NEITHER THIS WARRANT NOR THE SECURITIES TO BE RECEIVED UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, WHETHER OR NOT FOR CONSIDERATION, IN THE
ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT AND QUALIFICATION WITH
RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE
STATE SECURITIES LAWS OR (2) AN EXEMPTION FROM SUCH QUALIFICATION AND
REGISTRATION.
COMMON STOCK PURCHASE WARRANT
No. ___
January 25, 2001
NETGATEWAY, INC., a Delaware corporation (the "Company"), having its executive
offices at 754 E. Technology Ave., Orem, Utah 84097, does hereby certify and
agree that, for good and valuable consideration (the existence, sufficiency and
receipt of which are hereby acknowledged by the Company
________________________________________________________________________________
his successors and assigns ("Holder"), hereby is entitled to purchase from the
Company, during the term set forth in Section 1 hereof, up to an aggregate
amount of shares (the "Exercise Quantity") of duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock, par value US$.001 per
share, of the Company (the "Common Stock"), all upon the terms and provisions
and subject to adjustment of such Exercise Quantity as provided in this Common
Stock Purchase Warrant (the "Warrant"). The exercise price per share of Common
Stock for which this Warrant is exercisable shall be fifty cents ($.50), as
adjusted from time to time pursuant to the terms of this Warrant (the "Exercise
Price").
The term of this Warrant commences as of the date hereof, and shall
expire at 5:00 P.M., Pacific time, on the thirtieth calendar day following the
date of this Warrant; provided however, that in the event the closing bid price
of the Common Stock is not $.75 or more for ten consecutive trading days during
the initial term of this Warrant, the term shall be extended for a single
additional thirty calendar day period. In the event that this Warrant would
expire on a day that is not a Business Day (as defined below), then the term of
this Warrant automatically shall be extended to 5:00 P.M., Pacific time, on the
next succeeding Business Day.
This Warrant may be exercised by the Holder of this Warrant at any time
following the first anniversary of the date hereof through the balance of the
term hereof, in whole or in part, from time to time (but not for fractional
shares, unless this Warrant is exercised in whole), by presentation and
surrender of this Warrant to the Company, duly completed and executed for
exercise, together with payment in the aggregate amount equal to the Exercise
Price multiplied by the number of shares of Common Stock being purchased. At the
option of Holder, payment of the Exercise Price maybe made only by certified
check payable to the order of the Company or wire transfer. Upon the Company's
receipt of this Warrant, duly completed and signed for exercise, and the
requisite payment, the Company shall issue and deliver (or cause to be
delivered) to the exercising Holder stock certificates aggregating the number of
shares of Common Stock purchased. In the event of a partial exercise of this
Warrant, the Company shall issue and deliver to the Holder a new Warrant at the
same time such stock certificates are delivered, which new Warrant shall entitle
the Holder to purchase the balance of the Exercise Quantity not purchased in
that partial exercise and shall otherwise be upon the same terms and provisions
as this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized representative and its corporate seal, if any, to be impressed
hereupon and attested to by its Secretary or Assistant Secretary.
NETGATEWAY, INC.,
a Delaware corporation
By: ____________________________________
John J. Poelman
President
Attest:
By: ___________________________________
Frank C. Heyman
CFO, Secretary
1. Exercise. Upon the due exercise by the Holder of this Warrant, whether in
whole or in part, the Holder (or any other person to whom a stock certificate is
to be so issued) shall be deemed for all purposes to have become the Holder of
record of the shares of Common Stock for which this Warrant has been so
exercised (the "Warrant Securities" ), effective immediately prior to the close
of business on the date this Warrant, the completed and signed Exercise Form and
the requisite payment were duly delivered to the Company, irrespective of the
date of actual delivery of certificates representing such shares of Common Stock
so issued. In the event the Holder of this Warrant desires that any or all of
the stock certificates to be issued upon the exercise hereof be registered in a
name or names other than that of the Holder of this Warrant, the Holder must (i)
so request in writing at the time of exercise if the transfer is not a
registered transfer, (ii) provide to the Company an opinion of counsel
reasonably satisfactory to the Company to the effect that the proposed transfer
may be effected without registration under the Securities Act, and (iii) pay to
the Company funds sufficient to pay all stock transfer taxes (if any) payable in
connection with the transfer and delivery of such stock certificates.
2. Surrender of Warrant; Expenses. Whether in connection with the exercise,
exchange, registration of transfer or replacement of this Warrant, surrender of
this Warrant shall be made to the Company during normal business hours on a
Business Day (unless the Company otherwise permits) at the executive offices of
the Company specified above, or to such other office or duly authorized
representative of the Company as from time to time may be designated by the
Company by written notice given to the Holder of this Warrant. The Holder shall
pay all costs and expenses incurred in connection with the exercise,
registering, exchange, transfer or replacement of this Warrant (excluding the
costs of preparation, execution and delivery of warrants and stock certificates)
and shall pay all taxes and other charges imposed by law payable in connection
with the exercise, registration, exchange, transfer or replacement of this
Warrant.
