those warrants, or if we fail to maintain
our listing on the Nasdaq SmallCap Market, Nasdaq National Market or other
national exchanges.
Future sales of restricted shares could decrease the market price of our common
stock and impair our ability to raise capital.
Future sales of common stock by existing shareholders under exemptions from
registration or through the exercise of outstanding registration rights could
materially adversely affect the market price of our common stock and could
materially impair our future ability to raise capital through an offering of
equity securities. A substantial number of shares of common stock are, or will
be in the near future, available for sale under exemptions from registration or
are being registered pursuant to registration rights and we are unable to
predict the effect, if any, that market sales of these shares or the
availability of these shares for future sale will have on the market price of
the common stock prevailing from time to time.
We have never paid and do not currently intend to pay dividends.
We have never paid dividends on our common stock. We intend to retain any
future earnings to finance our growth. In addition, dividends on common stock
are subject to the preferences for dividends on the preferred stock. Any future
dividends will depend upon our earnings, if any, our financial requirements, and
other factors.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus may contain forward-looking
statements. Such forward-looking statements can be identified by the use of
forward-looking terminology such as "may," "will," "believe," "expect,"
"anticipate," "estimate," "continue" or other similar words, and include
statements as to the intent, belief, or current expectations of Netplex and our
directors, officers, and management with respect to future operations,
performance or position of Netplex or which contain other "forward-looking"
information. These forward-looking statements are predictions and are based on
current information and expectation, and we assume no obligation to update these
statements. When considering the forward-looking statements in this prospectus,
you should keep in mind the risk factors and other cautionary statements in this
prospectus and in the documents incorporated in this prospectus by
7
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reference. The risk factors noted in this prospectus and the other factors noted
throughout this prospectus and the documents that we incorporate by reference,
including certain known and unknown risks and uncertainties, could cause our
actual results to differ materially from those contained in any forward-looking
statement.
USE OF PROCEEDS
All of the net proceeds from the sale of the common stock covered by this
prospectus will go to the selling shareholders who offer and sell shares of the
common stock. We will not receive any proceeds from the sale of the common stock
offered by the selling shareholders pursuant to this prospectus. Some of the
common stock to be sold will be issued to the selling shareholders upon the
exercise of incentive warrants, placement agent warrants and certain other
warrants. If any or all of these warrants held by the selling shareholders are
exercised, we intend to use the net proceeds for working capital and general
corporate purposes.
SELLING SHAREHOLDERS
The following table sets forth (a) the name of each selling shareholder,
(b) the number of shares of outstanding common stock beneficially owned by each
selling shareholder as of April 28, 2000, (c) the aggregate number of shares of
common stock that each selling shareholder may offer and sell for its account
under this prospectus and (d) to our knowledge and assuming that all of the
shares of common stock offered under this prospectus are sold, the aggregate
number of shares of common stock and the percentage of outstanding shares of
common stock to be beneficially owned by each selling shareholder upon
completion of the offering made under this prospectus. To our knowledge and
except as otherwise indicated in the footnotes to the table, none of the selling
shareholders has had within the past three years any position, office or other
material relationship with us or any of our predecessors or affiliates.
The common stock offered by this prospectus includes up to 300,000 shares
of common stock issuable upon the conversion of the prepaid common stock
purchase warrants issued to Zanett Lombardier, Ltd. and/or its affiliates or
designees in connection with a recent private placement (the "Zanett prepaid
warrants"); 78,000 shares of common stock issuable upon the exercise of the
incentive warrants issued in connection with the Zanett prepaid warrants (the
"Zanett incentive warrants"); and 39,000 shares of common stock issuable upon
the exercise of incentive warrants issued to the placement agent and/or its
designees in connection with the Zanett prepaid warrants (the "Zanett placement
agent warrants").
Under the terms of the Zanett prepaid warrants, certain selling
shareholders have the right to purchase an aggregate number of shares of common
stock equal to $1,500,000 divided by the lower of (A) $10 and (B) the amount
obtained by multiplying a certain exercise percentage (which decreases over time
and is more particularly described in the warrants) by the average of the 5
lowest closing bid prices for the common stock during the 20 consecutive trading
day period ending on the trading day immediately preceding the date of
determination or exercise. All of the 300,000 shares of common stock issuable to
the holders of the Zanett prepaid warrants would be issued if the calculated
exercise price under the terms of the Zanett prepaid warrants is $5.00 per share
or less.
In the case of the shares of common stock underlying the Zanett prepaid,
incentive and placement agent warrants, there may be changes in the number of
shares offered hereby due to changes in the exercise price of such warrants in
accordance with the terms thereof. This is not intended to constitute a
prediction as to the number of shares of common stock into which the Zanett
prepaid, incentive and placement agent warrants will be exercised. Moreover, in
the case of the shares of common stock underlying the Zanett prepaid warrants,
the number of shares of common stock owned and offered for sale hereby
represents an estimate of the number of shares of common stock issuable upon
conversion of or otherwise with respect to the Zanett prepaid warrants, based on
an exercise price of $5.00 in accordance with the terms of the Zanett prepaid
warrants.
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The common stock offered by this prospectus also includes 250,000
shares of common stock issuable upon the exercise of the warrant issued to
Pennsylvania Merchant Group in connection with investment banking services
received by us (the "PMG warrant"); and up to 3,000,000 shares of common stock
issuable upon the exercise of warrants issued to TMP Interactive, Inc. in
connection with a co-branded services arrangement we entered into with one of
our subsidiaries and TMP Interactive, Inc. in May, 2000 (the "TMP warrants").
<TABLE>
<CAPTION>
Number of Shares
Name of Selling Number of Shares Beneficially Shares Offered Beneficially Owned
Security Holder Owned Prior to Offering (1) Hereby After Offering (2)
- --------------- --------------------------- ------ --------------
Number Percentage
------ ----------
<S> <C> <C> <C> <C>
TMP Interactive, Inc. 3,000,000 (4) 3,000,000 0 0
Zanett Lombardier, Ltd. (3) 475,883 (5) 370,440 (14) 105,443 *
Pennsylvania Merchant Group 250,000 (6) 250,000 (6) 0 0
Stephen Turner 290,746 (7) 34,882 (15) 255,864 1.4
J. Craig Jones 125,885 (8) 24,426 (15) 101,459 *
David McCarthy (3) 19,991 (9) 19,991 (9) 0 0
Claudio Guazzoni (3) 56,870 (10) 12,431 (16) 44,439 *
Samuel Millbank (3) 17,672 (11) 8,288 (17) 9,444 *
Augie LaTorre (3) 27,233 (12) 5,850 (18) 21,383 *
Stephen McBryde 23,936 3,046 (15) 20,890 *
Timothy Shelton 23,936 3,046 (15) 20,890 *
William Bell 55,743 3,594 (15) 52,149 *
David Turner 18,643 2,882 (15) 15,761 *
Robert Gladstone 12,500 (13) 12,500 (13) 0 0
David Nussbaum 12,500 (13) 12,500 (13) 0 0
</TABLE>
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* Less than one percent of the common stock outstanding.
(1) The selling shareholders have sole voting power and investment power with
respect to all shares listed as owned by the selling shareholders.
(2) Assumes that the selling shareholders sell all of the shares offered in
this offering.
(3) Under the terms of the Zanett prepaid, incentive and placement agent
warrants and except under certain circumstances, none of the selling
shareholders is entitled to exercise such warrants to the extent that such
exercise would cause the selling shareholder to beneficially own more than
4.99% of the total outstanding common stock of the Company, excluding for
purposes of such determination shares of common stock issuable upon
exercise of warrants which have not been exercised. Therefore, the
aggregate number of shares shown as owned prior to the offering excludes
shares in excess of such 4.99% limitation, and the aggregate number of
shares offered hereby and which a selling shareholder may sell pursuant to
this prospectus may exceed the number of shares of common stock the selling
shareholder may otherwise beneficially own at any one time as determined
pursuant to Section 13(d) of the Exchange Act.
(4) Represents the shares underlying the TMP warrants, which consist of
2,000,000 shares of common stock issuable upon the exercise of a warrant
(at an exercise price of $9.00, subject to certain adjustments as stated
therein), which expires May 2, 2003 and is not presently exercisable
(except under certain conditions as set forth in the warrant), and
1,000,000 shares of common stock issuable upon the exercise of a warrant
(at an exercise price of $6.00, subject to certain adjustments as stated
therein), which expires May 2, 2003 and is currently exercisable.
(5) Shares beneficially owned consist of those discussed in footnote 14 below
and 105,443 shares of common stock issuable upon the exercise of prepaid
warrants issued in April, 1998 (based on an exercise/conversion price of
$1.47) ("April 1998 Private Placement"). Pursuant to the terms of the
prepaid warrants issued in the April 1998 Private Placement, the selling
shareholder has the right to purchase shares of common stock at an exercise
price equal to the lower of (A) $1.47 and (B) the amount obtained by
multiplying 65% by the average of the 5 lowest closing bid prices for the
common stock during the 20 consecutive trading day period ending on the
trading day immediately preceding the date of determination or exercise.
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(6) Consists of shares of common stock issuable upon the exercise of the PMG
warrant, which expires October 21, 2004. Currently, the PMG warrant is
exercisable for 175,000 shares of common stock. The warrant may be
exercised for the remaining 75,000 shares of common stock after October 21,
2000 if certain conditions are met (as set forth in the PMG warrant).
(7) Includes 8,333 shares of common stock issuable upon the exercise of
employee stock options exercisable within 60 days.
(8) Includes 16,666 shares of common stock issuable upon the exercise of
employee stock options exercisable within 60 days.
(9) Consists of 6,000 shares of common stock issuable upon the exercise of the
Zanett prepaid warrants (based on an exercise price of $5.00), 1,560 shares
of common stock issuable upon the exercise of the Zanett incentive warrants
and 12,431 shares of common stock issuable upon the exercise of the Zanett
placement agent warrants.
(10) Shares beneficially owned consist of those discussed in footnote 16 below,
27,483 shares of common stock issuable upon the exercise of other incentive
warrants issued in connection with various private placements and 16,956
shares of common stock.
(11) Shares beneficially owned consist of those discussed in footnote 17 below
and 9,444 shares of common stock issuable upon the exercise of other
incentive warrants issued in connection with the April 1998 Private
Placement.
(12) Shares beneficially owned consist of those discussed in footnote 18 below
and 21,383 shares of common stock.
(13) Consists of shares of common stock issued to the selling shareholder in
December, 1999. These shares were issued upon exercise of certain
restricted warrants which were originally issued in 1996 to certain Series
A preferred shareholders and subsequently transferred to the selling
shareholder.
(14) Shares to be sold in this offering consist of 294,000 shares of common
stock issuable upon the exercise of the Zanett prepaid warrants (based on
an exercise price of $5.00) and 76,440 shares of common stock issuable upon
the exercise of the Zanett incentive warrants, which expire March 22, 2005.
(15) Includes shares of common stock issued in February, 2000 pursuant to the
amendment of the Agreement of Merger between a Netplex subsidiary and the
shareholders of Automated Business Systems of North Carolina, Inc. and
Kellar Technology Group.
(16) Shares to be sold in this offering consist of 12,431 shares of common stock
issuable upon the exercise of the Zanett placement agent warrants, which
expire March 22, 2005.
(17) Shares to be sold in this offering consist of 8,288 shares of common stock
issuable upon the exercise of the Zanett placement agent warrants, which
expire March 22, 2005.
(18) Shares to be sold in this offering include 5,850 shares of common stock
issuable upon the exercise of the Zanett placement agent warrants, which
expire March 22, 2005.
PLAN OF DISTRIBUTION
The selling shareholders, or their pledgees, donees, distributees,
transferees or other successors, if any, may sell or distribute some or all of
the shares of common stock offered under this prospectus from time to time
through underwriters, dealers, brokers or other agents or directly to one or
more purchasers in one or more, or a combination, of the following types of
transactions:
. ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
. transactions involving cross and block trades or otherwise on the
Nasdaq SmallCap Market;
. purchases by a broker, dealer or underwriter as principal and
resale by that person for its own account under this prospectus;
. "at the market" or through market makers or into an existing market
for the common stock;
. sales to purchasers or sales effected through agents or in other
ways not including market makers or established trading markets;
. transactions involving cross trades or otherwise on the Nasdaq
SmallCap Market;
. short sales and other types of hedging transactions;
. in privately negotiated transactions; or
. by any other legally available means.
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to the prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. Brokers,
dealers, agents or underwriters participating in these transactions as agent may
receive compensation in the form of discounts, concessions or commissions from
the selling shareholders and, if they act as agent for the purchaser of the
shares, from the purchaser. The discounts, concessions or commissions received
by a particular broker, dealer, agent
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or underwriter might be in excess of those customary in the type of transaction
involved. This prospectus also may be used, by donees of the selling
shareholders, or by other persons acquiring the shares of common stock and who
wish to offer and sell the shares under circumstances requiring or making
desirable the use of the prospectus. If required, we will file, during any
period in which the offers or sales are being made, one or more supplements to
this prospectus to disclose the names of donees of the selling shareholders and
any other material information with respect to the plan of distribution not
previously disclosed.
The selling shareholders and any underwriters, brokers, dealers or
agents that participate in the distribution of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any discounts,
commissions or concessions received by any of these underwriters, brokers,
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act. Neither we nor the selling shareholders can presently
estimate the amount of compensation that may be received by the underwriters,
brokers, dealers or agents. We do not know of any existing arrangements between
the selling shareholders and any underwriter, broker, dealer or other agent
relating to the sale or distribution of the shares of common stock.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of any of the shares of common stock may not
simultaneously engage in market activities with respect to the common stock for
a period of up to five business days prior to the commencement of the
distribution. The selling shareholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations enacted under the Exchange
Act, including Rule 10b-5 and Regulation M. These provisions may limit the
timing of purchases and sales of any of the shares of common stock by the
selling shareholders. All of the above may affect the marketability of the
common stock.
We will pay all of the costs and expenses for the registration of the
shares of common stock by the selling shareholders under this prospectus. In
addition, we have agreed to indemnify the selling shareholders, the directors
and officers of the selling shareholders, each underwriter of the shares of
common stock to be registered under this prospectus, and each person who
controls any selling shareholder or underwriter of the shares of common stock to
be registered under this prospectus against liabilities concerning untrue
statements or omissions that we make, or violations of the securities laws that
we commit, with respect to the registration of the shares of common stock,
including liabilities under the Securities Act. The selling shareholders have
agreed to indemnify us against liabilities concerning untrue statements or
omissions that they make, or violations of the securities laws that they commit,
with respect to the registration of the shares of common stock, including
liabilities under the Securities Act. See "Disclosure of Commission Position on
Indemnification for Securities Act Liabilities."
If shares of the common stock are sold in an underwritten offering,
those shares may be acquired by the underwriters for their own account and may
be further resold from time to time in one or more transactions, including
negotiated transactions. These transactions may be made in the following manner:
. at market prices prevailing at the time of sale;
. at prices related to the prevailing market prices;
. at negotiated prices; or
. at fixed prices.
The names of the underwriters with respect to an offering of the shares of
common stock and the terms of the transactions, including any underwriting
discounts, concessions or commissions and other items constituting compensation
of the underwriters and broker-dealers, if any, will be set forth in a
supplement to this prospectus relating to the offering. Any public offering
price and any discounts, concessions or commissions allowed or reallowed or paid
to broker-dealers may be changed from time to time.
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EXPERTS
The consolidated financial statements and schedule of The Netplex
Group, Inc. as of December 31, 1999, and for the year then ended, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of Grant Thorton LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements and schedule of The Netplex
Group, Inc. as of December 31, 1998, and for each of the years in the two-year
period ended December 31, 1998, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered
hereby and certain other matters will be passed upon for us by Venable, Baetjer
and Howard, LLP.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act of 1933, as amended,
covering the shares offered by this prospectus. This prospectus does not contain
all of the information set forth in the Registration Statement and exhibits.
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any materials we file at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Regional Offices of the SEC at 7 World Trade Center, Suite
1300, New York, New York 10048, and at 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further
information on the SEC's public reference rooms. Our SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
MATERIAL CHANGES
On May 2, 2000, we entered into a two-year co-branded services
arrangement with TMP Interactive, Inc., the parent of TMP Worldwide, Inc. (whose
global online career site and flagship brand is Monster.com) and our subsidiary,
Contractor's Resources, whereby MyBizOffice will be a co-branded component of
the Monster Talent Market, an online auction-style marketplace for independent
professionals. Pursuant to this arrangement, we issued warrants to TMP
Interactive, Inc. for the right to purchase three million shares of our common
stock, at a weighted average exercise price of $8.00 per share. In addition, we
agreed to pay TMP Interactive, Inc. $5 million over the two-year engagement as a
minimum revenue share and slot fee.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to our filed SEC documents. The information incorporated by
reference is part of this prospectus. Information we file with the SEC after we
file this document will update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act, until our offering is completed.
(a) Our Annual Report on Form 10-K for the year ended December 31,
1999;
(b) Our current Report on Form 8-K filed with the SEC on April 3,
2000; and
(c) The description of our common stock that is contained in our Form
8-A filed March 8, 1993.
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Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be modified or superseded for the
purposes of this prospectus to the extent that a statement contained in this
prospectus, or in any other subsequently filed document which also is, or is
deemed to be, incorporated by reference, modifies or supersedes that statement.
