Exhibit 10.4
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS, SUPPORTED BY AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO DYNTEK, INC. AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
VOID AFTER 5:00 P.M. EASTERN TIME, __________, 200[__][5 years from grant date]
WARRANT
For the Purchase of [_____________] Shares of Common Stock
of
DYNTEK, Inc.
1. Warrant.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and
valuable consideration, duly paid by or on behalf of __________________ (the
"Holder"), as registered owner of this Warrant, to Dyntek, Inc. (the "Company"),
the Holder is entitled, at or before 5:00 p.m., Eastern time on __________,
200[___][5 years from grant date] (the "Expiration Date"), but not thereafter,
to subscribe for, purchase and receive, in whole or in part, up to
[________________ (#____)] shares of Common Stock, par value $0.0001 per share,
of the Company (the "Common Stock") in accordance with Section 2 hereof. If the
Expiration Date is a day on which banking institutions are authorized or
required by law to close, then this Warrant may be exercised on the next
succeeding day which is not such a day in accordance with the terms herein.
During the period ending on the Expiration Date, the Company agrees not to take
any action that would terminate the Warrant. This Warrant is exercisable at a
price of $0.90 per share; provided, however, that upon the occurrence of any of
the events specified in Section 5 hereof, the rights granted by this Warrant,
including the exercise price and the number of shares of Common Stock to be
received upon such exercise, shall be adjusted as therein specified. The term
"Exercise Price" shall mean the initial exercise price or the adjusted exercise
price, depending on the context, of a share of Common Stock. The term
"Securities" shall mean the shares of Common Stock issuable upon exercise of
this Warrant.
2. Exercise.
2.1 Exercise Form. In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased. If the subscription rights represented hereby shall
not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
2.2 Legend. Each certificate for Securities purchased under this Warrant
shall bear a legend as follows, unless and until such Securities have been
registered under the Securities Act of 1933, as amended (the "Act"):
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act") or applicable
state law. The securities may not be offered for sale, sold or otherwise
transferred except pursuant to an effective registration statement under
the Act, or pursuant to an exemption from registration under the Act and
applicable state law."
2.3 Exercise Schedule. This Warrant may be exercised, in whole or in part,
at any time following the date hereof but prior to the Expiration Date. Each
exercise of this Warrant shall be deemed to have been effected immediately prior
to the close of business on the day on which this Warrant shall have been
surrendered to the Company as provided in Section 2.1 above. At such time, the
person or persons in whose name or names any certificates for Securities shall
be issuable upon such exercise shall be deemed to have become the holder or
holders of record of the Securities represented by such certificates.
3. Transfer.
3.1 General Restrictions. The Holder of this Warrant, by its acceptance
hereof, agrees that it shall not sell, transfer or assign or hypothecate this
Warrant to any person or entity except upon compliance with, or pursuant to
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. In such event, the
Company shall immediately transfer this Warrant on the books of the Company and
shall execute and deliver a new Warrant or Warrants of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the aggregate
number of shares of Common Stock purchasable hereunder or such portion of such
number as shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (a)
the Company has received an opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the Act
and applicable state securities laws, the availability of which is established
to the reasonable satisfaction of the Company, or (b) a registration statement
relating to such Securities has been filed by the Company and declared effective
by the Securities and Exchange Commission and compliance with applicable state
securities laws.
3.3 Registration Rights. Pursuant to the terms and conditions set forth in
the Subscription Agreement, being simultaneously executed herewith, the Company
shall prepare and file with the Commission a Registration Statement relating to
the offer and sale of the Common Stock issuable upon exercise of the Warrant and
shall use its reasonable best efforts to cause the Commission to declare such
Registration Statement effective under the Securities Act pursuant to the terms
and conditions of the Subscription Agreement. If the Company shall list any
shares of Common Stock on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all shares of
Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant so long as
any shares of Common Stock shall be so listed during any such Exercise Period.
4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Warrant may be exercised or assigned in whole or in part. In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and funds (or conversion equivalent) sufficient to pay any Exercise Price
and transfer taxes, the Company shall cause to be delivered to the Holder
without charge a new Warrant of like tenor to this Warrant in the name of the
Holder evidencing the right of the Holder to purchase the aggregate
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number of shares of Common Stock and Warrants purchasable hereunder as to which
this Warrant has not been exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and of
reasonably satisfactory indemnification, the Company shall execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
as a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.
