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EXHIBIT 10.10
STOCK PURCHASE WARRANT
This Warrant is issued as of this 21st day of May, 1999, by BUILDNET,
INC., a North Carolina corporation (the "Company"), to PETRA CAPITAL, LLC, a
Georgia limited liability company (Petra Capital, LLC and any subsequent
assignee or transferee hereof are hereinafter referred to collectively as
"Holder" or "Holders").
AGREEMENT:
Section 1. Issuance of Warrant; Term.
(a) Petra Capital, LLC ("Petra") and Piedmont Venture Partners Limited
Partnership ("Piedmont") made a loan to the Company in the amount of $3,000,000
(the "Loan"). The portion of the Loan funded by Petra is evidenced by a Secured
Promissory Note dated October 8, 1998, in the original principal amount of
$2,000,000, payable to the order of Petra (together with any and all extensions,
replacements and renewals thereof, the "Note"), and the Loan was made pursuant
to a Loan and Security Agreement dated October 8, 1998 (as amended, supplemented
or otherwise modified from time to time, the "Loan Agreement"). In consideration
of the funding of $2,000,000 of the Loan, the receipt and sufficiency of which
are hereby acknowledged, the Company hereby grants to Holder the right to
purchase 12,000 shares of the Company's common stock (the "Common Stock.
(b) The shares of Common Stock issuable upon exercise of this Warrant
are hereinafter referred to as the "Shares." This Warrant shall be exercisable
at any time and from time to time from the date hereof until October 7, 2007.
Section 2. Exercise Price. The exercise price (the "Exercise Price")
per share for which all or any of the Shares may be purchased pursuant to the
terms of this Warrant shall be one cent ($.01).
Section 3. Exercise.
(a) This Warrant may be exercised by the Holder hereof (but only on the
conditions hereafter set forth) as to all or any increment or increments of one
hundred (100) Shares (or the balance of the Shares if less than such number),
upon delivery of written notice of intent to exercise to the Company at the
following address: 4815 Emperor Blvd., Suite 214, Durham, NC 27703, Attention:
Steve Thompson, or such other address as the Company shall designate in a
written notice to the Holder hereof, together with this Warrant and payment to
the Company of the aggregate Exercise Price of the Shares so purchased. The
Exercise Price shall be payable, at the option of the Holder, (i) by certified
or bank check, (ii) by the surrender of the Note or portion thereof having, an
outstanding principal balance equal to the aggregate Exercise Price. Upon
exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute and
deliver to the Holder of this Warrant a certificate or certificates for the
total number of whole Shares for which this Warrant is being exercised in such
names and denominations as are requested by such Holder. If this Warrant shall
be exercised with respect to less than all of the Shares, the Holder shall be
entitled to receive a new Warrant covering the number of Shares in
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respect of which this Warrant shall not have been exercised, which new Warrant
shall in all other respects be identical to this Warrant. The Company covenants
and agrees that it will pay when due any and all state and federal issue taxes
which may be payable in respect of the issuance of this Warrant or the issuance
of any Shares upon exercise of this Warrant.
(b) In lieu of exercising this Warrant pursuant to Section 3(a) above,
the Holder shall have the right to require the Company to convert this Warrant
(as it may be adjusted pursuant to Section 5 hereof), in whole or in part and at
any time or times into Shares (the "Conversion Right"), upon delivery of written
notice of intent to convert to the Company at its address in Section 3(a) or
such other address as the Company shall designate in a written notice to the
Holder hereof, together with this Warrant. Upon exercise of the Conversion
Right, the Company shall deliver to the Holder (without payment by the Holder of
any Exercise Price) that number of Shares which is equal to the quotient
obtained by dividing (x) the net value of the number of Shares with respect to
which Holder is then exercising the Conversion Right (determined by subtracting
the aggregate Exercise Price for the Shares with respect to which Holder is then
exercising the Conversion Right from a number equal to the product of (i) the
Fair Market Value per Share (as such term is defined in Section 5(b)) as at such
time, multiplied by (ii) that number of Shares with respect to which Holder is
then exercising the Conversion Right), by (y) the Fair Market Value per Share.
Any references in any Warrants to the "exercise" of this Warrant, and the use of
the term exercise herein, shall be deemed to include (without limitation) any
exercise of the Conversion Right.