Any statement modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this prospectus.
You may request a copy of any of the filings incorporated herein by
reference, at no cost, by writing or telephoning Mr. Peter Russo, Chief
Accounting Officer, at:
The Netplex Group, Inc.
8260 Greensboro Drive, 5th Floor
McLean, Virginia 22102
Telephone: (703) 356-3001.
You should rely only on the information incorporated by reference or
provided in this prospectus and any prospectus supplement. We have authorized no
one to provide you with different information. The selling shareholders are not
authorized to make an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on the
front of this prospectus or the applicable prospectus supplement.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our amended and restated certificate of incorporation allows us
indemnify to the fullest extent permitted under the New York Business
Corporation Law our directors, officers, employees and agents. We may indemnify
them only if we determine that their conduct did not violate the law. In
addition, the amended and restated certificate of incorporation eliminates the
personal liability of directors to Netplex and its shareholders for money
damages if they breach their duty as directors.
The New York Business Corporation Law also permits us to indemnify a
director or officer against judgments, fines, amounts paid in settlement and
reasonable expenses of litigation, except when we bring the case against such
director or officer, or if a case is brought by our shareholders against them on
our behalf. We can indemnify a director or officer if he acted in good faith and
for a purpose he reasonably believed to be in Netplex's best interests. However,
no indemnification is permitted in an action by Netplex, or its shareholders on
its behalf, in connection with the settlement or other disposition of a
threatened or pending action or in connection with any claim, issue or matter as
to which a director or officer is liable to Netplex, unless a court determines
Netplex should pay a portion. In addition, the New York Business Corporation Law
provides that a director or officer shall be indemnified if he is successful in
the litigation on the merits or otherwise.
Permitted indemnification as described above may only be made if it is
authorized by our board of directors, in each specific case, based upon a
determination that the applicable standard of conduct has been met or that
indemnification is proper under the New York Business Corporation Law. The board
of directors can authorize indemnification, either acting as a quorum of
disinterested directors or based upon an opinion by independent legal counsel,
or if the shareholders decide that indemnification is proper because the
applicable standard of conduct has been met. Upon application of the person
seeking indemnification, a court may also award indemnification upon a
determination that the standards outlined above have been met. We may also
authorize the advancement of litigation expenses to a director or officer upon
receipt of an undertaking by him to repay such expenses if it is ultimately
determined that he is not entitled to be indemnified by us.
We have also agreed to indemnify our directors and executive officers
pursuant to indemnification agreements. We will pay all expenses, losses,
claims, damages and liability incurred by our directors or executive officers
for or as a result of action taken or not taken while they were acting as
directors, officers, employees or agents.
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Although the indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons as discussed above, we have been advised that in the opinion of the SEC
this indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities, other than the payment by us of expenses incurred or
paid by one of our directors, officers or controlling persons in the successful
defense of any action, suit or proceeding, is asserted by that director, officer
or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
No person has been authorized to give any information or to make any
representation not contained in or incorporated by reference in this prospectus,
and, if given or made, the information or representation not contained in this
prospectus must not be relied on as having been authorized. This prospectus does
not constitute an offer to sell, or the solicitation of an offer to purchase,
any of the securities offered by this prospectus, in any jurisdiction to or from
any person to or from whom it is unlawful to make such offer or solicitation of
an offer, or proxy solicitation in such jurisdiction. Neither the delivery of
this prospectus nor the issuance or sale of any securities hereunder shall under
any circumstances create any implication that there has been no change in the
information disclosed in this prospectus to date or delivered and incorporated
by reference.
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Part II. Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses expected to be
incurred in connection with the issuance and distribution, all of which will be
paid by Netplex:
<TABLE>
<S> <C>
Registration Fee-- Securities and Exchange Commission....................... $3,975
Listing Fee-- Nasdaq SmallCap Market........................................ $15,170
Listing Fee - Boston Stock Exchange......................................... $5,000
Legal Fees and Expenses..................................................... $25,000
Printing and Engraving Expenses............................................. $1,000
Miscellaneous............................................................... $1,000
------
Total....................................................................... $51,145
</TABLE>
Except for the Securities and Exchange Commission Registration fee,
the National Association of Securities Dealers, Inc. filing fee, the Nasdaq
SmallCap Market listing fee and the Boston Stock Exchange listing fee, the cost
and expenses are estimates.
Item 15. Indemnification of Directors and Officers.
Except as hereinafter set forth, there is no statute, charter
provision, by-law, contract or other arrangement under which any controlling
person, director or officer of the Company is insured or indemnified in any
manner against liability that he may incur in his capacity as such.
The Company's authority to indemnify its directors and officers is
governed by the provisions of Article 7 of the New York Business Corporation Law
(the "BCL").
Section 722 of the BCL provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
judgments, fines, amounts paid in settlement, and reasonable expenses, including
attorneys' fees, in connection with actions or proceedings, whether civil or
criminal (other than an action by or in the right of the corporation--a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except indemnification only
extends to amounts paid in settlement and reasonable expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
actions, and the statute does not apply in respect of a threatened action, or a
pending action that is settled or otherwise disposed of, and requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. Section 721 of the BCL
provides that Article 7 of the BCL is not exclusive of other indemnification
that may be granted by a corporation's certificate of incorporation,
disinterested director vote, shareholder vote, agreement or otherwise.
A more specific description of the relevant law is provided below.
Section 721. Nonexclusivity of Statutory Provisions for
Indemnification of Directors and Officers -- The indemnification and advancement
of expenses granted pursuant to, or provided by, this article shall not be
deemed exclusive of any other rights to which a director or officer seeking
indemnification or advancement of expenses may be entitled, whether contained in
the certificate of incorporation or the by-laws or, when authorized by such
certificate of incorporation or by-laws, (i) a resolution of shareholders, (ii)
a resolution of directors, or (iii) an agreement providing for such
indemnification, provided that no indemnification may be made to or on behalf of
any
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director or officer if a judgment or other final adjudication adverse to the
director or officer establishes that his acts were committed in bad faith or
were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled. Nothing
contained in this article shall affect any rights to indemnification to which
corporate personnel other than directors and officers may be entitled by
contract or otherwise under law.
Section 722. Authorization for Indemnification of Directors and
Officers -- (a) A corporation may indemnify any person made, or threatened to be
made, a party to an action or proceeding (other than one by or in the right of
the corporation to procure a judgment in its favor), whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
corporation served in any capacity at the request of the corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding
by judgme nt, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation or that he had reasonable
cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he, his testator or intestate,
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer or any other corporation of
any type or kind, domestic or foreign, of any partnership, joint venture, trust,
employee benefit plan or other enterprise, against amounts paid in settlement
and reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is settled
or otherwise disposed of, or (2) any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation, unless and only
to the extent that the court in which the action was brought, or, if no action
was brought, any court of competent jurisdiction, determines upon application
that, in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
(d) For the purpose of this section, a corporation shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
Section 723. Payment of Indemnification Other Than By Court Award --
(a) A person who has been successful, on the merits or otherwise, in the defense
of a civil or criminal action or proceeding of the character described in
section 722 shall be entitled to indemnification as authorized in such section.
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(b) Except as provided in paragraph (a), any indemnification under
section 722 or otherwise permitted by section 721, unless ordered by a court
under section 724 (Indemnification of directors and officers by a court), shall
be made by the corporation, only if authorized in the specific case:
(1) By the board acting by a quorum consisting of directors
who are not parties to such action or proceeding upon a
finding that the director or officer has met the
standard of conduct set forth in section 722 or
established pursuant to section 721, as the case may be,
or,
(2) If a quorum under subparagraph (1) is not obtainable or,
even if obtainable, a quorum of disinterested directors
so directs;
(A) By the board upon the opinion in writing of
independent legal counsel that indemnification is
proper in the circumstances because the applicable
standard of conduct set forth in such sections has
been met by such director or officer, or
(B) By the shareholders upon a finding that the
director or officer has met the applicable standard
of conduct set forth in such sections.
(C) Expenses incurred in defending a civil or criminal
action or proceeding may be paid by the corporation
in advance of the final disposition of such action
or proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such
amount as, and to the extent, required by paragraph
(a) of section 725.
Section 724. Indemnification of Directors and Officers by a Court --
(a) Notwithstanding the failure of a corporation to provide indemnification, and
despite any contrary resolution of the board or of the shareholders in the
specific case under section 723 (Payment of indemnification other than by court
award), indemnification shall be awarded by a court to the extent authorized
under section 722 (Authorization for indemnification of directors and officers),
and paragraph (a) of section 723.
Application therefor may be made, in every case, either:
(1) In the civil action or proceeding in which the
expenses were incurred or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in
which case the application shall set forth the
disposition of any previous application made to any
court for the same or similar relief and also
reasonable cause for the failure to make application
for such relief in action or proceeding in which the
expenses were incurred or other amounts were paid.
(b) The application shall be made in such manner and form as may be
required by the applicable rules of court or, in the absence thereof, by
direction of a court to which it is made. Such application shall be upon notice
to the corporation. The court may also direct that notice be given at the
expense of the corporation to the shareholders and such other persons as it may
designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court may
allow a person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his defense
therein, if the court shall find that the defendant has by his pleadings or
during the course of the litigation raised genuine issues of fact or law.
Section 725. Other Provisions Affecting Indemnification of Directors
and Officers -- (a) All expenses incurred in defending a civil or criminal
action or proceeding which are advanced by the corporation under paragraph (c)
of section 723 (Payment of indemnification other than by court award) or allowed
by a court under paragraph (c) of section 724 (Indemnification of directors and
officers by a court) shall be repaid in case the person receiving such
advancement or allowance is ultimately found, under the procedure set forth in
this article, not to be
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entitled to indemnification or, where indemnification is granted, to the extent
the expenses so advanced by the corporation or allowed by the court exceed the
indemnification to which he is entitled:
(b) No indemnification, advancement or allowance shall be made under
this article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with
the law of the jurisdiction of incorporation of a
foreign corporation which prohibits or otherwise
limits such indemnification;
(2) That the indemnification would be inconsistent with a
provision of the certificate of incorporation, a
by-law, a resolution of the board or of the
shareholders, an agreement or other proper corporate
action, in effect at the time of the accrual of the
alleged cause of action asserted in the threatened or
pending action or proceeding in which the expenses
were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or
(3) If there has been a settlement approved by the court,
that the indemnification would be inconsistent with
any condition with respect to indemnification
expressly imposed by the court in approving the
settlement.
(c) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders,
the corporation shall, not later than the next annual meeting of shareholders
unless such meeting is held within three months from the date of such payment,
and, in any event, within fifteen months from the date of such payment, mail to
its shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
(d) If any action with respect to indemnification of directors and
officers is taken by way of amendment of the by-laws, resolution of directors,
or by agreement, then the corporation shall, not later than the next annual
meeting of shareholders, unless such meeting is held within three months from
the date of such action, and, in any event, within fifteen months from the date
of such action, mail to its shareholders of record at the time entitled to vote
for the election of directors a statement specifying the action taken.
(e) Any notification required to be made pursuant to the foregoing
paragraph (c) or (d) of this section by any domestic mutual insurer shall be
satisfied by compliance with the corresponding provisions of section one
thousand two hundred sixteen of the insurance law.
(f) The provisions of this article relating to indemnification of
directors and officers and insurance therefor shall apply to domestic
corporations and foreign corporations doing business in this state, except as
provided in section 1320 (Exemption from certain provisions).
Section 726. Insurance for Indemnification of Directors and Officers --
(a) Subject to paragraph (b), a corporation shall have power to purchase and
maintain insurance:
(1) To indemnify the corporation for any obligation which it
incurs as a result of the indemnification of directors and
officers under the provisions of this article, and
(2) To indemnify directors and officers in instances in which they
may be indemnified by the corporation under the provisions of
this article, and
(3) To indemnify directors and officers in instances in which they
may not otherwise be indemnified by the corporation under the
provisions of this article provided the contract of insurance
covering such directors and officers provides, in a manner
acceptable to the superintendent of insurance, for
II-4
<PAGE>
a retention amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any payment,
other than cost of defense, to or on behalf of any director or officer:
(1) if a judgment or other final adjudication adverse to the
insured director or officer establishes that his acts of
active and deliberate dishonesty were material to the cause of
action so adjudicated, or that he personally gained in fact a
financial profit or other advantage to which he was not
legally entitled, or
(2) in relation to any risk the insurance of which is prohibited
under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may be
included in a single contract or supplement thereto. Retrospective rated
contracts are prohibited.
(d) The corporation shall, within the time and to the persons provided
in paragraph (c) of section 725 (Other provisions affecting indemnification of
directors or officers), mail a statement in respect of any insurance it has
purchased or renewed under this section, specifying the insurance carrier, date
of the contract, cost of the insurance, corporate positions insured, and a
statement explaining all sums, not previously reported in a statement to
shareholders, paid under any indemnification insurance contract.
(e) This section is the public policy of this state to spread the risk
of corporate management, notwithstanding any other general or special law of
this state or of any other jurisdiction including the federal government.
The Company's Amended and Restated Certificate of Incorporation
provides that the personal liability of the directors of the Company to the
Company or its shareholders for damages for any breach of duty as directors, is
eliminated, provided that nothing shall limit the liability of any director if a
judgment or other final adjudication adverse to him establishes that his acts or
omissions were in bad faith or involved intentional misconduct.
The Company has also entered into indemnification agreements with each
of its officers and directors.
The selling shareholders have agreed to indemnify Netplex against
liabilities concerning untrue statements or omissions that they make, or
violations of the securities laws that they commit, with respect to the
registration of the shares of common stock, including liabilities under the
Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be given to directors, officers and controlling persons of the
registrant or others under the above provisions, or otherwise, the registrant
has been informed that in the opinion of the Commission, indemnification for
liabilities under the Securities Act is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against liabilities under the Securities Act, other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding, is asserted by a director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether that
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of the issue.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
4(a) -- Common Stock Purchase Warrant issued to the Pennsylvania Merchant
Group, dated October 21, 1999.****
4(b) -- Investor Rights Agreement dated September 30, 1998.*
II-5
<PAGE>
4(c) -- Registration Rights Agreement (between Netplex and Waterside
Capital Corporation) dated September 30, 1998.*
4(d) -- Stock Purchase Warrant dated September 30, 1998.*
4(e) -- Placement Agency Agreement dated September 25, 1998.*
4(f) -- Incentive Stock Purchase Warrant dated September 28, 1998.*
4(g) -- Prepaid Common Stock Purchase Warrant dated September 28, 1998.*
4(h) -- Registration Rights Agreement (between Netplex and the Initial
Investors) dated September 28, 1998.*
4(i) -- Securities Purchase Agreement dated September 25, 1998.*
4(j) -- Form of Prepaid Common Stock Purchase Warrant, dated as of
March __, 2000, by and between the Company and each of the
Holders.**
4(k) -- Form of The Netplex Group, Inc. Incentive Stock Purchase Warrant,
dated as of March __, 2000, by and between the Company and each of
the holders.**
4(l) -- Form of Prepaid Warrant issued to Purchasers in April 1998 Private
Placement.***
4(m) -- Form of Incentive Warrant issued to Purchasers in April 1998
Private Placement.***
4(n) -- Form of Warrant issued to TMP Interactive, Inc. for the right to
purchase 2,000,000 shares of common stock, dated May 2, 2000.****
4(o) -- Form of Warrant issued to TMP Interactive, Inc. for the right to
purchase 1,000,000 shares of common stock, dated May 2, 2000.****
5 -- Opinion of Venable, Baetjer and Howard, LLP.****
23(a) -- Consent of Grant Thornton, LLP.****
23(b) -- Consent of KPMG LLP.****
23(c) -- Consent of Venable, Baetjer and Howard, LLP (contained in their
opinion included under Exhibit 5).****
24 -- Power of Attorney, included on Page II-8.
_______________________
* Incorporated by reference to the Registrant's Registration Statement on
Form S-3 filed with the Securities and Exchange Commission on November
13, 1998 (Commission File No. 333-67321), as amended.
** Incorporated by reference to the Registrant's Current Report on Form
8-K filed with the Securities and Exchange Commission on April 3, 2000
(Commission File No. 1-11784).
*** Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1997 filed with the Securities and
Exchange Commission on April 15, 1998.
**** Filed herewith.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
II-6
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To file a post-effective amendment and to remove from registration
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Under the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in McLean, Virginia, on the 9/th/ day of May, 2000.
THE NETPLEX GROUP, INC.
