Exhibit 4.5
FORM OF ROCKWOOD WARRANT
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DYNTEK, INC.
AND
ROCKWOOD INC.
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PLACEMENT AGENT
WARRANT AGREEMENT
Dated as of December 9, 2003
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PLACEMENT AGENT WARRANT AGREEMENT, dated as of December 9, 2003,
between DynTek, Inc., a Delaware corporation (the "Company"), and Rockwood Inc.
(hereinafter referred to variously as the "Holder" or "Rockwood").
W I T N E S S E T H:
WHEREAS, Rockwood has acted pursuant to that certain Investment Banking
Advisory Agreement, dated November 19, 2003 ("Engagement Agreement"), by and
between the Company and ▇▇▇▇▇▇ Capital LLC ("▇▇▇▇▇▇ Capital"), an affiliate of
Rockwood, as exclusive placement agent to effect a private offering of
approximately $2,200,000 in securities (the "Offering"); and
WHEREAS, the Company proposes to issue to Rockwood or its designee(s)
warrants (the "Warrants") to purchase up to 500,000 shares of Class A Common
Stock, $0.0001 par value per share, of the Company ("Common Stock");
WHEREAS, Rockwood Capital has requested that all of the Warrants be
issued in the name of ▇▇▇▇▇▇ Capital;
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued at the Closing (as such term is defined in the Securities Purchase
Agreement) by the Company to Rockwood, or its designee, in consideration for,
and as part of Rockwood's compensation in connection with, Rockwood acting as
exclusive placement agent pursuant to the Engagement Agreement;
NOW, THEREFORE, in consideration of the premises made herein, the
payment by Rockwood to the Company of $50.00, the agreements herein set forth,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
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1. Grant. The Holder (as defined in Section 3 hereof) is hereby granted
the right to purchase, at any time from December 9, 2003, (the "Initial Exercise
Date") until 5:30 P.M., New York time, on December 9, 2008, up to 500,000 shares
of Common Stock at an initial exercise price (subject to adjustment as provided
in Article 8 hereof) of $0.913 per share of Common Stock, subject to the terms
and conditions of this Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are exercisable at an
initial exercise price (subject to adjustment as provided in Section 8 hereof)
per share of Common Stock set forth in Section 6 hereof, payable by certified or
official bank check in New York Clearing House funds. Upon surrender of a
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Purchase Price (as hereinafter defined) for the
shares of Common Stock purchased at the Company's principal offices (presently
located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇) the registered
holder of a Warrant Certificate ("Holder" or "Holders") shall be entitled to
receive a certificate or certificates for the shares of Common Stock so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock underlying the Warrants). Warrants may
be exercised to purchase all or part of the shares of Common Stock represented
thereby. In the case of the purchase of less than all the shares of Common Stock
purchasable under any Warrant Certificate, the Company shall cancel said Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the shares of Common Stock
purchasable thereunder.
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3.2 Exercise by Surrender of Warrant. In addition to the method of
payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in whole or in part by surrendering
the Warrant Certificate in the manner specified in Section 3.1 hereof in
exchange for that number of shares of Common Stock equal to the product of (x)
the number of shares as to which such Warrants are being exercised multiplied by
(y) a fraction, the numerator of which is the Market Price (as hereinafter
defined) of the Common Stock less the Exercise Price and the denominator of
which is such Market Price. Solely for the purposes of this Section 3.2, Market
Price shall be calculated either (i) on the date on which the Form of Election
to Purchase annexed to such Warrant Certificate as to such exercise is deemed to
have been sent to the Company pursuant to Section 14 hereof (the "Notice Date")
or (ii) as the average of the Market Prices for each of the five trading days
preceding the Notice Date, whichever results in a higher Market Price.
3.3 Definition of Market Price. As used herein, the phrase "Market
Price" at any date shall be deemed to be the last reported sale price, or, in
case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any national securities exchange, the average closing bid
price as furnished by the NASD through NASDAQ or similar organization if NASDAQ
is no longer reporting such information, or if the Common Stock is not quoted on
NASDAQ, as determined in good faith by resolution of the Board of Directors of
the Company, based on the best information available to it.