Section 4. Covenants and Conditions. The above provisions are subject
to the following:
(a) Neither this Warrant nor the Shares have been registered under the
Securities Act of 1933, as amended ("Securities Act") or any state securities
laws ("Blue Sky Laws"). This Warrant has been acquired for investment purposes
and not with a view to distribution or resale. Except for the Holder's intended
transfer to Petra Special Purpose, LLC (the "SPV") and the subsequent collateral
assignment by the SPV, this Warrant may not be pledged, hypothecated, sold, made
subject to a security interest, or otherwise transferred without (i) an
effective registration statement for such Warrant under the Securities Act and
such applicable Blue Sky Laws, or (ii) an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company and its counsel, that
registration is not required under the Securities Act or under any applicable
Blue Sky Laws (the Company hereby acknowledges that Sherrard & Roe, PLC is
acceptable counsel). Transfer of Shares issued upon the exercise of this Warrant
shall be restricted in the same manner-and to the same extent as the Warrant,
and the certificates representing such Shares shall, subject to Section 6
hereof, bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (1) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (11) IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH SECURITIES ACTS OR
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
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The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of this Warrant and any shares of Common Stock issued
upon exercise hereof with applicable federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment therefor,
be legally and validly issued and outstanding, fully paid and nonassessable,
free from all taxes, liens, charges and preemptive rights (other than any
created by the Holder), if any, with respect thereto or to the issuance thereof.
The Company shall at all times reserve and keep available for issuance upon the
exercise of this Warrant such number of authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of this Warrant.
Section 5. Adjustment of Exercise Price and Number of Shares Issuable.
The Exercise Price and the number of Shares (or other securities or property)
issuable upon exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of any of the events enumerated in this Section 5.
(a) Common Stock Reorganization. If the Company shall (i) subdivide or
consolidate its outstanding shares of Common Stock (or any class thereof) into a
greater or smaller number of shares, (ii) pay a dividend or make a distribution
on its Common Stock (or any class thereof) in shares of its capital stock, or
(iii) issue by reclassification of its Common Stock (or any class thereof) any
shares of its capital stock (any such event described in clauses (i), (ii) or
(iii) being called a "Common Stock Reorganization"), then the Exercise Price and
the type of securities for which this Warrant is exercisable shall be adjusted
immediately such that the Holder thereafter shall be entitled to received upon
exercise of this Warrant the aggregate number and type of securities that it
would have received if this Warrant had been exercised immediately prior to such
Common Stock Reorganization.
(b) Common Stock Distribution. If the Company shall issue, sell,
distribute or otherwise grant any shares of Common Stock, other than pursuant to
a Common Stock Reorganization (any such issuance, sale, distribution or grant
being herein called a "Common Stock Distribution"), for a consideration per
share less than the Fair Market Value per Share immediately prior to such Common
Stock Distribution, then the Exercise Price shall be reduced to the price
determined by multiplying such Exercise Price by a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such Common Stock Distribution plus the number of shares
issuable upon exercise of this Warrant and any Additional Warrants issued
pursuant to the Loan Agreement plus (B) the quotient obtained by dividing the
aggregate consideration, if any, received by the Company upon such Common Stock
Distribution by such Fair Market Value per Share, and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
after such Common Stock Distribution plus the number of shares issuable upon
exercise of this Warrant and any Additional Warrants issued pursuant to the Loan
Agreement. "Fair Market Value per Share" as of any time means the fair market
value of the Company as of such time divided by the number of outstanding shares
of Common Stock, as of such
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time after giving effect to the exercise of this Warrant and any Additional
Warrants issued pursuant to the Loan Agreement.