By: /s/ Gene Zaino
------------------------------------
Gene Zaino
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Gene Zaino and Robert Skelton, either of whom may act, as their true
and lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Gene Zaino Chief Executive Officer May 9, 2000
- ------------------------ and Chairman (Principal
Gena Zaino Executive Officer)
/s/ Pamela Fredette President and Director May 9, 2000
- ------------------------
Pamela Fredette
/s/ Walton E. Bell III Chief Financial Officer and May 9, 2000
- ------------------------ Treasurer (Principal Financial
Walton E. Bell III Officer)
/s/ Peter Russo Chief Accounting Officer May 9, 2000
- ------------------------ (Principal Accounting Officer)
Peter Russo
II-8
<PAGE>
/s/ Richard Goldstein Director May 9, 2000
- ---------------------------
Richard Goldstein
/s/ J. Alan Lindauer Director May 9, 2000
- ---------------------------
J. Alan Lindauer
/s/ Steven Hanau Director May 9, 2000
- ---------------------------
Steven Hanau
/s/ Robert Skelton Attorney-in-fact May 9, 2000
- ---------------------------
Robert Skelton
II-9
<PAGE>
EXHIBIT INDEX
Exhibit Description
4 (a) -- Common Stock Purchase Warrant issued to the Pennsylvania
Merchant Group, dated October 21, 1999.****
4 (b) -- Investor Rights Agreement dated September 30, 1998.*
4 (c) -- Registration Rights Agreement (between Netplex and Waterside
Capital Corporation) dated September 30, 1998.*
4 (d) -- Stock Purchase Warrant dated September 30, 1998.*
4 (e) -- Placement Agency Agreement dated September 25, 1998.*
4 (f) -- Incentive Stock Purchase Warrant dated September 28, 1998.*
4 (g) -- Prepaid Common Stock Purchase Warrant dated September 28, 1998.*
4 (h) -- Registration Rights Agreement (between Netplex and the Initial
Investors) dated September 28, 1998.*
4 (i) -- Securities Purchase Agreement dated September 25, 1998.*
4 (j) -- Form of Prepaid Common Stock Purchase Warrant, dated as of March
__, 2000, by and between the Company and each of the Holders.**
4 (k) -- Form of The Netplex Group, Inc. Incentive Stock Purchase
Warrant, dated as of March __, 2000, by and between the Company
and each of the holders.**
4 (l) -- Form of Prepaid Warrant issued to Purchasers in April 1998
Private Placement.***
4 (m) -- Form of Incentive Warrant issued to Purchasers in April 1998
Private Placement.***
4 (n) -- Form of Warrant issued to TMP Interactive, Inc. for the right to
purchase 2,000,000 shares of common stock, dated May 2,
2000.****
4 (o) -- Form of Warrant issued to TMP Interactive, Inc. for the right to
purchase 1,000,000 shares of common stock, dated May 2,
2000.****
5 -- Opinion of Venable, Baetjer and Howard, LLP.****
23(a) -- Consent of Grant Thornton LLP.****
23(b) -- Consent of KPMG LLP.****
23(c) -- Consent of Venable, Baetjer and Howard, LLP (contained in their
opinion included under Exhibit 5).****
24 -- Power of Attorney, included on Page II-8.
______________________
* Incorporated by reference to the Registrant's Registration Statement on
Form S-3 filed with the Securities and Exchange Commission on November
13, 1998 (Commission File No. 333-67321), as amended.
** Incorporated by reference to the Registrant's Current Report on Form
8-K filed with the Securities and Exchange Commission on April 3, 2000
(Commission File No. 1-11784).
*** Incorporated by reference to the Registrant's Annual Report on Form 10-
K for the year ended December 31, 1997 filed with the Securities and
Exchange Commission on April 15, 1998.
**** Filed herewith.
<PAGE>
Exhibit 4(a)
VOID AFTER 5:00PM, PHILADELPHIA, PA
TIME, ON OCTOBER 21, 2004
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
THE NETPLEX GROUP, INC.
Warrant for the Purchase of Shares of Common Stock
--------------------------------------------------
No. PMG-001 Up to 250,000 Shares of
Date: October 21, 1999 Common Stock, $.001 par value
FOR VALUE RECEIVED, THE NETPLEX GROUP, INC., a New York corporation (the
"Company"), with its principal office at 1800 Robert Fulton Drive, Suite 250,
Reston, Virginia 20191, hereby certifies that Pennsylvania Merchant Group (the
"Holder") is entitled, subject to the provisions of this Warrant, to purchase
from the Company, at any time after the date hereof and continuing for a period
of five (5) years (the "Expiration Date"), up to the number of fully paid and
nonassessable shares of Common Stock of the Company set forth above, subject to
adjustment as hereinafter provided.
The Holder may purchase such number of shares of Common Stock at a purchase
price per share (as appropriately adjusted pursuant to Section 6 hereof) of
$3.00 (the "Exercise Price"), subject to the limitations set forth in Section 1.
The term "Common Stock" shall mean the aforementioned Common Stock of the
Company, together with any other equity securities that may be issued by the
Company in addition thereto or in substitution therefor as provided herein.
The number of shares of Common Stock to be received upon the exercise or
exchange of this Warrant and the price to be paid for a share of Common Stock
are subject to adjustment from time to time as hereinafter set forth. The
shares of Common Stock deliverable upon such exercise or exchange, as adjusted
from time to time, are hereinafter sometimes referred to as "Warrant Shares."
<PAGE>
Section 1. Exercise of Warrant; Vesting; Cashless Exercise.
-----------------------------------------------
(a) The vested portion of this Warrant may be exercised in whole or in part
on any business day on or before the Expiration Date by presentation and
surrender hereof to the Company at its principal office at the address set forth
in the initial paragraph hereof (or at such other address as the Company may
hereafter notify the Holder in writing) with the Purchase Form annexed hereto
duly executed and accompanied by proper payment of the Exercise Price in lawful
money of the United States of America in the form of a check, subject to
collection, for the number of Warrant Shares specified in the Purchase Form. If
this Warrant should be exercised in part only, the Company shall, upon surrender
of this Warrant, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of the Warrant Shares purchasable
hereunder. Upon receipt by the Company of this Warrant and such Purchase Form,
together with proper payment of the Exercise Price, at such office, the Holder
shall be deemed to be the holder of record of the Warrant Shares,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then be
actually delivered to the Holder. The Company shall pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of the Warrant Shares.
(b) Vesting. The Holder shall have the right to purchase 175,000 shares of
--------
the Common Stock represented by this Warrant as of the date hereof. The Holder
shall have the right to purchase the remaining 75,000 shares of the Common Stock
on or after October 21, 2000, provided, however, that the Company has extended
that certain Agreement dated October 21, 1999, as amended December 22, 1999, by
and between the Company and Holder in accordance with the terms of that certain
Agreement. If that certain Agreement has not been extended by the Company in
accordance with the terms of that Agreement, then the Holder shall not have any
rights to purchase the remaining 75,000 shares of the Common Stock represented
by this Warrant.
(c) Cashless Exercise. In addition to the rights of the Holder under
------------------
paragraph (a) above, the Holder shall have the right to exercise this Warrant,
in whole or in part, in lieu of paying the Exercise Price in cash, by
instructing the Company to issue that number of Warrant Shares determined by
multiplying the number of Warrant Shares in respect of which this Warrant is
being exercised by a fraction, the numerator of which shall be the difference
between the Market Price (as defined in Section ) 6(e) below) per share of
Common Stock on the date of exercise and the Exercise Price, and the denominator
of which shall be such Market Price per share of Common Stock.
Section 2. Reservation of Shares. The Company hereby agrees that at all
---------------------
times there shall be reserved for issuance and delivery upon exercise or
exchange of this Warrant all shares of its Common Stock or other shares of
capital stock of the Company from time to time issuable upon exercise or
exchange of this Warrant. All such shares shall be duly authorized
2
<PAGE>
and, when issued upon the exercise or exchange of the Warrant in accordance with
the terms hereof, shall be validly issued, fully paid and nonassessable, free
and clear of all liens, security interests, charges and other encumbrances or
restrictions on sale (other than any restrictions on sale pursuant to applicable
federal and state securities laws) and free and clear of all preemptive rights.
Section 3. Fractional Interest
-------------------
The Company will not issue a fractional share of Common Stock upon exercise or
exchange of this Warrant. Instead, the Company will deliver its check for the
current market value of the fractional share. The current market value of a
fraction of a share is determined as follows: multiply the Market Price (as
defined in Section 6(g) below) of a full share by the fraction of a share and
round the result to the nearest cent.
Section 4. Assignment or Loss of Warrant.
-----------------------------
(a) Except as provided in Section 9, the Holder of this Warrant shall be
entitled, without obtaining the consent of the Company, to assign its interest
in this Warrant, or any of the Warrant Shares, in whole or in part to any bona
fide officer, director or partner of Holder, provided, however, that the
transferee, prior to any such transfer, agrees in writing, in form and substance
satisfactory to the Company, to be bound by the terms of this Agreement as if
originally a party hereto and provides the Company with an opinion of counsel in
such form reasonably acceptable to the Company and its counsel, that such
transfer would not be in violation of the Act or any applicable state securities
or blue sky laws. Subject to the provisions hereof and of Section 9, upon
surrender of this Warrant to the Company or at the office of its stock transfer
agent or warrant agent, with the Assignment Form annexed hereto duly executed
and funds sufficient to pay any transfer or other tax payable in respect
thereof, the Company shall, without charge, execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees named in such instrument of
assignment and, if the Holder's entire interest is not being assigned, in the
name of the Holder, and this Warrant shall promptly be canceled.
(b) Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnification satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
Section 5. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those set forth in this Warrant.
Nothing contained in this Warrant shall be construed as conferring upon the
Holder hereof the right to vote or to consent or to receive notice as a
shareholder of the Company on any matters or with respect to any rights
whatsoever as a shareholder of the Company. No dividends or interest shall be
payable or accrued in respect of this Warrant or the interest represented hereby
or the Warrant Shares purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised or exchanged in accordance with its
terms.
3
<PAGE>
Section 6. Adjustment of Exercise Price and Number of Shares. The number and
-------------------------------------------------
kind of securities purchasable upon the exercise or exchange of this Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Adjustment for Change in Capital Stock. If at any time after October 21,
--------------------------------------
1999, , the Company:
(A) pays a dividend or makes a distribution on its Common Stock, in
either case in shares of its Common Stock;
(B) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(C) combines its outstanding shares of Common Stock into a smaller number
of shares; or
(D) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock;
then the Exercise Price in effect immediately prior to such action shall be
adjusted so that the Holder may receive, upon exercise or exchange of this
Warrant and payment of the same aggregate consideration, the number of shares of
capital stock of the Company which the Holder would have owned immediately
following such action if the Holder had exercised or exchanged the Warrant
immediately prior to such action.
The adjustment shall become effective immediately after the record date in the
case of a dividend or distribution and immediately after the effective date in
the case of a subdivision, combination or reclassification.
(b) Adjustment for Other Distributions. If at any time after the date
----------------------------------
hereof, the Company distributes to all of its Common Stock holders any of its
assets, equity securities or debt securities, the Holder shall be entitled,
without additional consideration, to the same distribution as it would have
received if it had been a holder of the Warrant Shares.
This subsection does not apply to cash dividends or cash distributions paid
out of consolidated current or retained earnings as shown on the books of the
Company and paid in the ordinary course of business.
(c) Deferral of Issuance or Payment. In any case in which an event covered
-------------------------------
by this Section 6 shall require that an adjustment in the Exercise Price be made
effective as of a record date, the Company may elect to defer until the actual
occurrence of such event (i) issuing to the Holder, if this Warrant is exercised
after such record date, the shares of Common Stock and other capital stock of
the Company, if any, issuable upon such exercise over and above the shares of
Common Stock or other capital stock of the Company, if any, issuable upon such
exercise on the basis of the Exercise Price in effect prior to such adjustment,
and (ii) paying to the Holder by check any amount in lieu of the issuance of
fractional shares pursuant to Section 3.
4
<PAGE>
(d) When No Adjustment Required. No adjustment need be made for a change in
---------------------------
the par value of the Common Stock.
(e) Market Price. The "Market Price" per share of Common Stock is the last
------------
reported sales price of the Common Stock as reported by NASDAQ, or the primary
national securities exchange on which the Common Stock is then quoted; provided,
however, that if quotes for the Common Stock are not reported by NASDAQ and the
Common Stock is neither traded on the NASDAQ National Market, on a national
securities exchange, on the NASDAQ Small Cap Market nor on the OTC Electronic
Bulletin Board, the price referred to above shall be the price reflected in the
over-the-counter market as reported by the National Quotation Bureau, Inc. or
any organization performing a similar function, and provided, further, that if
the Common Stock is not then publicly traded, the Market Price shall equal the
Conversion Price.
(f) No Adjustment Upon Exercise of Warrants. No adjustments shall be made
---------------------------------------
under any Section herein in connection with the issuance of Warrant Shares
upon exercise or exchange of the Warrants.
(g) Common Stock Defined. Whenever reference is made in Section 6(a) to the
--------------------
issue of shares of Common Stock, the term "Common Stock" shall include any
equity securities of any class of the Company hereinafter authorized which shall
not be limited to a fixed sum or percentage in respect of the right of the
thereof to participate in dividends or distributions of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company.
Subject to the provisions of Section 8 hereof, however, shares issuable upon
exercise or exchange hereof shall include only shares of the class designated as
Common Stock of the Company as of the date hereof or shares of any class or
classes resulting from any reclassification or reclassifications thereof or as a
result of any corporate reorganization as provided for in Section 8 hereof.
Section 7. Officers' Certificate. Whenever the Exercise Price shall be
---------------------
adjusted as required by the provisions of Section 6, the Company shall forthwith
file in the custody of its secretary or an assistant secretary at its principal
office an officers' certificate showing the adjusted Exercise Price determined
as herein provided, setting forth in reasonable detail the facts requiring such
adjustment and the manner of computing such adjustment. Each such officers'
certificate shall be signed by the chairman, president or chief financial
officer of the Company and by the secretary or any assistant secretary of the
Company. Each such officers' certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a Warrant
executed and delivered pursuant to Section 4 hereof.
Section 8. Reclassification, Reorganization, Consolidation or Merger. In the
---------------------------------------------------------
event of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the par
value of the Common Stock) or in the event of any consolidation or merger of the
Company with or into another corporation (other than a merger in which merger
the Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise or exchange of this Warrant)
or in the event of any sale, lease, transfer or conveyance to another
corporation of the property and assets of the Company as an entirety or
substantially as an entirety, the Company shall use its best efforts to cause
effective
5
<PAGE>
provisions to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
that would have been received upon exercise or exchange of this Warrant
immediately prior to such reclassification, capital reorganization, change,
consolidation, merger, sale or conveyance. Any such provision shall include
provisions for adjustments in respect of such shares of stock and other
securities and property that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Warrant. The foregoing provisions of
this Section 8 shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
Section 9. Transfer to Comply with the Securities Act of 1933; Registration
----------------------------------------------------------------
Rights.
- ------
9.1 No sale, transfer, assignment, hypothecation or other disposition of this
Warrant or of the Warrant Shares shall be made unless any such transfer,
assignment or other disposition will comply with the rules and statutes
administered by the Securities and Exchange Commission and (i) a Registration
Statement under the Act including such Shares is currently in effect, or (ii) in
the written opinion of counsel, which counsel and which opinion shall be
reasonably satisfactory to the Company, a current registration Statement is not
required for such disposition of the shares. Each stock certificate
representing Warrant Shares issued upon exercise or exchange of this Warrant
shall bear a legend in substantially the following form (unless, in the opinion
of counsel, which counsel and which opinion shall be reasonably satisfactory to
the Company, such legend is not required):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS."
9.2 The Company agrees that during the term of this Warrant, the Holder shall
have the right to require the Company to register the Warrant Shares with any
subsequent registration statement filed by the Company.
Section 10. Modification and Waiver. Except as otherwise provided herein,
-----------------------
any term of this Warrant may be amended, and the observance of any term of this
Warrant may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and
6
<PAGE>
the Holder of this Warrant. Any amendment or waiver effected in accordance with
this section shall be binding upon each future Holder of this Warrant and the
Company.
Section 11. Notices. All notices and other communications required or
-------
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery, on the first business day following mailing by overnight
courier, or on the fifth day following mailing by registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at the
address indicated therefor in the first paragraph of this Warrant and the Holder
at its address as shown on the books of the Company; provided, however, that
presentation of a Purchase Form and payment of any Exercise Price shall be
effective only upon receipt by the Company.
Section 12. Descriptive Headings and Governing Law. The titles of the
--------------------------------------
paragraphs and subparagraphs of this Warrant are for convenience of reference
only and are not to be considered in construing this Warrant. This Warrant
shall be governed by and construed under the laws of the Commonwealth of
Pennsylvania without regard to any otherwise applicable principles of conflicts
of laws.
Section 13. Entire Agreement. This Warrant and the other documents delivered
----------------
pursuant hereto constitute the full and entire understanding and agreement among
the parties with regard to the subjects hereof and no party shall be liable or
bound to any other party in any manner by any representations, warranties,
covenants or agreements except as specifically set forth herein or therein.
Nothing in this Warrant, express or implied, is intended to confer upon any
party, other than the parties hereto and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Warrant, except as expressly provided herein.
Section 14. Severability. In the event that any provision of this Warrant
------------
shall be invalid, illegal or unenforceable, it shall, to the extent practicable,
be modified so as to make it valid, legal and enforceable and to retain as
nearly as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. To the extent permitted by law, the parties hereto waive the
benefit of any provision of law that renders any provision of this Warrant
invalid or unenforceable in any respect.
Section 15. No Waiver. No waiver by any party to this Warrant of any one or
---------
more defaults by any other party or parties in the performance of any of the
provisions hereof shall operate or be construed as a waiver of any future
default or defaults, whether of a like or different nature. Except as expressly
provided herein, no failure or delay on the part of any party in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy.
7
<PAGE>
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed by
its duly authorized officer and to be dated as of this 21st day of October,
1999.
