EXHIBIT 10.5
WARRANT AGREEMENT
THIS WARRANT AGREEMENT has been made as of October 28, 1994, between
DATA SYSTEMS NETWORK CORPORATION, a Michigan corporation (the "Company"),
and AMERICAN STOCK TRANSFER & TRUST COMPANY (the "Warrant Agent").
WHEREAS, the Company proposes to issue and sell to one or more
underwriters, including Xxxxxx Xxxxx Associates, Inc., the representative of
such underwriters (the "Representative"), for the purpose of a public
offering thereof (the "Offering"), certain Units (including Units subject to
the Underwriters' over-allotment option) (the "Units"), each Unit consisting
of two shares of the Common Stock, $.01 par value per share, of the Company
(the "Common Stock"), and two 60-month stock purchase warrants (the
"Warrants"), each Warrant exercisable to purchase one share of Common Stock
at any time commencing on October 28, 1994 (the "Original Issue Date"), and
ending on October 27, 1999, at an exercise price of $6.25 per share through
October 27, 1997 (36 months from the Original Issue Date), and $7.50 per
share during the remaining 24 months, all subject to adjustment as provided
herein; and
WHEREAS, the Company proposes to issue pursuant to this Agreement
certificates evidencing the Warrants (the "Warrant Certificates"); and
WHEREAS, the Company desires the Warrant Agent, and the Warrant
Agent agrees, to act on behalf of the Company in connection with the
issuance, transfer, exchange, replacement and surrender of the Warrant
Certificates; and
WHEREAS, the Company and the Warrant Agent desire to set forth in
this Warrant Agreement, among other things, the form and provisions of the
Warrant Certificates and the terms and conditions under which they may be
issued, transferred, exchanged, replaced and surrendered in connection with
the exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF WARRANT AGENT; WARRANT CERTIFICATES.
1.1 Appointment of and Acceptance by Warrant Agent. The Company
hereby appoints the Warrant Agent to act on behalf of the Company in
accordance with the provisions of this Agreement. The Warrant Agent hereby
accepts such appointment and the agency established by this Agreement, and
agrees to perform the same upon the terms and conditions herein set forth.
1.2 Form of Warrant Certificates. Each Warrant Certificate
shall be issued in registered form only, in the name of the registered
holder thereof (the "Holder"), and, together with the purchase and
assignment forms to be printed on the reverse thereof, shall be
substantially in the form of Exhibit A annexed hereto. The Warrant
Certificates may also have stamped, printed, lithographed or engraved
thereon such letters, numbers or other marks of identification or
designation, and such legends, summaries or endorsements, as the Company may
deem appropriate from time to time and as are not inconsistent with the
provisions hereof, or as, in any particular case, may be required, in the
opinion of counsel to the Company, to comply with any law, rule or
regulation of any regulatory authority or agency, or to conform to customary
usage.
1.3 Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by its Chairman of the Board,
President or any Vice President, either manually or by facsimile signature
printed thereon. The Warrant Certificates shall be manually countersigned
and dated the date of countersignature by the Warrant Agent and shall not be
valid for any purpose unless so countersigned and dated. In case any
authorized officer of the Company who shall have signed any Warrant
Certificate shall cease to be such officer of the Company either before or
after delivery thereof by the Company to the Warrant Agent, the signature of
such person on such Warrant Certificate shall nevertheless be valid, and
such Warrant Certificate may be countersigned by the Warrant Agent, and
issued and delivered to the person entitled to receive the Warrants
represented thereby, with the same force and effect as though the person who
signed such Warrant Certificate had not ceased to be such officer of the
Company.
1.4 Issuance and Distribution of Warrant Certificates. Upon
completion of the Offering, the Company shall deliver to the Warrant Agent
an adequate supply of Warrant Certificates executed on behalf of the Company
as provided by Section 1.3. Upon receipt of an order from the Company, the
Warrant Agent shall, within three business days, complete and countersign
and deliver Warrant Certificates representing the total number of Warrants
to be issued hereunder.
2. WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS.
2.1 Exercise Price. Each Warrant Certificate shall, when
executed and countersigned as required by Section 1.3, entitle the Holder
thereof to purchase from the Company one fully paid and non-assessable share
of Common Stock for each Warrant evidenced thereby, at a purchase price of
$6.25 per share if exercised on or before October 27, 1997, and $7.50 per
share if exercised during the next succeeding 24 months, or such adjusted
number of shares at such adjusted purchase price as may be established from
time to time pursuant to the provisions of Section 4, payable in full at the
time of exercise of the Warrant. Except as the context otherwise requires,
as used herein the term "Exercise Price" shall mean the purchase price of
one share of Common Stock, as provided by this Section 2.1 and reflecting
all appropriate adjustments made in accordance with the provisions of
Section 4, which is in effect on the date of the particular Warrant
exercise.
2.2 Exercisability of Warrants. Each Warrant may be immediately
exercised at any time after the Original Issue Date but not after 5:00 p.m.,
New York time, on October 27, 1999 (the "Expiration Date," which term shall
also mean the latest time and date at which the Warrants may be exercised).
From and after the Expiration Date, each Warrant not theretofore exercised
shall be void and of no effect, and all rights thereunder, and all rights in
respect thereof under this Agreement, shall thereupon cease. The Company
has secured the effective registration of the shares of Common Stock
issuable upon exercise of the Warrants under the Securities Act of 1933, as
amended (the "Securities Act"), and has registered or qualified such shares
under applicable state securities laws, as requested by the Representative.