5. Adjustments
5.1 Adjustments to Exercise Price and Number of Securities. The Exercise
Price and the number of shares of Common Stock underlying this Warrant shall be
subject to adjustment from time to time as hereinafter set forth:
5.1.1 Stock Dividends, Recapitalizations, Reclassifications and
Split-Ups. If, after the date hereof, and subject to the provisions of Section
5.2, the number of outstanding shares of Common Stock is increased by a stock
dividend on the Common Stock payable in shares of Common Stock or by a
recapitalization, reclassification or split-up of shares of Common Stock or
other similar event, then, on the effective date thereof, the number of shares
of Common Stock issuable upon exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares.
5.1.2 Consolidations, Combinations or Reclassifications. If after
the date hereof, and subject to the provisions of Section 5.2, the number of
outstanding shares of Common Stock is decreased by a consolidation, combination
or reclassification of shares of Common Stock or other similar event, then, upon
the effective date thereof, the number of shares of Common Stock issuable upon
exercise of this Warrant shall be decreased in proportion to such decrease in
outstanding shares.
5.1.3 Adjustments in Exercise Price. Whenever the number of shares
of Common Stock purchasable upon the exercise of this Warrant is adjusted, as
provided in this Section 5.1, the Exercise Price shall be adjusted (to the
nearest whole cent) by multiplying such Exercise Price immediately prior to such
adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.
5.1.4 Replacement of Securities upon Reorganization, etc. In the
event of any reclassification or reorganization of the outstanding shares of
Common Stock other than a change covered by Section 5.1.1 or that solely affects
the par value of such shares of Common Stock, or in the case of any merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or reorganization of the
outstanding shares of Common Stock), or in the case of any sale or conveyance to
another corporation or entity of the property of the Company as an entirety or
substantially as an entirety in connection with which the Company is dissolved,
the Holder of this Warrant shall have the right thereafter (until the Expiration
Date) to receive upon the exercise hereof, for the same aggregate Exercise Price
payable hereunder immediately prior to such event, the kind and amount of shares
of stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution
following any such sale or other transfer, by a Holder of the number of shares
of Common Stock of the Company obtainable upon exercise of this Warrant
immediately prior to such event; and in the event any reclassification also
results in a change in shares of Common Stock covered by Sections 5.1.1 or
5.1.2, then such adjustment shall be
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made pursuant to Sections 5.1.1, 5.1.2 and 5.1.3 and this Section 5.1.4. The
provisions of this Section 5.1.4 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
5.1.5 Changes in Form of Warrant. This form of Warrant need not be
changed because of any change pursuant to this Section 5.1, and Warrants issued
after such change may state the same Exercise Price and the same number of
shares of Common Stock and Warrants as are stated in this Warrant. The
acceptance by any Holder of the issuance of new Warrants reflecting a required
or permissive change shall not be deemed to waive any rights to a prior
adjustment or the computation thereof.
5.2 Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of this Warrant, nor shall it be required to issue scrip or pay cash in
lieu of any 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.
6. Reservation. 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
exercise of this Warrant, 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 this Warrant 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 and
non-assessable.
7. Certain Notice Requirements.
7.1 Xxxxxx's Right to Receive Notice. Nothing in this Warrant shall be
construed as conferring upon the Holder the right to vote or consent or to
receive notice as a stockholder 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 Date, any of the events described
in Section 7.2 shall occur, then, in one or more of said events, the Company
shall give written notice of such event at least 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, conversion or
exchange of 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 the closing of the transfer books, as the case
may be.
7.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 7 upon one or more of the following events: (a)
if 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, (b) if
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, (c) a merger or reorganization in which the
Company is not the surviving party, or (d) 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 shall be
proposed.
7.3 Notice of Change in Exercise Price. The Company shall, promptly after
an event requiring a change in the Exercise Price pursuant to Section 5, send
notice to the Holders of such event and change (the "Price Notice"). The Price
Notice shall describe in reasonable detail the event causing
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the change and the method of calculating the same and shall be certified as
being true and accurate by the Company's President and Chief Financial Officer.