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4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within three (3) business days thereafter) without charge to the
Holder thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections 5 and 7 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates and the certificates representing the shares
of Common Stock (and/or other securities, property or rights issuable upon the
exercise of the Warrants) shall be executed on behalf of the Company by the
manual or facsimile signature of the then present Chairman or Vice Chairman of
the Board of Directors or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
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5. Restriction on Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
described therein are being acquired as an investment and not with a view to the
distribution thereof.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise provided
in Section 8 hereof, the initial exercise price of each Warrant shall be $0.913
per share of Common Stock. The adjusted exercise price of each Warrant shall be
the price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Section 8
hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The Warrants and the
shares of Common Stock issuable upon exercise of the Warrants or other
securities issuable upon exercise of the Warrants, have not been registered
under the Securities Act of 1933, as amended (the "Act"). Upon exercise, in part
or in whole, of the Warrant certificates representing the shares of Common Stock
underlying the Warrants, certificates representing the shares of Common Stock
and any other securities issuable upon exercise of the Warrants (collectively,
the "Warrant Securities") shall bear the following legend:
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The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent applicable, Rule 144 under
the Act (or any similar rule under such Act relating to the disposition
of securities), or (iii) an opinion of counsel, if such opinion shall
be reasonably satisfactory to counsel to the issuer, that an exemption
from registration under such Act is available.
7.2 Piggyback Registration. If, at any time during the seven-year
period commencing on the date the Warrants are issued, the Company proposes to
register any of its securities under the Act (other than pursuant to Form ▇-▇,
▇-▇ or a comparable registration statement) the Company will give written notice
by registered mail, at least thirty (30) days prior to the filing of each such
registration statement, to the Placement Agent and to all other Holders of the
Warrant Securities of its intention to do so. If the Placement Agent or other
Holders of the Warrant Securities notify the Company within twenty (20) days
after receipt of any such notice of its or their desire to include any such
securities in such proposed registration statement, the Company shall afford the
Placement Agent and such Holders of the Warrant Securities the opportunity to
have any such Warrant Securities registered under such registration statement;
provided, however, that it is understood and agreed that the Company shall
register all of the Warrant Securities as part of the registration statement it
is obligated to file pursuant to the Offering within sixty (60) days from the
date hereof (the "Offering Registration Statement") and no notice need be
provided by the Placement Agent or other Holders of the Warrant Securities. The
obligation to register the Warrant Securities pursuant to this Section 7.2 shall
be subject to the same piggyback registration cutbacks and holdbacks to which
registration of the warrant shares are subject to under the Warrants issued to
the purchasers of securities in the Offering; provided, however, that no
registration cutbacks or holdbacks shall apply to the registration of the
Warrant Security pursuant to the Offering Registration Statement.
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Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
7.3 Covenants of the Company with Respect to Registration. In
connection with any registration under Section 7.2 hereof, the Company covenants
and agrees as follows:
(a) The Company shall furnish each Holder desiring to sell Warrant
Securities such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of the
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Section 7.2 hereof including, without limitation, the Company's legal and
accounting fees, printing expenses, blue sky fees and expenses.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to do business
under the laws of any such jurisdiction.
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(d) The Company shall indemnify the Holder(s) of the Warrant Securities
to be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
from and against any and all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement.
(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, from and against any and all loss, claim,
damage, expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished in writing by or on behalf of such Holders, or their
successors or assigns, for specific inclusion in such registration statement.
(f) Nothing contained in this Agreement shall be construed as requiring
the Holder(s) to exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
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(g) If the relevant offering is an underwritten offering, the Company
shall furnish to each Holder participating in the offering and to each
underwriter a signed counterpart, addressed to such Holder or underwriter, of
(i) an opinion of counsel to the Company dated the date of the closing under the
underwriting agreement, and (ii) a "cold comfort" letter dated the date of the
closing under the underwriting agreement signed by the independent public
accountants who have issued a report on the Company's financial statements
included in such registration statement, in each case covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(h) The Company shall deliver promptly to each Holder participating in
the offering and requesting the correspondence and memoranda described below and
the managing underwriter, if any, copies of all correspondence between the
Commission and the Company and its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect to the
registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records, and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder shall reasonably request.