THE NETPLEX GROUP, INC.
By:
-------------------------------------
Gene F. Zaino
Chairman and Chief Executive Officer
8
<PAGE>
PURCHASE FORM
-------------
Dated
--------------, ----
The undersigned hereby irrevocably elects to exercise the within Warrant to
purchase ______ shares of Common Stock and hereby makes payment of _____________
in payment of the exercise price thereof.
Signature:
-----------------------------
Name:
----------------------------------
Title:
---------------------------------
Name of Holder:
--------------------------------
Address:
---------------------------------------
---------------------------------------
Taxpayer ID#:
----------------------------------
9
<PAGE>
ASSIGNMENT FORM
---------------
Dated
--------------, ----
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers
unto _____________________________(the "Assignee"), Taxpayer ID#_______________
(please type or print in block letters)
-------------------------------------------------------------------------------
(insert address)
its right to purchase up to ________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
_______________________________ Attorney, to transfer the same on the books of
the Company, with full power of substitution in the premises.
Signature
---------------------------
Name:
-------------------------------
Title:
------------------------------
Name of Holder:
--------------------------------
Address:
---------------------------------------
---------------------------------------
Taxpayer ID#:
----------------------------------
10
<PAGE>
Exhibit 4(n)
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT AND LAWS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON MAY 2, 2003, OR IF NOT A BUSINESS DAY,
AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS
DAY.
WARRANT TO PURCHASE
2,000,000
SHARES OF COMMON STOCK
OF
THE NETPLEX GROUP, INC.
No. W-2
This certifies that, for value received, TMP Interactive, Inc. and its
registered assigns (collectively, the "Warrantholder"), is entitled to purchase
from The Netplex Group, Inc., a corporation incorporated under the laws of the
State of New York (the "Company"), subject to the terms and conditions hereof,
at any time on or after the date hereof and before 5:00 p.m., New York time on
May 2, 2003 (or, if such day is not a Business Day, at or before 5:00 p.m., New
York time, on the next following Business Day), up to 2,000,000 fully paid and
nonassessable shares of Common Stock of the Company at the Exercise Price (as
defined herein). The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as provided in Article 3
hereof.
<PAGE>
ARTICLE 1
DEFINITION OF TERMS
As used in this Warrant, the following capitalized terms shall have the
following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day on
------------
which banks in the State of New York are authorized by law to remain closed.
(b) Common Stock: Common Stock, par value $.001 per share, of the Company.
------------
(c) Common Stock Equivalents: Securities that are convertible into or
------------------------
exercisable for shares of Common Stock.
(c) Co-Branding Agreement: That certain Co-Branded Services Agreement,
---------------------
dated the date hereof, among TMP Interactive, Inc., The Netplex Group, Inc. and
Contractors Resources, Inc.
(d) Demand Registration: See Section 6.2.
-------------------
(e) Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
(f) Exercise Price: $9.00 per Warrant Share, as such price may be adjusted
--------------
from time to time pursuant to Article 3 hereof.
(g) Expiration Date: 5:00 p.m., New York time, on May 2, 2003, or if such
---------------
day is not a Business Day, the next succeeding day which is a Business Day.
(h) Holder: A Holder of Registrable Securities.
------
(i) NASD: National Association of Securities Dealers, Inc.
----
(j) Person: An individual, partnership, joint venture, corporation, trust,
------
unincorporated organization or government or any department or agency thereof.
(k) Piggyback Registration: See Section 6.1.
----------------------
(l) Prospectus: Any prospectus included in any Registration Statement, as
----------
amended or supplemented by any prospectus supplement, or to which a Term Sheet
(as defined in Rule 434 under the Securities Act) relates, with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments and all materials incorporated
by reference in such Prospectus.
(m) Public Offering: A public offering of any of the Company's equity or
---------------
debt securities
2
<PAGE>
pursuant to Registration Statement under the Securities Act.
(n) Registrable Securities: Any Warrant Shares issued to TMP Interactive,
----------------------
Inc. and/or its designees or transferees and/or other securities that may be or
are issued by the Company upon exercise of the Warrants, including those which
may thereafter be issued by the Company in respect of any such securities by
means of any stock splits, stock dividends, recapitalizations, reclassifications
or the like, and as adjusted pursuant to Article 3 hereof; provided, however,
that as to any particular security contained in Registrable Securities, such
securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such Registration Statement; or (ii) they shall have been
sold to the public pursuant to Rule 144(k) (or any successor provision) under
the Securities Act.
(o) Registration Expenses: Any and all expenses incurred in connection
---------------------
with any registration or action incident to performance of or compliance by the
Company with Article 6, including, without limitation, (i) all SEC, national
securities exchange and NASD registration and filing fees; all listing fees and
all transfer agent fees; (ii) all fees and expenses of complying with state
securities or blue sky laws (including the fees and disbursements of counsel of
the underwriters in connection with blue sky qualifications of the Registrable
Securities); (iii) all printing, mailing, messenger and delivery expenses; (iv)
all fees and disbursements of counsel for the Company and of its accountants,
including the expenses of any special audits and/or "cold comfort" letters
required by or incident to such performance and compliance; and (v) any
disbursements of underwriters customarily paid by issuers or sellers of
securities including the reasonable fees and expenses of any special experts
retained by the underwriters in connection with the requested registration, but
excluding underwriting discounts and commissions, brokerage fees and transfer
taxes, if any, and fees of counsel or accountants retained by the holders of
Registrable Securities to advise them in their capacity as Holders of
Registrable Securities.
(s) Registration Statement: Any registration statement of the Company
----------------------
filed or to be filed with the SEC which covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including all amendments
(including post-effective amendments) and supplements thereto, all exhibits
thereto and all material incorporated therein by reference.
(t) SEC: The Securities and Exchange Commission or any other federal
---
agency at the time administering the Securities Act and the Exchange Act.
(u) Securities Act: The Securities Act of 1933, as amended.
--------------
(v) 25% Holders: At any time as to which a Demand Registration is
-----------
requested, the Holder and/or the holders of any other Warrants and/or the
holders of Warrant Shares who have the right to acquire or hold, as the case may
be, not less than 25% of the combined total of Warrant Shares issuable and
Warrant Shares outstanding (other than Warrant Shares which are no longer
Registrable Securities by reason of the proviso to the definition of the term
"Registrable Securities") at the time such Demand Registration is requested.
3
<PAGE>
(w) Warrant Shares: Common Stock, Common Stock Equivalents and other
--------------
securities purchased or purchasable upon exercise or conversion of the Warrants.
(x) Warrantholder: The person(s) or entity(ies) to whom this Warrant is
-------------
originally issued, or any successor in interest thereto, or any assignee or
transferee thereof, in whose name this Warrant is registered upon the books to
be maintained by the Company for that purpose.
(y) Warrants: This Warrant and all other warrants that may be issued in
--------
its place (together evidencing the right to purchase an aggregate of up to
2,000,000 shares of Common Stock), originally issued as set forth in the
definition of Registrable Securities.
ARTICLE 2
DURATION AND EXERCISE OF WARRANT
2.1 Duration of Warrant
The Warrantholder may exercise this Warrant at any time and from time to
time after 9:00 a.m., New York time, on the date which is two years from the
date hereof and before 5:00 p.m., New York time, on the Expiration Date.
Notwithstanding the foregoing sentence, if the Co-Branding Agreement is
terminated prior to May 2, 2002 by Contractors Resources, Inc. pursuant to
Section 9 thereto or by TMP Interactive, Inc. pursuant to Sections 9(a)(i),
(a)(ii), (a)(iii), (a)(iv), (a)(v) or (a)(vi) thereto, a portion of this Warrant
equal to the product of (a) 2,000,000 and (b) a fraction (i) the numerator of
which is equal to the number of months elapsed between the date hereof and the
date of such termination and (ii) the denominator of which is 24, shall become
immediately exercisable. Notwithstanding anything herein to the contrary, in
the event of a termination of the Co-Branding Agreement by Contractors
Resources, Inc. pursuant to Section 9 thereto, TMP Interactive, Inc. shall
solely be entitled to exercise, at any time and from time to time after 9:00
a.m., New York time, on May 2, 2002 and before 5:00 p.m., New York time, on the
Expiration Date, a portion of this Warrant equal to the product of (a) 2,000,000
and (b) a fraction (i) the numerator of which is equal to the number of months
elapsed between the date hereof and the date of such termination, and the
remaining portion shall become void, and all rights hereunder shall thereupon
cease.
2.2 Method of Exercise
(a) The Warrantholder may exercise this Warrant, in whole or in part,
by presentation and surrender of this Warrant to the Company at its corporate
office at 1800 Robert Fulton Drive, Suite 250, Reston, Virginia 29191-9992, or
at the office of its stock transfer agent, if any, with the Exercise Form
annexed hereto duly executed, accompanied by payment of the full Exercise Price
for each Warrant Share to be purchased in accordance with Section 2.3(a).
(b) Upon receipt of this Warrant with the Exercise Form fully executed
and
4
<PAGE>
accompanied by payment of the aggregate Exercise Price for the Warrant Shares
for which this Warrant is then being exercised, the Company shall cause to be
issued certificates for the total number of whole shares of Common Stock for
which this Warrant is being exercised in accordance with Section 2.3(a)
(adjusted to reflect the effect of the anti-dilution provisions contained in
Article 3 hereof, if any, and as provided in Section 2.4 hereof) in such
denominations as are requested for delivery to the Warrantholder, and the
Company shall thereupon deliver such certificates to the Warrantholder. The
Warrantholder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise as of the time of receipt of the Exercise Form
and payment in accordance with the preceding sentence, in the case of an
exercise for cash pursuant to Section 2.3(a), notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Warrantholder. If at the time this Warrant is exercised, a Registration
Statement is not in effect to register under the Securities Act the Warrant
Shares issuable upon exercise of this Warrant, the Company may, prior to the
satisfaction of any holding period required by Rule 144 promulgated under the
Securities Act, require the Warrantholder to make such representations, and may
place the legends on certificates representing the Warrant Shares, as may be
reasonably required in the opinion of counsel to the Company to permit the
Warrant Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this Warrant with respect
to less than all of the Warrant Shares that may be purchased under this Warrant,
the Company shall execute as of the exercise date a new warrant in the form of
this Warrant for the balance of such Warrant Shares and deliver such new warrant
to the Warrantholder within 10 days following the exercise date (or, if later,
the Net Issuance Exercise Date).
(d) The Company shall pay any and all stock transfer and similar taxes
which may be payable in respect of the issuance of any Warrant Shares.
2.3 Exercise of Warrant
(a) Right to Exercise for Cash. This Warrant may be exercised by the
--------------------------
Holder by delivery of payment to the Company, for the account of the Company, by
cash, by certified or bank cashier's check or by wire transfer, of the Exercise
Price for the number of Warrant Shares specified in the Exercise Form in lawful
money of the United States of America.
2.4 Reservation of Shares
The Company hereby agrees that at all times there shall be reserved for
issuance and delivery upon exercise of this Warrant such number of shares of
Common Stock or other shares of capital stock of the Company from time to time
issuable upon exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except as contemplated
by Sections 2.2(b) and 5.2) and free and clear of all preemptive and other
similar rights.
5
<PAGE>
2.5 Fractional Shares
The Company shall not be required to issue any fraction of a share of its
capital stock in connection with the exercise of this Warrant, and in any case
where the Warrantholder would, except for the provisions of this Section 2.5, be
entitled under the terms of this Warrant to receive a fraction of a share upon
the exercise of this Warrant, the Company shall, upon the exercise of this
Warrant, pay to the Warrantholder an amount in cash equal to the fair market
value of such fractional share as of the exercise date.
2.6 Listing
Prior to the issuance of any shares of Common Stock upon exercise of this
Warrant, the Company shall use its best efforts to secure the listing of such
shares of Common Stock upon each national securities exchange or automated
quotation system, if any, 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 any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall use its best efforts to so list
on each national securities exchange or automated quotation system, and shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
ARTICLE 3
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article 3.
3.1 Mechanical Adjustments
(a) If at any time prior the exercise of this Warrant in full, the
Company shall (i) declare a dividend or make a distribution on the Common Stock
payable in shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class); (ii) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares; or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the number of Warrant Shares issuable upon exercise of the Warrant and/or the
Exercise Price in effect at the time of the record date of such dividend,
distribution, subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Warrantholder shall be entitled to receive the
aggregate number and kind of shares which, if this Warrant had been exercised
6
<PAGE>
in full immediately prior to such event, the Warrantholder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or recapitalization.
Any adjustment required by this Section 3.1(a) shall be made successively
immediately after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination, reclassification
or recapitalization, to allow the purchase of such aggregate number and kind of
shares.
(b) If any time prior to the exercise of this Warrant in full, the
Company shall fix a record date for the issuance or making of a distribution to
all holders of the Common Stock (including any such distribution to be made in
connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness, any other securities
of the Company or any cash, property or other assets (excluding a combination,
reclassification or recapitalization referred to in Section 3.1(a), regular cash
dividends or cash distributions paid out of net profits legally available
therefor and in the ordinary course of business if the full amount thereof,
together with the value of other dividends and distributions made substantially
concurrently therewith or pursuant to a plan which includes payment thereof, is
equivalent to not more than 5% of the Company's net worth, or subscription
rights, options or warrants for Common Stock or Common Stock Equivalents
(excluding those referred to in Section 3.1(b)) (any such nonexcluded event
being herein called a "Special Dividend")), the Exercise Price shall be
decreased immediately after the record date for such Special Dividend to a price
determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which shall be the then current market price of the Common Stock
(as defined in Section 3.1(e)) on such record date less the fair market value
(as determined by the Company's Board of Directors) of the evidences of
indebtedness, securities or property, or other assets issued or distributed in
such Special Dividend applicable to one share of Common Stock or of such
subscription rights or warrants applicable to one share of Common Stock and the
denominator of which shall be the then current market price per share of Common
Stock (as so determined). Any adjustments required by this Section 3.1(b) shall
be made successively whenever such a record date is fixed and in the event that
such distribution is not so made, the Exercise Price shall again be adjusted to
be the Exercise Price that was in effect immediately prior to such record date.
(c) If at any time prior to the exercise of this Warrant in full, the
Company shall make a distribution to all holders of the Common Stock of stock of
a subsidiary or securities convertible into or exercisable for such stock, then
in lieu of an adjustment in the Exercise Price or the number of Warrant Shares
purchasable upon the exercise of this Warrant, each Warrantholder, upon the
exercise hereof at any time after such distribution, shall be entitled to
receive from the Company, such subsidiary or both, as the Company shall
determine, the stock or other securities to which such Warrantholder would have
been entitled if such Warrantholder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in this Article 3, and
the Company shall reserve, for the life of the Warrant, such securities of such
subsidiary or other corporation; provided, however, that no adjustment in
respect of dividends or interest on such stock or other securities shall be made
during the term of this Warrant or upon its exercise.
(d) Whenever the Exercise Price payable upon exercise of each Warrant
is
7
<PAGE>
adjusted pursuant to one or more of paragraphs (a) and (b) of this Section
3.1, the Warrant Shares shall simultaneously be adjusted by multiplying the
number of Warrant Shares initially issuable upon exercise of each Warrant by the
Exercise Price in effect on the date thereof and dividing the product so
obtained by the Exercise Price, as adjusted.
(e) For the purpose of any computation under this Section 3.1, the
current market price per share of Common Stock at any date shall be deemed to be
the average of the daily closing prices for 20 consecutive trading days
commencing 30 trading days before such date. The closing price for each day
shall be the last sale price regular way or, in case no such reported sales take
place on such day, the average of the last reported bid and asked prices regular
way, in either case on the principal national securities exchange on which the
Common Stock is admitted to trading or listed, or if not listed or admitted to
trading on such exchange, the representative closing bid price as reported by
Nasdaq, or other similar organization if Nasdaq is no longer reporting such
information, or if not so available, the fair market price as determined in good
faith by the Board of Directors of the Company.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($.05)
in such price; provided, however, that any adjustments which by reason of this
paragraph (f) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
3.1 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Notwithstanding anything in this Section 3.1 to the
contrary, the Exercise Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.
(g) In the event that at any time, as a result of any adjustment made
pursuant to Section 3.1(a), the Warrantholder thereafter shall become entitled
to receive any shares of the Company other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in this Section 3.1.
(h) In case any event shall occur as to which the other provisions of
this Article 3 are not strictly applicable but as to which the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles hereof then, in
each such case, the Warrantholders representing the right to purchase a majority
of the Warrant Shares subject to all outstanding Warrants may appoint a firm of
independent public accountants of recognized national standing reasonably
acceptable to the Company, which shall give their opinion as to the adjustment,
if any, on a basis consistent with the essential intent and principles
established herein, necessary to preserve the purchase rights represented by the
Warrants. Upon receipt of such opinion, the Company will promptly mail a copy
thereof to the Warrantholder and shall make the adjustments described therein.
The fees and expenses of such independent public accountants shall be borne by
the Company.
8
<PAGE>
(i) If, as a result of an adjustment made pursuant to this Article 3,
the Holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive shares of two or more classes of capital stock or shares of
Common Stock and other capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a written
notice to the Holder of any Warrant promptly after such adjustment) shall
determine the allocation of the adjusted Exercise Price between or among shares
or such classes of capital stock or shares of Common Stock and other capital
stock.