(c) Convertible Securities and Option Securities. If the Company shall
issue, sell, distribute or otherwise grant (including by assumption):
(i) any stock or other securities convertible into or
exchangeable for Common Stock, whether or not the rights to exchange or
convert thereunder are immediately exercisable such convertible or
exchangeable stock or securities being herein called "Convertible
Securities"), or
(ii) any rights to subscribe for or to purchase, or any
warrants or options for the purchase of, Common Stock or Convertible
Securities, whether or not immediately exercisable, other than (A) any
Additional Warrants issued pursuant to the Loan Agreement, or (B)
Permitted Plan Options (as defined below) (such rights, warrants or
options being herein called "Option Securities"),
and the lowest aggregate consideration per share for which Common Stock is
issuable upon the exercise of such Convertible Securities or Option Securities
(and, if applicable, upon conversion or exchange of Convertible Securities
issuable upon exercise of Option Securities) shall be less than the Fair Market
Value per Share at such time, then the Exercise Price shall be reduced to the
price determined by multiplying such Exercise Price by a fraction, the numerator
of which shall be the sum of (A) the number of shares of Common Stock then
outstanding plus the number of shares issuable upon exercise of this Warrant and
any Additional Warrants issued pursuant to the Loan Agreement plus (B) the
quotient obtained by dividing the aggregate consideration, if any, received or
receivable by the Company upon such issuance, sale, distribution or grant by
such Fair Market Value per Share, and the denominator of which shall be the
total number of shares of Common Stock then outstanding plus the number of
shares issuable upon exercise of this Warrant and any Additional Warrants issued
pursuant to the Loan Agreement plus the total maximum number of shares issuable
upon exercise or conversion of such Convertible Securities or Option Securities
and, in the case of Option Securities to acquire Convertible Securities, upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Option Securities. If any of such
Convertible Securities or Option Securities shall have terminated, lapsed or
expired prior to exercise, exchange or conversion, the Exercise Price then in
effect shall forthwith be readjusted (effective only with respect to any
exercise of Warrants after such readjustment) to the Exercise Price which would
then be in effect had the adjustment not been made upon the issuance, sale,
distribution or grant of such Convertible Securities or Option Securities. For
purposes hereof, "Permitted Plan Options" shall mean Option Securities issued
pursuant to the Company's 1997 Stock Plan; provided that the number of shares of
Common Stock issuable upon exercise thereof shall not exceed in the aggregate,
the sum of (i) 155,000 shares, less (ii) any shares of Common Stock issuable
upon the exercise of options granted under the Sun Forest Plan (net of any
options thereunder which have been canceled), in each case, adjusted to account
for any stock splits, subdivisions or the like.
(d) Adjustment in Number of Shares. Upon each adjustment to the
Exercise Price pursuant to subsections (a), (b) or (c) this Section 5, this
Warrant shall thereafter evidence the right
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to receive upon payment of the adjusted Exercise Price that number of Shares
obtained by multiplying the number of Shares previously issuable upon exercise
of this Warrant by a fraction the numerator of which is the Exercise Price prior
to adjustment and the denominator of which is the adjusted Exercise Price.
(e) Non-Cash Consideration. If any shares of Common Stock, Option
Securities or Convertible Securities shall be issued, sold, distributed or
granted for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be deemed to be the fair market
value of such consideration, as determined in good faith by the Corporation's
Board of Directors. If any shares of Common Stock, Option Securities or
Convertible Securities shall be issued in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair market value, as determined in good faith by the
Corporation's Board of Directors, of such portion of the assets and business of
the non-surviving corporation as shall be attributable to such Common Stock,
Option Securities or Convertible Securities, as the case may be.
(f) Capital Reorganizations. If there shall be any consolidation,
merger or amalgamation of the Company with another person or entity or any
acquisition of capital stock of the Company by means of a share exchange, other
than a consolidation, merger or share exchange in which the Company is the
continuing corporation or any sale or conveyance of the property of the Company
as an entirety or substantially as an entirety, or any reorganization or
recapitalization of the Company (any such event being called a "Capital
Reorganization", then the Holder of this Warrant shall no longer have the right
to purchase Common Stock, but shall have instead the right to purchase, upon
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property (including cash) which the Holder would have owned or
have been entitled to receive pursuant to such Capital Reorganization if this
Warrant had been exercised immediately prior to the effective date of such
Capital Reorganization. As a condition to effecting any Capital Reorganization,
the Company or the successor or surviving corporation, as the case may be, shall
assume by a supplemental agreement, reasonably satisfactory in form, scope and
substance to the Holder (which shall be mailed or delivered to the Holder of
this Warrant at the last address of such Holder appearing on the books of the
Company) the obligation to deliver to such Holder such shares of stock,
securities, cash or property as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase, and all other obligations of the
Company set forth in this Warrant.