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8. Adjustments to Exercise Price and Number of Securities. For purposes
of this Section 8, references to Common Stock shall also include common stock
equivalents (including but not limited to shares of Class B Common Stock, par
value $.0001, of the Company) ("Common Stock Equivalents"); provided, that
Common Stock Equivalent shall not include any securities that are defined in
Section 8.2(b)(i) as Convertible Securities.
8.1 Stock Splits, Etc. The number and kind of securities purchasable
upon the exercise of the Warrants and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following. In case
the Company shall (a) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (b) subdivide its outstanding shares of Common Stock into a greater
number of shares, (c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (d) issue any shares of its capital
stock in a reclassification of the Common Stock, then the number of Warrant
Securities purchasable upon exercise of the Warrants immediately prior thereto
shall be adjusted so that the Holder shall be entitled to receive the kind and
number of Warrant Securities or other securities of the Company which it would
have owned or have been entitled to receive had such Warrant been exercised in
advance thereof. Upon each such adjustment of the kind and number of Warrant
Securities or other securities of the Company which are purchasable hereunder
pursuant to this Section 8.1, the Holder shall thereafter be entitled to
purchase the number of Warrant Securities or other securities resulting from
such adjustment at an Exercise Price per Warrant Security or other security
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Securities or other securities of the Company resulting from such adjustment. An
adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event.
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8.2 Anti-Dilution Provisions. The Exercise Price and the number of
Warrant Securities issuable hereunder and for which the Warrant is then
exercisable pursuant to Section 1 hereof shall be subject to adjustment from
time to time as provided in this Section 8.2. In the event that any adjustment
of the Exercise Price as required herein results in a fraction of a cent, such
Exercise Price shall be rounded up or down to the nearest cent.
(a) Adjustment of Exercise Rate. If and whenever the Company issues or
sells, or in accordance with this Section 8.2 hereof is deemed to have issued or
sold, any shares of Common Stock for a consideration per share less than the
then Exercise Price or for no consideration (such lower price, the "Base Share
Price" and such issuances collectively, a "Dilutive Issuance"), then, the
Exercise Price shall be reduced to equal the Base Share Price; provided, that
for purposes hereof, all shares of Common Stock that are issuable upon
conversion, exercise or exchange of Common Stock Equivalents shall be deemed
outstanding immediately after the issuance of such Common Stock Equivalents.
Such adjustment shall be made whenever such shares of Common Stock or Common
Stock Equivalents are issued.
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(b) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 8.2 hereof, the following
will be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
issues or grants any warrants, rights or options, whether or not immediately
exercisable, to subscribe for or to purchase Common Stock or other securities
exercisable, convertible into or exchangeable for Common Stock ("Convertible
Securities") (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as "Options") and the
effective price per share for which Common Stock is issuable upon the exercise
of such Options is less than the Exercise Price ("Below Base Price Options"),
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Below Base Price Options (assuming full exercise,
conversion or exchange of Convertible Securities, if applicable) will, as of the
date of the issuance or grant of such Below Base Price Options, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share and the maximum consideration payable to the Company upon such exercise
(assuming full exercise, conversion or exchange of Convertible Securities, if
applicable) will be deemed to have been received by the Company. For purposes of
the preceding sentence, the "effective price per share for which Common Stock is
issuable upon the exercise of such Below Base Price Options" is determined by
dividing (x) the total amount, if any, received or receivable by the Company as
consideration for the issuance or granting of all such Below Base Price Options,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Below Base Price Options, plus, in
the case of Convertible Securities issuable upon the exercise or conversion of
such Below Base Price Options, the minimum aggregate amount of additional
consideration payable upon the exercise, conversion or exchange thereof at the
time such Convertible Securities first become exercisable, convertible or
exchangeable, by (y) the maximum total number of shares of Common Stock issuable
upon the exercise of all such Below Base Price Options (assuming full conversion
of Convertible Securities, if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such Common Stock upon the
exercise of such Below Base Price Options or upon the exercise, conversion or
exchange of Convertible Securities issuable upon exercise of such Below Base
Price Options.