3.2 Notices of Adjustment
Whenever the number of Warrant Shares or the Exercise Price is adjusted as
herein provided, the Company shall prepare and deliver forthwith to the
Warrantholder a certificate signed by its President, and by any Vice President,
Treasurer or Secretary, setting forth the adjusted number of shares purchasable
upon the exercise of this Warrant and the Exercise Price of such shares after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which adjustment was made.
3.3 No Adjustment for Dividends
Except as provided in Section 3.1 of this Agreement, no adjustment in
respect of any cash dividends shall be made during the term of this Warrant or
upon the exercise of this Warrant.
3.4 Preservation of Purchase Rights in Certain Transactions
In case of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock (other than a subdivision or combination of
the outstanding Common Stock and other than a change in the par value of the
Common Stock) or in case of any consolidation or merger of the Company with or
into another corporation (other than merger with a subsidiary in which the
Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in the
case of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Holder of this Warrant shall have the right thereafter to receive
on the exercise of this Warrant the kind and amount of securities, cash or other
property which the Holder would have owned or have been entitled to receive
immediately after such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and in any such case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Article 3 with respect to the
rights and interests thereafter of the Holder of this Warrant to the end that
the provisions set forth in this Article 3 shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares of
stock or other securities or property thereafter deliverable on the exercise of
this Warrant. The provisions of this Section 3.4 shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances. The issuer of
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any shares of stock or other securities or property thereafter deliverable on
the exercise of this Warrant shall be responsible for all of the agreements and
obligations of the Company hereunder. Notice of any such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and of said provisions so proposed to be made, shall be mailed to the Holders of
the Warrants not less than 30 days prior to such event. A sale of all or
substantially all of the assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation or merger for the
foregoing purposes.
3.5 Form of Warrant After Adjustments
The form of this Warrant need not be changed because of any adjustments in
the Exercise Price or the number or kind of the Warrant Shares, and Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant, as initially issued.
3.6 Treatment of Warrantholder
Prior to due presentment for registration of transfer of this Warrant, the
Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
all purposes and shall not be affected by any notice to the contrary.
ARTICLE 4
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
4.1 No Rights as Shareholders; Notice to Warrantholders
Nothing contained in this Warrant shall be construed as conferring upon the
Warrantholder or his or its transferees the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or of any
other matter, or any rights whatsoever as shareholders of the Company. The
Company shall give notice to the Warrantholder by registered mail if at any time
prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall authorize the payment of any dividend payable in
any securities upon shares of Common Stock or authorize the making of any
distribution (other than a cash dividend subject to the parenthetical set
forth in Section 3.1(b)) to all holders of Common Stock;
(b) the Company shall authorize the issuance to all holders of Common
Stock of any additional shares of Common Stock or Common Stock Equivalents
or of rights, options or warrants to subscribe for or purchase Common Stock
or Common Stock Equivalents or of any other subscription rights, options or
warrants (other than Common Stock or Common
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Stock Equivalents or of rights, options or warrants to subscribe for or
purchase Common Stock or Common Stock Equivalents or of any other
subscription rights, options or warrants subject to the parenthetical set
forth in Section 3.1(b));
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock
and other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification or
change of Common Stock outstanding) or in the case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety.
Such giving of notice shall be initiated (i) at least 10 Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Company's stock transfer books for the determination of the
shareholders entitled to such dividend, distribution or subscription rights, or
for the determination of the shareholders entitled to vote on such proposed
merger, consolidation, sale, conveyance, dissolution, liquidation or winding up.
Such notice shall specify such record date or the date of closing the stock
transfer books, as the case may be. Failure to provide such notice shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or proposed merger, consolidation, sale,
conveyance, dissolution, liquidation or winding up.
4.2 Lost, Stolen, Mutilated or Destroyed Warrants
If this Warrant is lost, stolen, mutilated or destroyed, the Company may,
on such terms as to indemnity or otherwise as it may in its reasonable judgment
impose (which shall include reasonable costs and expenses and, in the case of a
mutilated Warrant, including the surrender thereof), issue a new Warrant of like
denomination and tenor as, and in substitution for, this Warrant.
ARTICLE 5
SPLIT-UP, COMBINATION, EXCHANGE AND
TRANSFER OF WARRANTS AND WARRANT SHARES
5.1 Split-Up, Combination and Exchange of Warrants
This Warrant may be split up, combined or exchanged for another Warrant or
Warrants containing the same terms to purchase a like aggregate number of
Warrant Shares. If the Warrantholder desires to split up, combine or exchange
this Warrant, he or it shall make such request in writing delivered to the
Company and shall surrender to the Company this Warrant and any other Warrants
to be so split-up, combined or exchanged. Upon any such surrender for a split-
up,
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combination or exchange, the Company shall execute and deliver to the person
entitled thereto a Warrant or Warrants, as the case may be, as so requested.
The Company shall not be required to effect any split-up, combination or
exchange which will result in the issuance of a Warrant entitling the
Warrantholder to purchase upon exercise a fraction of a share of Common Stock or
a fractional Warrant. The Company may require such Warrantholder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any split-up, combination or exchange of Warrants.
5.2 Restrictions on Transfer, Restrictive Legends
Except as otherwise permitted by this Section 5.2, each Warrant shall (and
each Warrant issued upon direct or indirect transfer or in substitution for any
Warrant issued pursuant to Section 5.1 shall) be stamped or otherwise imprinted
with a legend in substantially the following form:
"THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED
UNDER SUCH ACT AND LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
Except as otherwise permitted by this Section 5.2, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT AND LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED."
Notwithstanding the foregoing, the Warrantholder may require the Company to
issue a Warrant or a stock certificate for Warrant Shares, in each case without
a legend, if (i) the issuance of such Warrant Shares has been registered under
the Securities Act and any applicable state securities laws, (ii) such Warrant
or such Warrant Shares, as the case may be, have been registered for resale
under the Securities Act or sold pursuant to Rule 144 under the Securities Act
(or a successor thereto) or (iii) the Warrantholder has received an opinion of
counsel (who may be house counsel for such Warrantholder) reasonably
satisfactory to the Company that such registration is not required with respect
to such Warrant or such Warrant Shares, as the case may be.
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ARTICLE 6
REGISTRATION UNDER THE SECURITIES ACT OF 1933
6.1 Piggyback Registration
(a) Right to Include Registrable Securities. If at any time or from
---------------------------------------
time to time prior to the second anniversary of the Expiration Date, the Company
proposes to register any of its securities under the Securities Act on any form
for the registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form S-8 or other form which
does not include substantially the same information as would be required in a
form for the general registration of securities or would not be available for
the Registrable Securities) (a "Piggyback Registration"), it shall as
expeditiously as possible give written notice to all Holders of its intention to
do so and of such Holders' rights under this Section 6.1. Such rights are
referred to hereinafter as "Piggyback Registration Rights." Upon the written
request of any such Holder made within 10 days after receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such Holder), the Company shall include in the Registration Statement the
Registrable Securities which the Company has been so requested to register by
the Holders thereof and the Company shall use its reasonable best efforts to
keep such registration statement in effect and maintain compliance with each
federal and state law or regulation for the period necessary for such Holder to
effect the proposed sale or other disposition (but in no event for a period
greater than 90 days); provided that the Company shall not be in breach of its
obligations hereunder or otherwise responsible for any failure to keep such
registration statement in effect caused by any act or omission of a Holder.
(b) Withdrawal of Piggyback Registration by Company. If, at any time
-----------------------------------------------
after giving written notice of its intention to register any securities in a
Piggyback Registration but prior to the effective date of the related
Registration Statement, the Company shall determine for any reason not to
register such securities, the Company shall give notice of such determination to
each Holder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such Piggyback Registration. All best
efforts obligations of the Company pursuant to Section 6.4 shall cease if the
Company determines to terminate prior to such effective date any registration
where Registrable Securities are being registered pursuant to this Section 6.1.
(c) Piggyback Registration of Underwritten Public Offering. If a
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Piggyback Registration involves an offering by or through underwriters, then (i)
all Holders requesting to have their Registrable Securities included in the
Company's Registration Statement must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling shareholders and (ii) any Holder requesting to have his or its
Registrable Securities included in such Registration Statement may elect in
writing, not later than three Business Days prior to the effectiveness of the
Registration Statement filed in connection with such registration, not to have
his or its Registrable Securities so included in connection with such
registration.
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(d) Payment of Registration Expenses for Piggyback Registration. The
-----------------------------------------------------------
Company shall pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to a Piggyback Registration Right
contained in this Section 6.1.
(e) Priority in Piggyback Registration. If a Piggyback Registration
----------------------------------
involves an offering by or through underwriters, the Company, except as
otherwise provided herein, shall not be required to include Registrable Shares
therein if and to the extent the underwriter managing the offering reasonably
believes in good faith and advises the Company (which shall promptly notify the
Holder) that such inclusion would materially adversely affect such offering;
provided that (i) if other selling shareholders without contractual registration
rights have requested registration of securities in the proposed offering, the
Company will reduce or eliminate such securities held by selling shareholders
without registration rights before any reduction or elimination of Registrable
Securities; and (ii) any such reduction or elimination (after taking into
account the effect of clause (i)) shall be pro rata to all other selling
shareholders with contractual registration rights.
6.2 Demand Registration
(a) Request for Registration. If, at any time prior to the Expiration
------------------------
Date, any 25% Holders request that the Company file a registration statement
under the Securities Act, as soon as practicable thereafter the Company shall
use its best efforts to file a registration statement with respect to all
Warrant Shares that it has been so requested to include and obtain the
effectiveness thereof, and to take all other action necessary under federal or
state law or regulation to permit the Warrant Shares that are held and/or that
may be acquired upon the exercise of the Warrants specified in the notices of
the Holders or holders hereof to be sold or otherwise disposed of, and the
Company shall maintain such compliance with each such federal and state law and
regulation for the period necessary for such Holders or Holders to effect the
proposed sale or other disposition; provided, however, the Company shall be
entitled to defer such registration for a period of up to 60 days if and to the
extent that its Board of Directors shall in good faith determine that such
registration would require disclosure of information not otherwise then required
to be disclosed and that such disclosure would adversely affect any material
business situation, transaction or negotiation then proposed, contemplated or
being engaged in by the Company. The Company shall also promptly give written
notice to the Holders and the holders of any other Warrants and/or the holders
of any Warrant Shares who or that have not made a request to the Company
pursuant to the provisions of this Section 6.2(a) of its intention to effect any
required registration or qualification, and shall use its best efforts to effect
as expeditiously as possible such registration or qualification of all such
other Warrant Shares that are then held and/or that may be acquired upon the
exercise of the Warrants, the Holder or holders of which have requested such
registration or qualification, within 15 days after such notice has been given
by the Company, as provided in the preceding sentence. The Company shall be
required to effect a registration or qualification pursuant to this Section
6.2(a) on one occasion only.
(b) Payment of Registration Expenses for Demand Registration. The
--------------------------------------------------------
Company shall pay all Registration Expenses in connection with the Demand
Registration.
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(c) Selection of Underwriters. If any Demand Registration is
-------------------------
requested to be in the form of an underwritten offering, the managing
underwriter shall be selected and obtained by the Holders of a majority of the
Warrant Shares to be registered. Such selection shall be subject to the
Company's consent, which consent shall not be unreasonably withheld.
(d) Procedure for Requesting Demand Registration. Any request for a
--------------------------------------------
Demand Registration shall specify the aggregate number of the Registrable
Securities proposed to be sold and the intended method of disposition. Within
10 days after receipt of such a request the Company will give written notice of
such registration request to all Holders, and, subject to the limitations of
Section 6.2(b), the Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 Business Days after the date on which such notice is
given. Each such request shall also specify the aggregate number of Registrable
Securities to be registered and the intended method of disposition thereof.
6.3 Buy-Outs of Registration Demand
In lieu of carrying out its obligations to effect a Piggyback Registration
or Demand Registration of any Registrable Securities pursuant to this Article 6,
the Company may carry out such obligation by offering to purchase and purchasing
such Registrable Securities requested to be registered in an amount in cash
equal to the difference between (a) 95% of the last sale price of the Common
Stock on the day the request for registration is made and (b) the Exercise Price
in effect on such day; provided, however, that the Holder or Holders may
withdraw such request for registration rather than accept such offer by the
Company.
6.4 Registration Procedures
If and whenever the Company is required to use its best efforts to take
action pursuant to any Federal or state law or regulation to permit the sale or
other disposition of any Registrable Securities that are then held or that may
be acquired upon exercise of the Warrants in order to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in this Article 6, the Company shall, as expeditiously as practicable, use its
best efforts to:
(a) prepare and file with the SEC, as soon as practicable within 60
days after the end of the period within which requests for registration may be
given to the Company (but subject to the provision for deferral contained in
Section 6.2(a) hereof) a Registration Statement or Registration Statements
relating to the registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof, and use
its best efforts to cause such Registration Statements to become effective;
provided that before filing a Registration Statement or Prospectus or any
amendment or supplements thereto, including documents incorporated by reference
after the initial filing of any Registration Statement, the Company will furnish
to the Holders of the Registrable Securities covered by such Registration
Statement and the underwriters, if any, copies of all such documents proposed to
be filed, which documents will be subject to the review of such Holders and
underwriters; provided, that the Company shall not be in breach of its
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<PAGE>
obligations hereunder or otherwise responsible for any failure to keep such
registration statement in effect caused by any act or omission of a Holder;
(b) prepare and file with the SEC such amendments and post-effective
amendments to a Registration Statement as may be necessary to keep such
Registration Statement effective for 180 days if the offering is not
underwritten, provided, that such 180 day period shall be extended by the number
of days a Prospectus is not available pursuant to Section 6.4(k) because of the
occurrence of an event set forth in Section 6.4(c)(vi); provided, that the
Company shall not be in breach of its obligations hereunder or otherwise
responsible for any failure to keep such registration statement in effect caused
by any act or omission of a Holder; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement or supplement to such Prospectus;
(c) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (m) below ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purposes; and (vi) of the happening of any event that makes
any statement of a material fact made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement or Prospectus
so that they will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading:
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment (subject to Section 6.4(a));
(e) if reasonably requested by the managing underwriters, immediately
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters believe (on advice of counsel) should
be included therein as required by applicable law relating to such sale of
Registrable Securities, including, without limitation, information with respect
to the purchase price being paid for the Registrable Securities by such
underwriters and with respect to any other terms of the underwritten (or "best-
efforts" underwritten)
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offering; and make all required filings of such Prospectus supplement or post-
effective amendment as soon as notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
(f) furnish to each selling Holder of Registrable Securities and each
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary prospectus) any amendment or supplement
thereto as such Persons may reasonably request; the Company consents to the use
of such Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities, cooperate
with the selling Holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or underwriter reasonably requests in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration Statement;
provided that the Company will not be required to (i) qualify to do business in
any jurisdiction where it not then so qualified or (ii) to take any action which
would subject the Company to (a) general service of process in any jurisdiction
where it is not at the time so subject, or (b) taxation by any jurisdiction
where it is not at the time so subject;
(i) cooperate with the selling Holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends to the extent permitted by applicable law and
regulation; and enable such Registrable Securities to be in such denominations
and registered in such names as the managing underwriters may request at least
two Business Days prior to any sale of Registrable Securities to the
underwriters;
(j) use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities within the United States as may
be necessary to enable the seller or sellers thereof or the underwriters, if
any, to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by Section
6.4(c)(vi) above, prepare a supplement or post-effective amendment to the
applicable Registration Statement or
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related Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(l) with respect to each issue or class of Registrable Securities, use
its best efforts to cause all Registrable Securities covered by the Registration
Statements to be listed on each securities exchange or automated quotation
system, if any, on which similar securities issued by the Company are then
listed if requested by the Holders of a majority of such issue or class of
Registrable Securities;
(m) enter into such agreements (including an underwriting agreement)
and take all such other action reasonably required in connection therewith in
order to expedite or facilitate the disposition of such Registrable Securities
and in such connection, if the registration is in connection with an
underwritten offering (i) make such representations and warranties to the
underwriters (or the Holders of the Registrable Securities if such offering is
not underwritten), in such form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions in form, scope and substance shall be
reasonably satisfactory to the underwriters) addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
underwriters; (iii) obtain "cold comfort" letters and updates thereof from the
Company's accountants addressed to the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with underwritten offerings; (iv)
set forth in full in any underwriting agreement entered into the indemnification
provisions and procedures of Section 6.5 hereof with respect to all parties to
be indemnified pursuant to said Section; and (v) deliver such documents and
certificates as may be reasonably requested by the underwriters to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company; the
above shall be done at each closing under such underwriting or similar agreement
or as and to the extent required hereunder;
(n) make available for inspection by one or more representatives of
the Holders of Registrable Securities being sold, any underwriter participating
in any disposition pursuant to such registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such representatives, in connection with such; and
(o) otherwise use its best efforts to comply with all applicable
Federal and state regulations; and take such other action as may be reasonably
necessary to or advisable to enable each such Holder and each such underwriter
to consummate the sale or disposition in such jurisdiction or jurisdiction in
which any such Holder or underwriter shall have requested that the Registrable
Securities be sold.