7.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, or by facsimile with acknowledgment of receipt by the party
to which notice is given, or on the fifth day after mailing if mailed to the
party to whom notice is to be given, by registered or certified mail, or by
electronic confirmation or return receipt requested, postage prepaid and
properly addressed as follows: (a) if to the Holder of this Warrant, to the
address of such Holder as shown on the books of the Company, and (b) if to the
Company, to its principal executive office.
8. Miscellaneous.
8.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Warrant.
8.2 Entire Agreement. This Warrant (together with the other agreements and
documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
8.3 Binding Effect. This Warrant shall inure solely to the benefit of and
shall be binding upon the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.
8.4 Governing Law; Submission to Jurisdiction. This Warrant shall be
governed by and construed and enforced in accordance with the law of the State
of New York, without giving effect to conflict of laws. Each of the Company and
the Holder hereby agrees that any action, proceeding or claim against it arising
out of, or relating in any way to this Warrant 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. Each of the Company and the Holder hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any process or summons to be served upon the
Company 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 7. Such mailing shall be deemed personal service and shall
be legal and binding upon the Company in any action, proceeding or claim. Each
of the Company and the Holder agrees that the prevailing party in any such
action shall be entitled to recover from the other party all of its reasonable
attorneys' fees and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
8.5 Waiver, Etc. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the ___ day of _______, 2004.
DYNTEK, INC.
By: __________________________________
Xxxxxx Xxxx
President
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EXHIBIT A
PURCHASE FORM
To: Dyntek, Inc.
The undersigned pursuant to the provisions set forth in the attached
Warrant (No. W-____), hereby irrevocably elects to purchase _________ shares of
the Common Stock of DynTek, Inc., covered by such Warrant and herewith makes
payment of $__________, representing the full purchase price for such shares at
the price per share provided for in such Warrant.
The Common Stock for which the Warrant may be exercised shall be known in
this Purchase Form as the "Warrant Stock".
The undersigned is aware that the Warrant Stock has not been and will not
be registered under the Securities Act of 1933, as amended (the "Securities
Act") or any state securities laws. The undersigned understands that reliance by
the Company on exemptions under the Securities Act is predicated in part upon
the truth and accuracy of the statements of the undersigned in this Purchase
Form.
The undersigned represents and warrants that (1) it has been furnished
with all information which it deems necessary to evaluate the merits and risks
of the purchase of the Warrant Stock, (2) it has had the opportunity to ask
questions concerning the Warrant Stock and the Company and all questions posed
have been answered to its satisfaction, (3) it has been given the opportunity to
obtain any additional information it deems necessary to verify the accuracy of
any information obtained concerning the Warrant Stock and the Company, (4) it
has such knowledge and experience in financial and business matters that it is
able to evaluate the merits and risks of purchasing the Warrant Stock and to
make an informed investment decision relating thereto and (5) it is an
"accredited investor" as defined in Section 501 promulgated under the Securities
Act of 1933, as amended.
The undersigned hereby represents and warrant that it is purchasing the
Warrant Stock for its own account for investment and not with a view to the sale
or distribution of all or any part of the Warrant Stock.
The undersigned understands that because the Warrant Stock has not been
registered under the Securities Act, it must continue to bear the economic risk
of the investment for an indefinite period of time and the Warrant Stock cannot
be sold unless it is subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.
The undersigned agrees that it will in no event sell or distribute or
otherwise dispose of all or any part of the Warrant Stock unless (1) there is an
effective registration statement under the Securities Act and applicable state
securities laws covering any such transaction involving the Warrant Stock, or
(2) the Company receives an opinion satisfactory to the Company of the
undersigned's legal counsel stating that such transaction is exempt from
registration. The undersigned consents to the placing of a legend on its
certificate for the Warrant Stock stating that the Warrant Stock has not been
registered and setting forth the restriction on transfer contemplated hereby and
to the placing of a stop transfer order on the books of the Company and with any
transfer agents against the Warrant Stock until the Warrant Stock may be legally
resold or distributed without restriction.
The undersigned has considered the federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Warrant Stock.
__________________________________________
Dated: ___________________________________
Form to be used to assign Warrant:
ASSIGNMENT
Date: _____________________, 200___
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer
unto ________________________________ the right to purchase ___________ shares
of Common Stock of Dyntek, Inc. (the "Company") evidenced by the within Warrant
and does hereby authorize the Company to transfer such right on the books of the
Company.
_______________________________________
Signature
____________________________________
Signature Guaranteed
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