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(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities, whether or not immediately
convertible (other than where the same are issuable upon the exercise of
Options) and the effective price per share for which Common Stock is issuable
upon such exercise, conversion or exchange is less than the Exercise Price, then
the maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Convertible Securities will, as of the date
of the issuance of such Convertible Securities, be deemed to be outstanding and
to have been issued and sold by the Company for such price per share and the
maximum consideration payable to the Company upon such exercise (assuming full
exercise, conversion or exchange of Convertible Securities, if applicable) will
be deemed to have been received by the Company. For the purposes of the
preceding sentence, the "effective price per share for which Common Stock is
issuable upon such exercise, conversion or exchange" is determined by dividing
(x) the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise, conversion or exchange thereof at the time such
Convertible Securities first become exercisable, convertible or exchangeable, by
(y) the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of all such Convertible Securities. No further
adjustment to the Exercise Price will be made upon the actual issuance of such
Common Stock upon exercise, conversion or exchange of such Convertible
Securities.
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(iii) Change in Option Price or Conversion Rate. If there is a
change at any time in (x) the amount of additional consideration payable to the
Company upon the exercise of any Options; (y) the amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange of any Convertible Securities; or (z) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (in each such
case, other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(iv) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Agreement will be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company will be the fair market
value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the fair market value (closing bid price, if traded on any market)
thereof as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued in connection with any merger or consolidation
in which the Company is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair market value of such portion of the net
assets and business of the non-surviving corporation as is attributable to such
Common Stock, Options or Convertible Securities, as the case may be. The fair
market value of any consideration other than cash or securities will be
determined in good faith by an investment banker or other appropriate expert of
national reputation selected by the Company and reasonably acceptable to the
holder hereof, with the costs of such appraisal to be borne by the Company.
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(v) Exceptions to Adjustment of Exercise Price. Notwithstanding
anything to the contrary herein, this Section 8.2 shall not apply to the
following (A) the granting of options to employees, officers, directors or
consultants of the Company pursuant to any stock option plan or other written
compensatory agreement duly adopted by a majority of the non-employee members of
the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, or (B) the
exercise of any security issued by the Company in connection with the offer and
sale of the Company's securities pursuant to the Offering (including any
securities issued as compensation in connection therewith), or (C) the exercise
of or conversion of any convertible securities, options or warrants issued and
outstanding on the date hereof, provided such securities have not been amended
since the date hereof, or (D) the issuance of securities in connection with
acquisitions, joint ventures, arrangements related to the Company's operations
and strategic relationships, or other strategic investments, the primary purpose
of which is not to raise capital.
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(c) Minimum Adjustment of Exercise Price. No adjustment of the Exercise
Price shall be made in an amount of less than 1% of the Exercise Price in effect
at the time such adjustment is otherwise required to be made, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
9. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to any class of common stock of the
Company), or sell, transfer or otherwise dispose of all or substantially all its
property, assets or business to another corporation and, pursuant to the terms
of such reorganization, reclassification, merger, consolidation or disposition
of assets, shares of common stock of the successor or acquiring corporation, or
any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or acquiring corporation
("Other Property"), are to be received by or distributed to the holders of
Common Stock of the Company, then the Holder shall have the right thereafter to
receive, upon exercise of the Warrant, the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which the Warrant is
exercisable immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Agreement to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant
Securities for which this Agreement is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 9. For
purposes of this Section 9, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 9 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
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10. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
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11. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
12. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants such number
of shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants underlying the Warrants to be listed (subject
to official notice of issuance) on all securities exchanges, if any, on which
the Common Stock issued to the public in connection herewith may then be listed
and/or quoted on ▇▇▇▇▇▇.
▇▇
▇▇. Notices to Warrant Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
19
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
14. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to the Holders.
15. Supplements and Amendments. The Company and Rockwood may from time
to time supplement or amend this Agreement without the approval of any Holders
of Warrant Certificates (other than Rockwood) in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Rockwood
may deem necessary or desirable and which the Company and Rockwood deem shall
not adversely affect the interests of the Holders of Warrant Certificates.