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Except as otherwise provided in this Agreement, the Company shall have sole
control in connection with the preparation, filing, withdrawal, amendment or
supplementing of each Registration Statement, the selection of underwriters, and
the distribution of any preliminary prospectus included in the Registration
Statement, and may include within the coverage thereof additional shares of
Common Stock or other securities for its own account or for the account of one
or more of its other security holders.
The Company may require each Seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities and such other information as may
otherwise be required by the Securities Act to be included in such Registration
Statement.
6.5 Indemnification
(a) Indemnification by Company. In connection with each Registration
--------------------------
Statement relating to disposition of Registrable Securities, the Company shall
indemnify and hold harmless each Holder, its officers, directors and agents and
each underwriter of Registrable Securities and each Person, if any, who controls
such Holder or underwriter (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) against any and all losses, claims,
damages and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that such indemnity shall not inure
to the benefit of any Holder or underwriter (or any Person controlling such
Holder or underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) on account of any losses, claims, damages or
liabilities arising from the sale of the Registrable Securities if such untrue
statement or omission or alleged untrue statement or omission was made in such
Registration Statement, Prospectus or preliminary prospectus, or such amendment
or supplement, in reliance upon and in conformity with information furnished in
writing to the Company by such Holder or underwriter specifically for use
therein. The Company shall also indemnify selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the Holders of Registrable Securities, if requested. This indemnity agreement
shall be in addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder. In connection with each Registration
-------------------------
Statement,
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each Holder shall indemnify, to the same extent as the indemnification provided
by the Company in Section 6.5(a), the Company, its directors and each officer
who signs the Registration Statement and each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) but only insofar as such losses, claims, damages and liabilities
arise out of or are based upon any untrue statement or omission or alleged
untrue statement or omission which was made in the Registration Statement, the
Prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, in reliance upon and in conformity with information furnished in
writing by such Holder to the Company specifically for use therein. In no event
shall the liability of any selling Holder of Registrable Securities hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same extent as
provided above, with respect to information so furnished in writing by such
Persons specifically for inclusion in any Prospectus, Registration Statement or
preliminary prospectus or any amendment thereof or supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that proposes to
------------------------------------
assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6.5(a) or 6.5(b) shall be available to
any party who shall fail to give notice as provided in this Section 6.5(c) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to give such
notice, but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that it may
have to any indemnified party for contribution otherwise than under this
Section. In case any such action, suit or proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by
such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after
20
<PAGE>
notice of the commencement thereof, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying parties. An indemnified
party shall not be liable for any settlement of any action, suit, proceeding or
claim effected without its written consent.
(d) Contribution. In connection with each Registration Statement
------------
relating to the disposition of Registrable Securities, if the indemnification
provided for in subsection (a) hereof is unavailable to an indemnified party
thereunder in respect to any losses, claims, damages or liabilities referred to
therein, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 6.5 in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Notwithstanding anything
to the contrary in this Section 6.5(d), no selling Holder of Registrable
Securities shall be required to contribute any amount in excess of the net
proceeds it received in connection with its sale of Registrable Securities.
(e) Underwriting Agreement to Control. Notwithstanding the foregoing
---------------------------------
provisions of this Section 6.5, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement entered
into in connection with the underwritten public offering of the Registrable
Securities are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall control.
(f) Specific Performance. The Company and the Holder acknowledge that
--------------------
remedies at law for the enforcement of this Section 6.5 may be inadequate and
intend that this Section 6.5 shall be specifically enforceable.
(g) Survival of Obligations. The obligations of the Company and the
-----------------------
Holder under this Section 6.5 shall survive the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this Article
6, and otherwise.
6.6 Reports Under Securities Exchange Act of 1934
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined us SEC Rule 144, at all times after 90 days after the
effective date of the first registration
21
<PAGE>
statement filed by the Company for the offering of its securities to the general
public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
ARTICLE 7
OTHER MATTERS
7.1 Binding Effects; Benefits
This Warrant shall inure to the benefit of and shall be binding upon the
Company and the Warrantholder and their respective heirs, legal representatives,
successors and assigns. Nothing in this Warrant, expressed or implied, is
intended to or shall confer on any person other than the Company and the
Warrantholder, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant.
7.2 No Inconsistent Agreements
The Company will not on or after the date of this Warrant enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the Holders in this Warrant or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to holders of
the Company's securities under any other agreements.
7.3 Adjustments Affecting Registrable Securities
The Company will not take any action outside the ordinary course of
business, or permit any change within its control to occur outside the ordinary
course of business, with respect to the Registrable Securities which is without
a bona fide business purpose, and which is intended to interfere with the
ability of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
22
<PAGE>
7.4 Integration/Entire Agreement
This Warrant is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Warrants.
This Warrant supersedes all prior agreements and understandings between the
parties with respect to such subject matter (other than warrants previously
issued by the Company to the Warrantholder).
7.5 Amendments and Waivers
The provisions of this Warrant, including the provisions of this sentence,
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of holders of at least a majority of the
outstanding Registrable Securities. Holders shall be bound by any consent
authorized by this Section whether or not certificates representing such
Registrable Securities have been marked to indicate such consent.
7.6 Counterparts
This Warrant may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
7.7 Governing Law
This Warrant shall be governed by and construed in accordance with the laws
of the State of New York.
7.8 Severability
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provisions
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
7.9 Attorneys' Fees
In any action or proceeding brought to enforce any provisions of this
Warrant, or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees and
disbursements in addition to its costs and expenses and any other available
remedy.
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<PAGE>
7.10 Computations of Consent
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its affiliates (other than the Warrantholder or subsequent Holders if
they are deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
7.11 Notice
Any notices or certificates by the Company to the Holder and by the Holder
to the Company shall be deemed delivered if in writing and delivered in person
or by registered mail (return receipt requested) to the Holder addressed to him
in care of TMP Interactive, Inc., 5 Clock Tower Place, Suite 500, Maynard,
Massachusetts 01754, or, if the Holder has designated, by notice in writing to
the Company, any other address, to such other address, and if to the Company,
addressed to it at: 1800 Robert Fulton Drive, Suite 250, Reston, Virginia 29191-
9992, Attention: Secretary, or if the Company has designated, by notice in
writing to the Holder, any other address, to such other address.
The Company may change its address by written notice to the Holder and the
Holder may change its address by written notice to the Company.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the 2nd day of May, 2000.
THE NETPLEX GROUP, INC.
By:
-------------------------------
Title:
Attest:
-----------------------
24
<PAGE>
EXERCISE FORM
(To be executed upon exercise of Warrant)
Netplex Group, Inc.
1800 Robert Fulton Drive, Suite 250
Reston, Virginia 29191-9992
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase Warrant Shares herewith tenders payment
for of the Warrant Shares to the order of The Netplex Group, Inc.
---------------
in the amount of $ in accordance with the terms of this Warrant; or
------
Please issue a certificate or certificates for such Warrant Shares in the
name of, and pay any cash for any fractional share to:
Name
(Please print Name, Address and Social
Security No.)
Signature
Federal Tax ID #
Note: The above signature should correspond
exactly with the name on the first page of
this Warrant Certificate or with the name of
the assignee appearing in the assignment
form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder.
25
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, hereby sells, assigns and transfers
--------------------
unto the within Warrant, together with all right, title and
------------------
interest therein, and does hereby irrevocably constitute and appoint
attorney, to transfer said Warrant on the books of the
- ----------------------
within-named Company with respect to the number of Warrant Shares set forth
below, with full power of substitution in the premises:
Name(s) of No. of
Assignee(s) Address Warrant Shares
- ----------- ------- --------------
And if said number of Warrant Shares shall not be all the Warrant Shares
represented by the Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the Warrant Shares registered by said
Warrant.
Dated: , 20 Signature
------------ --
Note: The above signature should correspond
exactly with the name on the face
of this Warrant
26
<PAGE>
Exhibit 4(o)
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT AND LAWS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON MAY 2, 2003, OR IF NOT A BUSINESS DAY,
AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS
DAY.
WARRANT TO PURCHASE
1,000,000
SHARES OF COMMON STOCK
OF
THE NETPLEX GROUP, INC.
No. W-1
This certifies that, for value received, TMP Interactive, Inc. and its
registered assigns (collectively, the "Warrantholder"), is entitled to purchase
from The Netplex Group, Inc., a corporation incorporated under the laws of the
State of New York (the "Company"), subject to the terms and conditions hereof,
at any time on or after the date hereof and before 5:00 p.m., New York time on
May 2, 2003 (or, if such day is not a Business Day, at or before 5:00 p.m., New
York time, on the next following Business Day), up to 1,000,000 fully paid and
nonassessable shares of Common Stock of the Company at the Exercise Price (as
defined herein). The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as provided in Article 3
hereof.
<PAGE>
ARTICLE 1
DEFINITION OF TERMS
As used in this Warrant, the following capitalized terms shall have the
following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day on
------------
which banks in the State of New York are authorized by law to remain closed.
(b) Common Stock: Common Stock, par value $.001 per share, of the Company.
------------
(c) Common Stock Equivalents: Securities that are convertible into or
------------------------
exercisable for shares of Common Stock.
(c) Co-Branding Agreement: That certain Co-Branded Services Agreement,
---------------------
dated the date hereof, among TMP Interactive, Inc., The Netplex Group, Inc. and
Contractors Resources, Inc.
(d) Demand Registration: See Section 6.2.
-------------------
(e) Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
(f) Exercise Price: $6.00 per Warrant Share, as such price may be adjusted
--------------
from time to time pursuant to Article 3 hereof.
(g) Expiration Date: 5:00 p.m., New York time, on May 2, 2003, or if such
---------------
day is not a Business Day, the next succeeding day which is a Business Day.
(h) Holder: A Holder of Registrable Securities.
------
(i) NASD: National Association of Securities Dealers, Inc.
----
(j) Person: An individual, partnership, joint venture, corporation, trust,
------
unincorporated organization or government or any department or agency thereof.
(k) Piggyback Registration: See Section 6.1.
----------------------
(l) Prospectus: Any prospectus included in any Registration Statement, as
----------
amended or supplemented by any prospectus supplement, or to which a Term Sheet
(as defined in Rule 434 under the Securities Act) relates, with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments and all materials incorporated
by reference in such Prospectus.
2
<PAGE>
(m) Public Offering: A public offering of any of the Company's equity or
---------------
debt securities pursuant to Registration Statement under the Securities Act.
(n) Registrable Securities: Any Warrant Shares issued to TMP Interactive,
----------------------
Inc. and/or its designees or transferees and/or other securities that may be or
are issued by the Company upon exercise of the Warrants, including those which
may thereafter be issued by the Company in respect of any such securities by
means of any stock splits, stock dividends, recapitalizations, reclassifications
or the like, and as adjusted pursuant to Article 3 hereof; provided, however,
that as to any particular security contained in Registrable Securities, such
securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such Registration Statement; or (ii) they shall have been
sold to the public pursuant to Rule 144(k) (or any successor provision) under
the Securities Act.
(o) Registration Expenses: Any and all expenses incurred in connection
---------------------
with any registration or action incident to performance of or compliance by the
Company with Article 6, including, without limitation, (i) all SEC, national
securities exchange and NASD registration and filing fees; all listing fees and
all transfer agent fees; (ii) all fees and expenses of complying with state
securities or blue sky laws (including the fees and disbursements of counsel of
the underwriters in connection with blue sky qualifications of the Registrable
Securities); (iii) all printing, mailing, messenger and delivery expenses; (iv)
all fees and disbursements of counsel for the Company and of its accountants,
including the expenses of any special audits and/or "cold comfort" letters
required by or incident to such performance and compliance; and (v) any
disbursements of underwriters customarily paid by issuers or sellers of
securities including the reasonable fees and expenses of any special experts
retained by the underwriters in connection with the requested registration, but
excluding underwriting discounts and commissions, brokerage fees and transfer
taxes, if any, and fees of counsel or accountants retained by the holders of
Registrable Securities to advise them in their capacity as Holders of
Registrable Securities.
(s) Registration Statement: Any registration statement of the Company
----------------------
filed or to be filed with the SEC which covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including all amendments
(including post-effective amendments) and supplements thereto, all exhibits
thereto and all material incorporated therein by reference.
(t) SEC: The Securities and Exchange Commission or any other federal
---
agency at the time administering the Securities Act and the Exchange Act.
(u) Securities Act: The Securities Act of 1933, as amended.
--------------
(v) 25% Holders: At any time as to which a Demand Registration is
-----------
requested, the Holder and/or the holders of any other Warrants and/or the
holders of Warrant Shares who have the right to acquire or hold, as the case may
be, not less than 25% of the combined total of Warrant Shares issuable and
Warrant Shares outstanding (other than Warrant Shares which are no longer
Registrable Securities by reason of the proviso to the definition of the term
"Registrable Securities")
3
<PAGE>
at the time such Demand Registration is requested.
(w) Warrant Shares: Common Stock, Common Stock Equivalents and other
--------------
securities purchased or purchasable upon exercise or conversion of the Warrants.
(x) Warrantholder: The person(s) or entity(ies) to whom this Warrant is
-------------
originally issued, or any successor in interest thereto, or any assignee or
transferee thereof, in whose name this Warrant is registered upon the books to
be maintained by the Company for that purpose.
(y) Warrants: This Warrant and all other warrants that may be issued in
--------
its place (together evidencing the right to purchase an aggregate of up to
1,000,000 shares of Common Stock), originally issued as set forth in the
definition of Registrable Securities.
ARTICLE 2
DURATION AND EXERCISE OF WARRANT
2.1 Duration of Warrant
The Warrantholder may exercise this Warrant at any time and from time to
time after 9:00 a.m., New York time, on the date hereof and before 5:00 p.m.,
New York time, on the Expiration Date. If this Warrant is not exercised on the
Expiration Date, it shall become void, and all rights hereunder shall thereupon
cease.
2.2 Method of Exercise
(a) The Warrantholder may exercise this Warrant, in whole or in part,
by presentation and surrender of this Warrant to the Company at its corporate
office at 1800 Robert Fulton Drive, Suite 250, Reston, Virginia 29191-9992, or
at the office of its stock transfer agent, if any, with the Exercise Form
annexed hereto duly executed, accompanied by payment of the full Exercise Price
for each Warrant Share to be purchased in accordance with Section 2.3(a).
(b) Upon receipt of this Warrant with the Exercise Form fully executed
and accompanied by payment of the aggregate Exercise Price for the Warrant
Shares for which this Warrant is then being exercised, the Company shall cause
to be issued certificates for the total number of whole shares of Common Stock
for which this Warrant is being exercised in accordance with Section 2.3(a)
(adjusted to reflect the effect of the anti-dilution provisions contained in
Article 3 hereof, if any, and as provided in Section 2.4 hereof) in such
denominations as are requested for delivery to the Warrantholder, and the
Company shall thereupon deliver such certificates to the Warrantholder. The
Warrantholder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise as of the time of receipt of the Exercise Form
and payment in accordance with the preceding sentence, in the case of an
exercise for cash pursuant to Section 2.3(a), notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered
4
<PAGE>
to the Warrantholder. If at the time this Warrant is exercised, a Registration
Statement is not in effect to register under the Securities Act the Warrant
Shares issuable upon exercise of this Warrant, the Company may, prior to the
satisfaction of any holding period required by Rule 144 promulgated under the
Securities Act, require the Warrantholder to make such representations, and may
place the legends on certificates representing the Warrant Shares, as may be
reasonably required in the opinion of counsel to the Company to permit the
Warrant Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this Warrant with respect
to less than all of the Warrant Shares that may be purchased under this Warrant,
the Company shall execute as of the exercise date a new warrant in the form of
this Warrant for the balance of such Warrant Shares and deliver such new warrant
to the Warrantholder within 10 days following the exercise date (or, if later,
the Net Issuance Exercise Date).
(d) The Company shall pay any and all stock transfer and similar taxes
which may be payable in respect of the issuance of any Warrant Shares.
2.3 Exercise of Warrant
(a) Right to Exercise for Cash. This Warrant may be exercised by the
--------------------------
Holder by delivery of payment to the Company, for the account of the Company, by
cash, by certified or bank cashier's check or by wire transfer, of the Exercise
Price for the number of Warrant Shares specified in the Exercise Form in lawful
money of the United States of America.
2.4 Reservation of Shares
The Company hereby agrees that at all times there shall be reserved for
issuance and delivery upon exercise of this Warrant such number of shares of
Common Stock or other shares of capital stock of the Company from time to time
issuable upon exercise of this Warrant. All such shares shall be duly
authorized, and when issued upon such exercise, shall be validly issued, fully
paid and non-assessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale (except as contemplated
by Sections 2.2(b) and 5.2) and free and clear of all preemptive and other
similar rights.
2.5 Fractional Shares
The Company shall not be required to issue any fraction of a share of its
capital stock in connection with the exercise of this Warrant, and in any case
where the Warrantholder would, except for the provisions of this Section 2.5, be
entitled under the terms of this Warrant to receive a fraction of a share upon
the exercise of this Warrant, the Company shall, upon the exercise of this
Warrant, pay to the Warrantholder an amount in cash equal to the fair market
value of such fractional share as of the exercise date.
5
<PAGE>
2.6 Listing
Prior to the issuance of any shares of Common Stock upon exercise of this
Warrant, the Company shall use its best efforts to secure the listing of such
shares of Common Stock upon each national securities exchange or automated
quotation system, if any, 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 any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall use its best efforts to so list
on each national securities exchange or automated quotation system, and shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
ARTICLE 3
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article 3.