(g) Determination of Fair Market Value. Subject to the provisions set
forth below, the fair market value of the Company or of any non-cash
consideration received by the Company upon any Common Stock Distribution shall
be determined in good faith by the Board of Directors of the Company. Upon each
such determination, the Company shall promptly give notice thereof to the
Holder, setting forth in reasonable detail the calculation of such fair market
value and the method and basis of determination thereof (the "Company
Determination"). If the Holder shall disagree with the Company Determination and
shall, by notice to the Company given within thirty (30) days after the
Company's notice of the Company Determination, elect to dispute the Company
Determination, the Company shall, within thirty (30) days after such notice,
engage an investment bank or other qualified appraisal firm acceptable to the
Holder to make an independent determination of the fair market value of the
Company or of any non-cash consideration received by the Company upon any Common
Stock Distribution (the "Appraiser Determination"). The Appraiser Determination
shall be
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final and binding on the Company and the Holder. The cost of the Appraiser
Determination shall be borne by the Company.
(h) Adjustment Rules. Any adjustments pursuant to this Section 5 shall
be made successively whenever an event referred to herein shall occur. No
adjustment shall be made pursuant to this Section 5: (i) in respect of the
issuance from time to time of shares of Common Stock upon the exercise of this
Warrant, (ii) in respect of the issuance from time to time of shares of Common
Stock upon the exercise of the Warrant to be issued to Piedmont, (iii) the
exercise or conversion of any other Option Securities or Convertible Securities,
or (iii) in respect of the issuance or exercise of any Additional Warrants (as
defined in the Loan Agreement).
(i) Proceedings Prior to Any Action Requiring Adjustment. As a
condition precedent to the taking of any action which would require an
adjustment pursuant to this Section 5, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that (a) the Company may thereafter validly and legally issue as fully
paid and nonassessable all shares of Common Stock which the Holder of this
Warrant is entitled to receive upon exercise thereof.
(j) Notice of Adjustment. Not less than 10 days prior to the record
date or effective date, as the case may be, of any action which requires or
might require an adjustment or readjustment pursuant to this Section 5, the
Company shall give notice to the Holder of such event, describing such event in
reasonable detail and specifying the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give notice to the Holder of such adjustment and
computation promptly after such adjustment becomes determinable.
Section 6. Transfer of Warrant. Subject to the provisions of Section 4
hereof, this Warrant may be transferred, in whole or in part, to any person or
business entity, by presentation of the Warrant to the Company with written
instructions for such transfer. Upon such presentation for transfer, the Company
shall promptly execute and deliver a new Warrant or Warrants in the form hereof
in the name of the assignee or assignees and in the denominations specified in
such instructions. The Company shall pay all expenses incurred by it in
connection with the preparation, issuance and delivery of Warrants under this
Section.
Section 7. Warrant Holder Not Shareholder; Rights Offering; Preemptive
Rights. Except as otherwise provided herein, this Warrant does not confer upon
the Holder, as such, any right whatsoever as a shareholder of the Company. The
Company shall not grant any preemptive rights with respect to any of its capital
stock if such preemptive rights are exercisable upon exercise of this Warrant.
Section 8. Observation Rights, Interim Dividends.
(a) Observation Rights. The Holder of this Warrant shall receive notice
of and be entitled to attend or may send a representative to attend all meetings
of the Company's Board of Directors in a non-voting observation capacity and
shall receive a copy of all correspondence and
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information delivered to the Company's Board of Directors, from the date hereof
until such time as the indebtedness evidenced by the Note has been paid in full.
(b) Interim Dividends. If the Company pays a dividend or makes a
distribution to the holders of its capital stock of any securities (other than
capital stock) or property (including cash and securities of other companies) of
the Company, or any rights, options or warrants to purchase securities (other
than capital stock) or property (including securities of other companies) of the
Company, then, simultaneously with the payment of such dividend or the making of
such distribution, and as a condition precedent to its right to do so, it will
pay or distribute to the Holder of this Warrant an amount of property (including
without limitation cash) and/or securities (including without limitation
securities of other companies) of the Company as would have been received by
such Holder had it exercised this Warrant and received all of the Shares of
Common Stock issuable upon the exercise of this Warrant immediately prior to the
record date (or other applicable date) used for determining stockholders of the
Company entitled to receive such dividend or distribution. Anything in Section
to the contrary notwithstanding, no adjustment to the Exercise Price shall be
made for any distribution of Convertible Securities of the Company to the Holder
pursuant to the provisions of this Section 8.