20
16. Successors. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of
business on December 9, 2010. Notwithstanding the foregoing, the indemnification
provisions of Section 7 hereof shall survive such termination until the close of
business on December 9, 2011.
18. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State, without giving effect to the rules of
said State governing the conflicts of laws.
The Company, Rockwood and the Holders hereby agree that any action,
proceeding or claim against it arising out of, or relating in any way to, this
Agreement shall be brought and enforced in the courts of the State of New York
or of the United States of America for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company, Rockwood and the Holders hereby irrevocably waive any objection to
such exclusive jurisdiction or inconvenient forum. Any such process or summons
to be served upon any of the Company, Rockwood and the Holders (at the option of
the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
14 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company, Rockwood and the Holders agree that the prevailing party(ies) in any
such action or proceeding shall be entitled to recover from the other party(ies)
all of its/their reasonable legal costs and expenses relating to such action or
proceeding and/or incurred in connection with the preparation therefor.
21
19. Entire Agreement; Modification. This Agreement (including the
Engagement Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and, subject to the provisions of Section 15 hereof, may
not be modified or amended except by a writing duly signed by the party against
whom enforcement of the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or entity other than the Company and Rockwood
and any other registered Holder(s) of the Warrant Certificates or Warrant
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company
and Rockwood any other Holder(s) of the Warrant Certificates or Warrant
Securities.
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL]
DYNTEK, INC.
By:
------------------------
Name:
Title:
Attest:
----------------------------
Secretary
ROCKWOOD INC.
By:
------------------------
Name:
Title:
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M. NEW YORK TIME, DECEMBER 9, 2008
NO. W-01 500,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ▇▇▇▇▇▇ Capital LLC, or
registered assigns, is the registered holder of 500,000 Warrants to purchase
initially at any time from December 9, 2003 until 5:30 p.m. New York time on
December 9, 2008 (the "Expiration Date"), up to 500,000 fully-paid and
non-assessable shares of Series A Common Stock, $.0001 par value ("Common
Stock") of DynTek, Inc. a Delaware corporation (the "Company"), at the initial
exercise prices, subject to adjustment in certain events (the "Exercise Price"),
of $0.913, per share of Common Stock, upon surrender of this Warrant Certificate
and payment of the applicable Exercise Price at an office or agency of the
Company, or due exercise of Section 3.2 of the Warrant Agreement (as hereafter
defined), but subject to the conditions set forth herein and in the Warrant
Agreement dated as of December 9, 2003 between the Company and Rockwood Inc.
(the "Warrant Agreement"). Payment of the applicable Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference herein and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the then applicable Exercise Price and the type and/or number of the
Company's securities issuable thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the holder, issue a
new Warrant Certificate evidencing the adjustment in the then applicable
Exercise Price and the number and/or type of securities issuable upon the
exercise of the Warrants; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
2
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of December 9, 2003
DYNTEK, INC.
[SEAL] By:
------------------------
Name:
Title:
Attest:
-------------------------------
Secretary
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
_____________ shares of Common Stock;
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of DYNTEK, INC. in
the amount of $__________, all in accordance with the terms hereof. The
undersigned requests that a certificate for such securities be registered in the
name of __________________ whose address is ____________________ and that such
certificate be delivered to _______________ whose address is
____________________.
Dated: ______________________ Signature: ________________________
(Signature must conform
in all respects to name
of holder as specified
on the face of the
Warrant Certificate.)
---------------------------------------------
(Insert Social Security or Other Identifying
Number of Holder)
---------------------------------------------
(Address)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder
if such holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED, _________________ hereby sells, assigns and
transfers unto __________________ this Warrant Certificate, together with all
right, title and interest therein, and hereby irrevocably constitutes and
appoints _________, Attorney, to transfer the within Warrant Certificate on the
books of the within-named Company, with full power of substitution.
Dated: _______________________ Signature: ________________________
(Signature must conform
in all respects to name
of holder as specified
on the face of the
Warrant Certificate.)
--------------------------------------------
Insert Social Security or Other Identifying
Number of Assignee)
--------------------------------------------
(Address)