3.1 Mechanical Adjustments
(a) If at any time prior the exercise of this Warrant in full, the
Company shall (i) declare a dividend or make a distribution on the Common Stock
payable in shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class); (ii) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares; or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the number of Warrant Shares issuable upon exercise of the Warrant and/or the
Exercise Price in effect at the time of the record date of such dividend,
distribution, subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Warrantholder shall be entitled to receive the
aggregate number and kind of shares which, if this Warrant had been exercised in
full immediately prior to such event, the Warrantholder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or recapitalization.
Any adjustment required by this Section 3.1(a) shall be made successively
immediately after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination, reclassification
or recapitalization, to allow the purchase of such aggregate number and kind of
shares.
(b) If any time prior to the exercise of this Warrant in full, the
Company shall fix a record date for the issuance or making of a distribution to
all holders of the Common Stock (including any such distribution to be made in
connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness, any other
6
<PAGE>
securities of the Company or any cash, property or other assets (excluding a
combination, reclassification or recapitalization referred to in Section 3.1(a),
regular cash dividends or cash distributions paid out of net profits legally
available therefor and in the ordinary course of business if the full amount
thereof, together with the value of other dividends and distributions made
substantially concurrently therewith or pursuant to a plan which includes
payment thereof, is equivalent to not more than 5% of the Company's net worth,
or subscription rights, options or warrants for Common Stock or Common Stock
Equivalents (excluding those referred to in Section 3.1(b)) (any such
nonexcluded event being herein called a "Special Dividend")), the Exercise Price
shall be decreased immediately after the record date for such Special Dividend
to a price determined by multiplying the Exercise Price then in effect by a
fraction, the numerator of which shall be the then current market price of the
Common Stock (as defined in Section 3.1(e)) on such record date less the fair
market value (as determined by the Company's Board of Directors) of the
evidences of indebtedness, securities or property, or other assets issued or
distributed in such Special Dividend applicable to one share of Common Stock or
of such subscription rights or warrants applicable to one share of Common Stock
and the denominator of which shall be the then current market price per share of
Common Stock (as so determined). Any adjustments required by this Section 3.1(b)
shall be made successively whenever such a record date is fixed and in the event
that such distribution is not so made, the Exercise Price shall again be
adjusted to be the Exercise Price that was in effect immediately prior to such
record date.
(c) If at any time prior to the exercise of this Warrant in full, the
Company shall make a distribution to all holders of the Common Stock of stock of
a subsidiary or securities convertible into or exercisable for such stock, then
in lieu of an adjustment in the Exercise Price or the number of Warrant Shares
purchasable upon the exercise of this Warrant, each Warrantholder, upon the
exercise hereof at any time after such distribution, shall be entitled to
receive from the Company, such subsidiary or both, as the Company shall
determine, the stock or other securities to which such Warrantholder would have
been entitled if such Warrantholder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in this Article 3, and
the Company shall reserve, for the life of the Warrant, such securities of such
subsidiary or other corporation; provided, however, that no adjustment in
respect of dividends or interest on such stock or other securities shall be made
during the term of this Warrant or upon its exercise.
(d) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to one or more of paragraphs (a) and (b) of this Section
3.1, the Warrant Shares shall simultaneously be adjusted by multiplying the
number of Warrant Shares initially issuable upon exercise of each Warrant by the
Exercise Price in effect on the date thereof and dividing the product so
obtained by the Exercise Price, as adjusted.
(e) For the purpose of any computation under this Section 3.1, the
current market price per share of Common Stock at any date shall be deemed to be
the average of the daily closing prices for 20 consecutive trading days
commencing 30 trading days before such date. The closing price for each day
shall be the last sale price regular way or, in case no such reported sales take
place on such day, the average of the last reported bid and asked prices regular
way, in either case on the principal national securities exchange on which the
Common Stock is admitted to trading or listed,
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or if not listed or admitted to trading on such exchange, the representative
closing bid price as reported by Nasdaq, or other similar organization if Nasdaq
is no longer reporting such information, or if not so available, the fair market
price as determined in good faith by the Board of Directors of the Company.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents ($.05)
in such price; provided, however, that any adjustments which by reason of this
paragraph (f) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
3.1 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Notwithstanding anything in this Section 3.1 to the
contrary, the Exercise Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.
(g) In the event that at any time, as a result of any adjustment made
pursuant to Section 3.1(a), the Warrantholder thereafter shall become entitled
to receive any shares of the Company other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in this Section 3.1.
(h) In case any event shall occur as to which the other provisions of
this Article 3 are not strictly applicable but as to which the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles hereof then, in
each such case, the Warrantholders representing the right to purchase a majority
of the Warrant Shares subject to all outstanding Warrants may appoint a firm of
independent public accountants of recognized national standing reasonably
acceptable to the Company, which shall give their opinion as to the adjustment,
if any, on a basis consistent with the essential intent and principles
established herein, necessary to preserve the purchase rights represented by the
Warrants. Upon receipt of such opinion, the Company will promptly mail a copy
thereof to the Warrantholder and shall make the adjustments described therein.
The fees and expenses of such independent public accountants shall be borne by
the Company.
(i) If, as a result of an adjustment made pursuant to this Article 3,
the Holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive shares of two or more classes of capital stock or shares of
Common Stock and other capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a written
notice to the Holder of any Warrant promptly after such adjustment) shall
determine the allocation of the adjusted Exercise Price between or among shares
or such classes of capital stock or shares of Common Stock and other capital
stock.
3.2 Notices of Adjustment
Whenever the number of Warrant Shares or the Exercise Price is adjusted as
herein provided,
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the Company shall prepare and deliver forthwith to the Warrantholder a
certificate signed by its President, and by any Vice President, Treasurer or
Secretary, setting forth the adjusted number of shares purchasable upon the
exercise of this Warrant and the Exercise Price of such shares after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which adjustment was made.
3.3 No Adjustment for Dividends
Except as provided in Section 3.1 of this Agreement, no adjustment in
respect of any cash dividends shall be made during the term of this Warrant or
upon the exercise of this Warrant.
3.4 Preservation of Purchase Rights in Certain Transactions
In case of any reclassification, capital reorganization or other change of
outstanding shares of Common Stock (other than a subdivision or combination of
the outstanding Common Stock and other than a change in the par value of the
Common Stock) or in case of any consolidation or merger of the Company with or
into another corporation (other than merger with a subsidiary in which the
Company is the continuing corporation and that does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in the
case of any sale, lease, transfer or conveyance to another corporation of the
property and assets of the Company as an entirety or substantially as an
entirety, the Holder of this Warrant shall have the right thereafter to receive
on the exercise of this Warrant the kind and amount of securities, cash or other
property which the Holder would have owned or have been entitled to receive
immediately after such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and in any such case, if necessary, appropriate adjustment shall be made in the
application of the provisions set forth in this Article 3 with respect to the
rights and interests thereafter of the Holder of this Warrant to the end that
the provisions set forth in this Article 3 shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares of
stock or other securities or property thereafter deliverable on the exercise of
this Warrant. The provisions of this Section 3.4 shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers,
statutory exchanges, sales or conveyances. The issuer of any shares of stock or
other securities or property thereafter deliverable on the exercise of this
Warrant shall be responsible for all of the agreements and obligations of the
Company hereunder. Notice of any such reorganization, reclassification,
consolidation, merger, statutory exchange, sale or conveyance and of said
provisions so proposed to be made, shall be mailed to the Holders of the
Warrants not less than 30 days prior to such event. A sale of all or
substantially all of the assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation or merger for the
foregoing purposes.
3.5 Form of Warrant After Adjustments
The form of this Warrant need not be changed because of any adjustments in
the Exercise
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Price or the number or kind of the Warrant Shares, and Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in this Warrant, as initially issued.
3.6 Treatment of Warrantholder
Prior to due presentment for registration of transfer of this Warrant, the
Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
all purposes and shall not be affected by any notice to the contrary.
ARTICLE 4
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
4.1 No Rights as Shareholders; Notice to Warrantholders
Nothing contained in this Warrant shall be construed as conferring upon the
Warrantholder or his or its transferees the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or of any
other matter, or any rights whatsoever as shareholders of the Company. The
Company shall give notice to the Warrantholder by registered mail if at any time
prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall authorize the payment of any dividend payable in
any securities upon shares of Common Stock or authorize the making of any
distribution (other than a cash dividend subject to the parenthetical set
forth in Section 3.1(b)) to all holders of Common Stock;
(b) the Company shall authorize the issuance to all holders of Common
Stock of any additional shares of Common Stock or Common Stock Equivalents
or of rights, options or warrants to subscribe for or purchase Common Stock
or Common Stock Equivalents or of any other subscription rights, options or
warrants (other than Common Stock or Common Stock Equivalents or of rights,
options or warrants to subscribe for or purchase Common Stock or Common
Stock Equivalents or of any other subscription rights, options or warrants
subject to the parenthetical set forth in Section 3.1(b));
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock
and other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is
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the continuing corporation and that does not result in any reclassification
or change of Common Stock outstanding) or in the case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety.
Such giving of notice shall be initiated (i) at least 10 Business Days
prior to the date fixed as a record date or effective date or the date of
closing of the Company's stock transfer books for the determination of the
shareholders entitled to such dividend, distribution or subscription rights, or
for the determination of the shareholders entitled to vote on such proposed
merger, consolidation, sale, conveyance, dissolution, liquidation or winding up.
Such notice shall specify such record date or the date of closing the stock
transfer books, as the case may be. Failure to provide such notice shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or proposed merger, consolidation, sale,
conveyance, dissolution, liquidation or winding up.
4.2 Lost, Stolen, Mutilated or Destroyed Warrants
If this Warrant is lost, stolen, mutilated or destroyed, the Company may,
on such terms as to indemnity or otherwise as it may in its reasonable judgment
impose (which shall include reasonable costs and expenses and, in the case of a
mutilated Warrant, including the surrender thereof), issue a new Warrant of like
denomination and tenor as, and in substitution for, this Warrant.
ARTICLE 5
SPLIT-UP, COMBINATION, EXCHANGE AND
TRANSFER OF WARRANTS AND WARRANT SHARES
5.1 Split-Up, Combination and Exchange of Warrants
This Warrant may be split up, combined or exchanged for another Warrant or
Warrants containing the same terms to purchase a like aggregate number of
Warrant Shares. If the Warrantholder desires to split up, combine or exchange
this Warrant, he or it shall make such request in writing delivered to the
Company and shall surrender to the Company this Warrant and any other Warrants
to be so split-up, combined or exchanged. Upon any such surrender for a split-
up, combination or exchange, the Company shall execute and deliver to the person
entitled thereto a Warrant or Warrants, as the case may be, as so requested.
The Company shall not be required to effect any split-up, combination or
exchange which will result in the issuance of a Warrant entitling the
Warrantholder to purchase upon exercise a fraction of a share of Common Stock or
a fractional Warrant. The Company may require such Warrantholder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any split-up, combination or exchange of Warrants.
5.2 Restrictions on Transfer, Restrictive Legends
Except as otherwise permitted by this Section 5.2, each Warrant shall (and
each Warrant
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issued upon direct or indirect transfer or in substitution for any Warrant
issued pursuant to Section 5.1 shall) be stamped or otherwise imprinted with a
legend in substantially the following form:
"THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED
UNDER SUCH ACT AND LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
Except as otherwise permitted by this Section 5.2, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT AND LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED."
Notwithstanding the foregoing, the Warrantholder may require the Company to
issue a Warrant or a stock certificate for Warrant Shares, in each case without
a legend, if (i) the issuance of such Warrant Shares has been registered under
the Securities Act and any applicable state securities laws, (ii) such Warrant
or such Warrant Shares, as the case may be, have been registered for resale
under the Securities Act or sold pursuant to Rule 144 under the Securities Act
(or a successor thereto) or (iii) the Warrantholder has received an opinion of
counsel (who may be house counsel for such Warrantholder) reasonably
satisfactory to the Company that such registration is not required with respect
to such Warrant or such Warrant Shares, as the case may be.
ARTICLE 6
REGISTRATION UNDER THE SECURITIES ACT OF 1933
6.1 Piggyback Registration
(a) Right to Include Registrable Securities. If at any time or from
---------------------------------------
time to time prior to the second anniversary of the Expiration Date, the Company
proposes to register any of its securities under the Securities Act on any form
for the registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form S-8 or other form
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which does not include substantially the same information as would be required
in a form for the general registration of securities or would not be available
for the Registrable Securities) (a "Piggyback Registration"), it shall as
expeditiously as possible give written notice to all Holders of its intention to
do so and of such Holders' rights under this Section 6.1. Such rights are
referred to hereinafter as "Piggyback Registration Rights." Upon the written
request of any such Holder made within 10 days after receipt of any such notice
(which request shall specify the Registrable Securities intended to be disposed
of by such Holder), the Company shall include in the Registration Statement the
Registrable Securities which the Company has been so requested to register by
the Holders thereof and the Company shall use its reasonable best efforts to
keep such registration statement in effect and maintain compliance with each
federal and state law or regulation for the period necessary for such Holder to
effect the proposed sale or other disposition (but in no event for a period
greater than 90 days); provided that the Company shall not be in breach of its
obligations hereunder or otherwise responsible for any failure to keep such
registration statement in effect caused by any act or omission of a Holder.
(b) Withdrawal of Piggyback Registration by Company. If, at any time
-----------------------------------------------
after giving written notice of its intention to register any securities in a
Piggyback Registration but prior to the effective date of the related
Registration Statement, the Company shall determine for any reason not to
register such securities, the Company shall give notice of such determination to
each Holder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such Piggyback Registration. All best
efforts obligations of the Company pursuant to Section 6.4 shall cease if the
Company determines to terminate prior to such effective date any registration
where Registrable Securities are being registered pursuant to this Section 6.1.
(c) Piggyback Registration of Underwritten Public Offering. If a
------------------------------------------------------
Piggyback Registration involves an offering by or through underwriters, then (i)
all Holders requesting to have their Registrable Securities included in the
Company's Registration Statement must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling shareholders and (ii) any Holder requesting to have his or its
Registrable Securities included in such Registration Statement may elect in
writing, not later than three Business Days prior to the effectiveness of the
Registration Statement filed in connection with such registration, not to have
his or its Registrable Securities so included in connection with such
registration.
(d) Payment of Registration Expenses for Piggyback Registration. The
-----------------------------------------------------------
Company shall pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to a Piggyback Registration Right
contained in this Section 6.1.
(e) Priority in Piggyback Registration. If a Piggyback Registration
----------------------------------
involves an offering by or through underwriters, the Company, except as
otherwise provided herein, shall not be required to include Registrable Shares
therein if and to the extent the underwriter managing the offering reasonably
believes in good faith and advises the Company (which shall promptly notify the
Holder) that such inclusion would materially adversely affect such offering;
provided that (i) if other selling shareholders without contractual registration
rights have requested registration of
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securities in the proposed offering, the Company will reduce or eliminate such
securities held by selling shareholders without registration rights before any
reduction or elimination of Registrable Securities; and (ii) any such reduction
or elimination (after taking into account the effect of clause (i)) shall be pro
rata to all other selling shareholders with contractual registration rights.
6.2 Demand Registration
(a) Request for Registration. If, at any time prior to the Expiration
------------------------
Date, any 25% Holders request that the Company file a registration statement
under the Securities Act, as soon as practicable thereafter the Company shall
use its best efforts to file a registration statement with respect to all
Warrant Shares that it has been so requested to include and obtain the
effectiveness thereof, and to take all other action necessary under federal or
state law or regulation to permit the Warrant Shares that are held and/or that
may be acquired upon the exercise of the Warrants specified in the notices of
the Holders or holders hereof to be sold or otherwise disposed of, and the
Company shall maintain such compliance with each such federal and state law and
regulation for the period necessary for such Holders or Holders to effect the
proposed sale or other disposition; provided, however, the Company shall be
entitled to defer such registration for a period of up to 60 days if and to the
extent that its Board of Directors shall in good faith determine that such
registration would require disclosure of information not otherwise then required
to be disclosed and that such disclosure would adversely affect any material
business situation, transaction or negotiation then proposed, contemplated or
being engaged in by the Company. The Company shall also promptly give written
notice to the Holders and the holders of any other Warrants and/or the holders
of any Warrant Shares who or that have not made a request to the Company
pursuant to the provisions of this Section 6.2(a) of its intention to effect any
required registration or qualification, and shall use its best efforts to effect
as expeditiously as possible such registration or qualification of all such
other Warrant Shares that are then held and/or that may be acquired upon the
exercise of the Warrants, the Holder or holders of which have requested such
registration or qualification, within 15 days after such notice has been given
by the Company, as provided in the preceding sentence. The Company shall be
required to effect a registration or qualification pursuant to this Section
6.2(a) on one occasion only.
(b) Payment of Registration Expenses for Demand Registration. The
--------------------------------------------------------
Company shall pay all Registration Expenses in connection with the Demand
Registration.
(c) Selection of Underwriters. If any Demand Registration is
-------------------------
requested to be in the form of an underwritten offering, the managing
underwriter shall be selected and obtained by the Holders of a majority of the
Warrant Shares to be registered. Such selection shall be subject to the
Company's consent, which consent shall not be unreasonably withheld.