3. Warrant Register; Transfer; Loss. This Warrant is being issued in connection
with, and is subject to the terms, conditions, restrictions and obligations of,
the Note Purchase Agreement of even date herewith by and between the Company and
the original Holder of this Warrant. The Company at all times shall maintain at
its chief executive offices an open register for all Warrants, in which the
Company shall record the name and address of each person to whom a Warrant has
been issued or transferred, the number of shares of Common Stock or other
securities purchasable thereunder and the corresponding purchase prices. Neither
this Warrant nor the Warrant Securities, when issued, may be transferred: (a) if
such transfer would constitute a violation of any federal or state securities
laws or a breach of the conditions to any exemption from registration thereunder
and (b) unless and until one of the following has occurred: (i) registration of
this Warrant or the Warrant Securities, as the case may be, under the Securities
Act, and such registration or qualification as may be necessary under the
securities laws of any state, have become effective, or (ii) the Holder has
delivered evidence reasonably satisfactory to the Company that such registration
or qualification is not required. This Warrant may be transferred only in
accordance with the provisions hereof, in whole or in part, by the Holder or any
duly authorized representative of such Holder. A transfer may be registered with
the Company by submission to it of this Warrant, duly completed and signed for
assignment, and an opinion of counsel reasonably satisfactory to the Company.
Within five (5) Business Days after the Company's receipt of this Warrant so
completed and executed and opinion, the Company will issue and deliver to the
transferee a new Warrant representing the portion of the Exercise Quantity
transferred at the same Exercise Price per share and otherwise having the same
terms and provisions as this Warrant, which the Company will register in the new
Holder' s name. Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant, and (a) in the case of loss, theft or destruction, upon receipt by the
Company of indemnity reasonably satisfactory to it or (b) in the case of
mutilation, upon surrender and cancellation thereof, the Company, at its
expense, will execute, register and deliver, in lieu thereof, a new certificate
or instrument for (or covering the purchase of) this Warrant. The Company will
from time to time take all such action as may be necessary to assure that the
par value per share of the unissued Common Stock acquirable upon exercise of
this Warrant is at all times equal or less than the Exercise Price then in
effect.
4. Adjustment of Exercise Price in the Event of Dividends, Stock Splits and
Reverse Stock Splits. In case the Company shall at any time issue Common Stock
or Common Stock equivalents by way of a dividend or other distribution on any
stock of the Company or effect a stock split or reverse stock split of the
outstanding shares of Common Stock, the Exercise Price then in effect shall be
proportionately decreased in the case of such issuance (on the day following the
date fixed for determining shareholders entitled to receive such dividend or
other distribution) or decreased in the case of such stock split or increased in
the case of such reverse stock split (on the date that such stock split or
reverse stock split shall become effective), by multiplying the Exercise Price
in effect immediately prior to the stock dividend, stock split or reverse stock
split by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately prior to such stock dividend, stock split or
reverse stock split, and the denominator of which is the number of shares of
Common Stock outstanding immediately after such stock dividend, stock split or
reverse stock split. A similar appropriate adjustment shall be made with respect
to the number of shares of Common Stock for which this Warrant is exercisable.
5. Reorganization; Asset Sales; Etc. In case of (i) any capital reorganization
or any reclassification of the capital stock of the Company, (ii) any
consolidation or merger of the Company with or into another corporation or
entity, (iii) the disposition or transfer of the assets of the Company other
than in the ordinary course of the Company's business, or (iv) the dissolution,
liquidation or winding up of the Company, the Holder of this Warrant shall
thereafter be entitled to purchase upon exercise hereof the kind and amount of
shares of stock and other securities and property receivable in such transaction
by a holder of the number of shares of Common Stock of the Company into which
this Agreement entitled the holder to purchase immediately prior to such capital
reorganization, reclassification of capital stock, non-surviving combination or
disposition.
6. Governing Law. WITH RESPECT TO CORPORATE MATTERS, THIS WARRANT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE AND, WITH RESPECT TO ALL OTHER MATTERS, THIS WARRANT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF UTAH, IN
EACH CASE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Exercise; Transfer. The undersigned Holder of this Warrant hereby irrevocably
elects to exercise this Warrant to the extent of ____________________________
shares of Common Stock, $.001 par value per share, of the Company. The
undersigned herewith encloses a certified check payable to the order of the
Company in the amount of $_____________ in payment of the Exercise Price.
FOR VALUE RECEIVED, the undersigned Holder hereby sells, assigns and transfers
unto the transferee whose name and address are set forth below all of the rights
of the undersigned under this Warrant (to the extent of the portion of the
within Warrant being transferred hereby, which portion is ______________).
Name of Transferee: ___________________________________
State of Organization (if applicable): _______________________
Federal TIN or SSN: ___________________________________
Address: ____________________________________________
The undersigned does hereby irrevocably constitute and appoint
________________________ attorney to register the foregoing transfer on the
books of the Company maintained for that purpose, with full power of
substitution in the premises. As required, enclosed herewith is the opinion of
legal counsel for the undersigned.
If this exercise or transfer is not an exercise or transfer in full, then the
undersigned Holder hereby requests that a new Warrant of like tenor (exercisable
for the balance of the Exercise Quantity of shares of Common Stock underlying
this Warrant) be issued and delivered to the undersigned Holder at the address
on the warrant register of the Company.
Dated: _____________________
_________________________________________
(Name of Registered Holder - Please Print)
By: ________________________________
(Signature of Registered Holder or of Duly
Authorized Signatory)