Section 9. Financial Statements and Reports. Unless the Company is
otherwise furnishing such information to the Holder hereof, from the date hereof
until the earlier to occur of (i) the exercise in full of this Warrant or (ii)
its termination, the Company shall deliver to the Holder the following financial
information:
(a) within one hundred twenty (120) days after the end of each fiscal
year of Borrower, (A) audited consolidated financial statements of Borrower,
including a balance sheet as of the close of such fiscal year, an income
statement and statements of changes in stockholders' equity, and of cash flows
for such fiscal year, all in reasonable detail, prepared in accordance with GAAP
consistently applied, and with the report thereon of independent public
accountants, reasonably acceptable to Lender, and (B) unaudited consolidating
financial statements, including a balance sheet as of the close of such fiscal
year, an income statement and statements of changes in stockholders' equity, and
of cash flows for such fiscal year;
(b) within thirty (30) days after the end of each calendar month, a
consolidated balance sheet of Borrower as of the close of such month and
consolidated statements of earnings and retained earnings of Borrower for such
month and for the prior months of the current fiscal year (on a year to date
basis), each compared to the same period in the previous fiscal year, all in
reasonable detail, and unaudited but prepared on the basis of GAAP consistently
applied (except for the absence of footnotes and subject to year-end
adjustments), together with a narrative status report of Borrower's management;
and
(c) with reasonable promptness, such other financial data as Lender may
reasonably request.
Section 10. Certain Notices. In case at any time the Company shall
propose to:
(a) declare any cash dividend upon its Common Stock;
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(b) declare any dividend upon its Common Stock payable in stock or make
any special dividend or other distribution to the holders of its Common Stock;
(c) offer for subscription to the holders of any of its Common Stock
any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the Company, or
consolidate, merge or otherwise combine with, or sell all or substantially all
of its assets to, another corporation; or
(e) voluntarily or involuntarily dissolve, liquidate or wind up of the
affairs of the Company;
then, in any one or more of said cases, the Company shall give to the Holder, by
certified or registered mail, (i) at least twenty (20) days' prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, and (ii) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least
twenty (20) days prior written notice of the date when the same shall take
place. Any notice required by clause (i) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto, and any notice required by
clause (ii) shall specify the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.
Section 11. Put Right.
(a) The Company hereby irrevocably grants and issues to Holder the
right and option to sell to the Company (the "Put") this Warrant or the Shares
with respect to which this Warrant is exercisable, in whole or part, at any time
after May 31, 2006 at a purchase price (the "Purchase Price") equal to the Put
Value (as hereinafter defined) of the shares of Common Stock issuable to Holder
upon exercise of this Warrant.
(b) The Company shall pay to the Holder, in cash or certified or
cashier's check, the Purchase Price within thirty (30) days of the receipt of
written notice from the Holder stating its intention to exercise the Put and the
number of shares with respect to which it is then exercising the Put (the "Put
Securities").
(c) The Put Value shall by equal to the fair market value of the
Company (determined pursuant to Section 5(g) of this Warrant) multiplied by a
fraction, the numerator of which shall be the number of Put Securities and the
denominator of which shall be the number of shares of Common Stock then
outstanding (including the Put Securities and after giving effect to the
conversion of any Convertible Securities then outstanding).
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[Remainder of Page Intentionally Left Blank]
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[SIGNATURE PAGE TO STOCK PURCHASE WARRANT]
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
BUILDNET, INC.
By: /s/ Keith T. Brown
Name: Keith T. Brown
Title: President and CEO
Attest: /s/ J. William Waddell
Name: J. William Waddell
Title: Secretary
PETRA CAPITAL, LLC, a Georgia limited
liability company
By: Petra Capital Management, LLC,
Manager
By: /s/ Petra Capital Management, LLC
Name: Petra Capital Management, LLC
Title: Authorized Representative
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