(d) Procedure for Requesting Demand Registration. Any request for a
--------------------------------------------
Demand Registration shall specify the aggregate number of the Registrable
Securities proposed to be sold and the intended method of disposition. Within
10 days after receipt of such a request the Company will give written notice of
such registration request to all Holders, and, subject to the limitations of
Section 6.2(b), the Company will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 Business Days
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after the date on which such notice is given. Each such request shall also
specify the aggregate number of Registrable Securities to be registered and the
intended method of disposition thereof.
6.3 Buy-Outs of Registration Demand
In lieu of carrying out its obligations to effect a Piggyback Registration
or Demand Registration of any Registrable Securities pursuant to this Article 6,
the Company may carry out such obligation by offering to purchase and purchasing
such Registrable Securities requested to be registered in an amount in cash
equal to the difference between (a) 95% of the last sale price of the Common
Stock on the day the request for registration is made and (b) the Exercise Price
in effect on such day; provided, however, that the Holder or Holders may
withdraw such request for registration rather than accept such offer by the
Company.
6.4 Registration Procedures
If and whenever the Company is required to use its best efforts to take
action pursuant to any Federal or state law or regulation to permit the sale or
other disposition of any Registrable Securities that are then held or that may
be acquired upon exercise of the Warrants in order to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in this Article 6, the Company shall, as expeditiously as practicable, use its
best efforts to:
(a) prepare and file with the SEC, as soon as practicable within 60
days after the end of the period within which requests for registration may be
given to the Company (but subject to the provision for deferral contained in
Section 6.2(a) hereof) a Registration Statement or Registration Statements
relating to the registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof, and use
its best efforts to cause such Registration Statements to become effective;
provided that before filing a Registration Statement or Prospectus or any
amendment or supplements thereto, including documents incorporated by reference
after the initial filing of any Registration Statement, the Company will furnish
to the Holders of the Registrable Securities covered by such Registration
Statement and the underwriters, if any, copies of all such documents proposed to
be filed, which documents will be subject to the review of such Holders and
underwriters; provided, that the Company shall not be in breach of its
obligations hereunder or otherwise responsible for any failure to keep such
registration statement in effect caused by any act or omission of a Holder;
(b) prepare and file with the SEC such amendments and post-effective
amendments to a Registration Statement as may be necessary to keep such
Registration Statement effective for 180 days if the offering is not
underwritten, provided, that such 180 day period shall be extended by the number
of days a Prospectus is not available pursuant to Section 6.4(k) because of the
occurrence of an event set forth in Section 6.4(c)(vi); provided, that the
Company shall not be in breach of its obligations hereunder or otherwise
responsible for any failure to keep such registration statement in effect caused
by any act or omission of a Holder; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to
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be filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement or supplement to such Prospectus;
(c) notify the selling Holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (m) below ceases to be true and correct in all
material respects; (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purposes; and (vi) of the happening of any event that makes
any statement of a material fact made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement or Prospectus
so that they will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading:
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment (subject to Section 6.4(a));
(e) if reasonably requested by the managing underwriters, immediately
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters believe (on advice of counsel) should
be included therein as required by applicable law relating to such sale of
Registrable Securities, including, without limitation, information with respect
to the purchase price being paid for the Registrable Securities by such
underwriters and with respect to any other terms of the underwritten (or "best-
efforts" underwritten) offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling Holder of Registrable Securities and each
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each preliminary
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prospectus) any amendment or supplement thereto as such Persons may reasonably
request; the Company consents to the use of such Prospectus or any amendment or
supplement thereto by each of the selling Holders of Registrable Securities and
the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto;
(h) prior to any public offering of Registrable Securities, cooperate
with the selling Holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any selling Holder or underwriter reasonably requests in writing, keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Registration Statement;
provided that the Company will not be required to (i) qualify to do business in
any jurisdiction where it not then so qualified or (ii) to take any action which
would subject the Company to (a) general service of process in any jurisdiction
where it is not at the time so subject, or (b) taxation by any jurisdiction
where it is not at the time so subject;
(i) cooperate with the selling Holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends to the extent permitted by applicable law and
regulation; and enable such Registrable Securities to be in such denominations
and registered in such names as the managing underwriters may request at least
two Business Days prior to any sale of Registrable Securities to the
underwriters;
(j) use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities within the United States as may
be necessary to enable the seller or sellers thereof or the underwriters, if
any, to consummate the disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by Section
6.4(c)(vi) above, prepare a supplement or post-effective amendment to the
applicable Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(l) with respect to each issue or class of Registrable Securities, use
its best efforts to cause all Registrable Securities covered by the Registration
Statements to be listed on each securities exchange or automated quotation
system, if any, on which similar securities issued by the Company are then
listed if requested by the Holders of a majority of such issue or class of
Registrable Securities;
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(m) enter into such agreements (including an underwriting agreement)
and take all such other action reasonably required in connection therewith in
order to expedite or facilitate the disposition of such Registrable Securities
and in such connection, if the registration is in connection with an
underwritten offering (i) make such representations and warranties to the
underwriters (or the Holders of the Registrable Securities if such offering is
not underwritten), in such form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions in form, scope and substance shall be
reasonably satisfactory to the underwriters) addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
underwriters; (iii) obtain "cold comfort" letters and updates thereof from the
Company's accountants addressed to the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters by underwriters in connection with underwritten offerings; (iv)
set forth in full in any underwriting agreement entered into the indemnification
provisions and procedures of Section 6.5 hereof with respect to all parties to
be indemnified pursuant to said Section; and (v) deliver such documents and
certificates as may be reasonably requested by the underwriters to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company; the
above shall be done at each closing under such underwriting or similar agreement
or as and to the extent required hereunder;
(n) make available for inspection by one or more representatives of
the Holders of Registrable Securities being sold, any underwriter participating
in any disposition pursuant to such registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such representatives, in connection with such; and
(o) otherwise use its best efforts to comply with all applicable
Federal and state regulations; and take such other action as may be reasonably
necessary to or advisable to enable each such Holder and each such underwriter
to consummate the sale or disposition in such jurisdiction or jurisdiction in
which any such Holder or underwriter shall have requested that the Registrable
Securities be sold.
Except as otherwise provided in this Agreement, the Company shall have sole
control in connection with the preparation, filing, withdrawal, amendment or
supplementing of each Registration Statement, the selection of underwriters, and
the distribution of any preliminary prospectus included in the Registration
Statement, and may include within the coverage thereof additional shares of
Common Stock or other securities for its own account or for the account of one
or more of its other security holders.
The Company may require each Seller of Registrable Securities as to which
any registration is being effected to furnish to the Company such information
regarding the distribution of such securities and such other information as may
otherwise be required by the Securities Act to be
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included in such Registration Statement.
6.5 Indemnification
(a) Indemnification by Company. In connection with each Registration
--------------------------
Statement relating to disposition of Registrable Securities, the Company shall
indemnify and hold harmless each Holder, its officers, directors and agents and
each underwriter of Registrable Securities and each Person, if any, who controls
such Holder or underwriter (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) against any and all losses, claims,
damages and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that such indemnity shall not inure
to the benefit of any Holder or underwriter (or any Person controlling such
Holder or underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) on account of any losses, claims, damages or
liabilities arising from the sale of the Registrable Securities if such untrue
statement or omission or alleged untrue statement or omission was made in such
Registration Statement, Prospectus or preliminary prospectus, or such amendment
or supplement, in reliance upon and in conformity with information furnished in
writing to the Company by such Holder or underwriter specifically for use
therein. The Company shall also indemnify selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the Holders of Registrable Securities, if requested. This indemnity agreement
shall be in addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder. In connection with each Registration
-------------------------
Statement, each Holder shall indemnify, to the same extent as the
indemnification provided by the Company in Section 6.5(a), the Company, its
directors and each officer who signs the Registration Statement and each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act) but only insofar as such losses, claims,
damages and liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in the
Registration Statement, the Prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
information furnished in writing by such Holder to the Company specifically for
use therein. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall be
entitled
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to receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above, with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus,
Registration Statement or preliminary prospectus or any amendment thereof or
supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that proposes to
------------------------------------
assert the right to be indemnified hereunder will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an indemnifying party or parties
under this Section, notify each such indemnifying party of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6.5(a) or 6.5(b) shall be available to
any party who shall fail to give notice as provided in this Section 6.5(c) if
the party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was prejudiced by the failure to give such
notice, but the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability that it may
have to any indemnified party for contribution otherwise than under this
Section. In case any such action, suit or proceeding shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and the approval by the indemnified party of such counsel, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment of counsel by
such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnified party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
(d) Contribution. In connection with each Registration Statement
------------
relating to the disposition of Registrable Securities, if the indemnification
provided for in subsection (a) hereof is unavailable to an indemnified party
thereunder in respect to any losses, claims, damages or liabilities referred to
therein, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 6.5 in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the
20
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statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. Notwithstanding anything
to the contrary in this Section 6.5(d), no selling Holder of Registrable
Securities shall be required to contribute any amount in excess of the net
proceeds it received in connection with its sale of Registrable Securities.
(e) Underwriting Agreement to Control. Notwithstanding the foregoing
---------------------------------
provisions of this Section 6.5, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement entered
into in connection with the underwritten public offering of the Registrable
Securities are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall control.
(f) Specific Performance. The Company and the Holder acknowledge that
--------------------
remedies at law for the enforcement of this Section 6.5 may be inadequate and
intend that this Section 6.5 shall be specifically enforceable.
(g) Survival of Obligations. The obligations of the Company and the
-----------------------
Holder under this Section 6.5 shall survive the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this Article
6, and otherwise.
6.6 Reports Under Securities Exchange Act of 1934
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined us SEC Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the
21
<PAGE>
most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration or
pursuant to such form.
ARTICLE 7
OTHER MATTERS
7.1 Binding Effects; Benefits
This Warrant shall inure to the benefit of and shall be binding upon the
Company and the Warrantholder and their respective heirs, legal representatives,
successors and assigns. Nothing in this Warrant, expressed or implied, is
intended to or shall confer on any person other than the Company and the
Warrantholder, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant.
7.2 No Inconsistent Agreements
The Company will not on or after the date of this Warrant enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the Holders in this Warrant or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to holders of
the Company's securities under any other agreements.
7.3 Adjustments Affecting Registrable Securities
The Company will not take any action outside the ordinary course of
business, or permit any change within its control to occur outside the ordinary
course of business, with respect to the Registrable Securities which is without
a bona fide business purpose, and which is intended to interfere with the
ability of the Holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement.
7.4 Integration/Entire Agreement
This Warrant is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Warrants.
This Warrant supersedes all prior agreements and understandings between the
parties with respect to such subject matter (other than warrants previously
issued by the Company to the Warrantholder).
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7.5 Amendments and Waivers
The provisions of this Warrant, including the provisions of this sentence,
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of holders of at least a majority of the
outstanding Registrable Securities. Holders shall be bound by any consent
authorized by this Section whether or not certificates representing such
Registrable Securities have been marked to indicate such consent.
7.6 Counterparts
This Warrant may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
7.7 Governing Law
This Warrant shall be governed by and construed in accordance with the laws
of the State of New York.
7.8 Severability
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provisions
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
7.9 Attorneys' Fees
In any action or proceeding brought to enforce any provisions of this
Warrant, or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees and
disbursements in addition to its costs and expenses and any other available
remedy.
7.10 Computations of Consent
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its affiliates (other than the Warrantholder or subsequent Holders if
they are deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
7.11 Notice
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Any notices or certificates by the Company to the Holder and by the Holder
to the Company shall be deemed delivered if in writing and delivered in person
or by registered mail (return receipt requested) to the Holder addressed to him
in care of TMP Interactive, Inc., 5 Clock Tower Place, Suite 500, Maynard,
Massachusetts 01754, or, if the Holder has designated, by notice in writing to
the Company, any other address, to such other address, and if to the Company,
addressed to it at: 1800 Robert Fulton Drive, Suite 250, Reston, Virginia 29191-
9992, Attention: Secretary, or if the Company has designated, by notice in
writing to the Holder, any other address, to such other address.
The Company may change its address by written notice to the Holder and the
Holder may change its address by written notice to the Company.
24
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the 2nd day of May, 2000.
THE NETPLEX GROUP, INC.
By: _______________________________
Title:
Attest: _______________________
25
<PAGE>
EXERCISE FORM
(To be executed upon exercise of Warrant)
Netplex Group, Inc.
1800 Robert Fulton Drive, Suite 250
Reston, Virginia 29191-9992
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase Warrant Shares herewith tenders payment
for ______________ of the Warrant Shares to the order of The Netplex Group, Inc.
in the amount of $______ in accordance with the terms of this Warrant; or
Please issue a certificate or certificates for such Warrant Shares in the
name of, and pay any cash for any fractional share to:
Name
(Please print Name, Address and Social
Security No.)
Signature
Federal Tax ID #
Note: The above signature should correspond
exactly with the name on the first page of
this Warrant Certificate or with the name
of the assignee appearing in the assignment
form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder.
26
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, ___________________ hereby sells, assigns and transfers
unto __________________ the within Warrant, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
______________________ attorney, to transfer said Warrant on the books of the
within-named Company with respect to the number of Warrant Shares set forth
below, with full power of substitution in the premises:
Name(s) of No. of
Assignee(s) Address Warrant Shares
- ----------- ------- --------------
And if said number of Warrant Shares shall not be all the Warrant Shares
represented by the Warrant, a new Warrant is to be issued in the name of said
undersigned for the balance remaining of the Warrant Shares registered by said
Warrant.
Dated: ____________, 20__ Signature
Note: The above signature should
correspond exactly with the name
on the face of this Warrant
27
<PAGE>
Exhibit 5
Venable, Baetjer and Howard, LLP
2010 Corporate Ridge
Suite 400
McLean, Virginia 22102
May 9, 2000
The Netplex Group, Inc.
1800 Robert Fulton Drive, Suite 250
Reston, Virginia 20191
Ladies and Gentlemen:
We have acted as counsel for The Netplex Group, Inc., a New York
corporation (the "Company"), in connection with a registration statement on Form
S-3 of the Company (File No. ________) (the "Registration Statement"), filed
with the Securities and Exchange Commission (the "Commission") on May 9, 2000,
pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
pertaining to the registration of 3,763,876 shares of common stock, par value
$0.001 per share, of the Company (the "Shares") for resale by certain
shareholders of the Company named in the Registration Statement (collectively,
the "Selling Shareholders").
In connection with this opinion, we have considered such questions of
law as we have deemed necessary as a basis for the opinion set forth below, and
we have examined or otherwise are familiar with originals or copies, certified
or otherwise identified to our satisfaction, of the following: (i) the
Registration Statement; (ii) the Certificate of Incorporation and Bylaws, as
amended, of the Company, as currently in effect; (iii) certain resolutions of
the Board of Directors of the Company relating to the Shares and the
transactions described by the Registration Statement; and (iv) such other
documents as we have deemed necessary or appropriate as a basis for the opinion
set forth below. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such copies. As
to any facts material to this opinion that we did not independently establish or
verify, we have relied upon statements and representations of officers and other
representatives of the Company and others.
Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and
1. with respect to the outstanding Shares, are validly issued, fully
paid and nonassessable; and
<PAGE>
2. with respect to those Shares underlying the warrants described in
the Registration Statement, will be validly issued, fully paid and nonassessable
upon the proper exercise of the warrants in accordance with the respective terms
thereof.
Except as provided in the next sentence, we express no opinion as to
the laws of any jurisdiction other than the laws of the Commonwealth of Virginia
and the federal laws of the United States of America. To the extent that matters
concerning the New York Business Corporation Law are involved in the opinions
expressed above, our opinions are solely based upon our reasonable familiarity
with the New York Business Corporation Law based on our reading of standard
published compilations of such laws. We express no opinion as to the application
of the "securities" or "blue sky" law of any state, including the State of New
York and the Commonwealth of Virginia, to the offer and/or sale of the Shares.
We assume no obligation to update the opinions set forth herein.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5 to the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act, or the Rules and Regulations of
the Commission thereunder.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
The Netplex Group, Inc.:
We have issued our report dated March 1, 2000 (except for Note 20, as to which
the date is March 30, 2000) accompanying the consolidated financial statements
of The Netplex Group, Inc. appearing in the 1999 Annual Report of The Netplex
Group, Inc. to its stockholders and accompanying the schedule included in the
Annual Report on Form 10-K for the year ended December 31, 1999 which are
incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in the Registration Statement of the aforementioned
report and to the use of our name as it appears under the caption "Experts."
Grant Thornton LLP
Vienna, Virginia
May 5, 2000
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
The Netplex Group, Inc.
We consent to the incorporation by reference in the registration statement (No.
333-00000) on Form S-3 of The Netplex Group, Inc. of our report dated April 19,
1999 relating to the consolidated balance sheet of The Netplex Group, Inc. and
subsidiaries as of December 31, 1998, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
two-year period ended December 31, 1998, and the related schedule, which report
appears in the December 31, 1999, annual report on Form 10-K of The Netplex
Group, Inc., and to the reference to our firm under the heading "Experts" in the
prospectus.
KPMG LLP
McLean, VA
May 5, 2000