The Company agrees to use reasonable good faith efforts to maintain such
registration and/or qualification in effect and to keep available for
delivery upon the exercise of Warrants a prospectus that meets the
requirements of section 10 of the Securities Act, until the earlier of the
date by which all of the Warrants are exercised or the Expiration Date;
provided, however, that the Company shall have no obligation to maintain the
effectiveness of such registration or qualification or to keep available a
prospectus, as aforesaid, at any time at which such registration or
qualification or the delivery of such prospectus is not then required; and
provided further, that in the event, by amendment to the Securities Act or
otherwise, some other or different requirement shall be imposed by act of
Congress of the United States which shall relate to the issuance of Common
Stock upon exercise of the Warrants, the Company shall use reasonable good
faith efforts to comply with such requirement so long as the same shall not
be substantially more burdensome to the Company than the registration
requirements under the Securities Act.
2.3 Procedure for Exercise of Warrants. From the Original Issue
Date through the Expiration Date, Warrants may be exercised by the Holder
by: (a) surrendering the Warrant Certificates representing such Warrants to
the Warrant Agent at its principal office (its "Principal Office"), which is
currently at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, with the Election to
Purchase form set forth on the Warrant Certificate (the "Election to
Purchase") duly completed and executed by the Holder, with "Signatures
Guaranteed" (which for purposes hereof shall mean signatures guaranteed by a
member firm of a national securities exchange, a commercial bank or a trust
company located in the United States, or a member of the National
Association of Securities Dealers, Inc.); (b) delivering to the Warrant
Agent for the account of the Company payment in full of the aggregate
Exercise Price for the shares of Common Stock with respect to which such
Warrants are being exercised; and (c) delivering to the Warrant Agent
payment in full of the aggregate amount of the transfer taxes, if any,
referred to in Section 7.1. Such Exercise Price and taxes shall be paid in
full by cash, certified or official bank check, or postal money order, in
each case payable in United States currency to the order of the Warrant
Agent. The date on which Warrants are exercised in accordance with this
Section 2.3 is sometimes referred to herein as the "Date of Exercise" of
such Warrants.
2.4 Issuance of Common Stock. As soon as practicable after the
Date of Exercise of any Warrants, the Warrant Agent shall requisition from
the transfer agent for the Common Stock a certificate or certificates for
the number of full shares of Common Stock to which the Holder of such
Warrants is entitled, registered in accordance with the instructions set
forth in the Election to Purchase. All shares of Common Stock issued upon
the exercise of any Warrants shall be validly authorized and issued, fully
paid and non-assessable, and free from all taxes, liens and charges created
by the Company in respect of the issue thereof. Each person in whose name
any such certificate for shares of Common Stock is issued shall for all
purposes be deemed to have become the Holder of record of the Common Stock
represented thereby on the Date of Exercise of the Warrants resulting in the
issuance of such shares, irrespective of the date of issuance or delivery of
such certificate for shares of Common Stock.
2.5 Certificates for Unexercised Warrants. In the event that
less than all of the Warrants represented by a Warrant Certificate are
exercised, the Warrant Agent shall countersign and mail, by first-class
mail, postage prepaid, within 30 days after the Date of Exercise, to the
Holder of such Warrant Certificate (or to such other person as shall be
designated in the Election to Purchase), a new Warrant Certificate
representing the number of full Warrants not exercised. In no event shall a
fraction of a Warrant be exercised, and the Warrant Agent shall distribute
no Warrant Certificates representing fractions of Warrants under this or any
other provision of this Agreement.
2.6 Reservation of Shares. The Company shall at all times
reserve and keep available for issuance upon the exercise of Warrants such
number of its authorized but unissued and/or treasury shares of Common Stock
as will be sufficient to permit the exercise in full of all outstanding
Warrants.
2.7 Disposition of Proceeds. The Warrant Agent shall account
promptly to the Company with respect to all Warrants exercised, and shall
concurrently deliver to the Company all funds received with respect to the
purchase of shares of Common Stock upon exercise of such Warrants.
3. REDEMPTION OF WARRANTS.
3.1 Redemption; Redemption Price. Commencing 90 days from the
Original Issue Date, the Company may, at its option, redeem the outstanding
Warrants, in whole or in part, upon not less than 30 days' prior notice (the
"Notice of Redemption"), at a price of $.05 per Warrant (the "Redemption
Price") provided, however, that (i) the Representative granted its prior
written consent or (ii) the average of the closing bid price of the Common
Stock for a period of 30 consecutive trading days exceeds $12.00 per share,
in which case the consent of the Representative is not required. If the
Company shall determine so to redeem less than all of the Warrants then
outstanding, then the Warrant Agent shall determine the Warrants to be
redeemed by such manner or method as it shall deem fair and appropriate,
whether by lot or otherwise. No redemption shall affect any Warrant not
issued and outstanding on the date of the Notice of Redemption.
3.2 Notice of Redemption. The Company shall give notice to the
Warrant Agent of any redemption in sufficient time so that the Warrant Agent
shall give the Notice of Redemption to all Holders of Warrant Certificates
to be redeemed at least 30 days prior to the date established for such
redemption (the "Redemption Date"). Each Notice of Redemption shall: (a)
specify the Redemption Date and the Redemption Price; (b) state that payment
of the Redemption Price will be made by the Warrant Agent upon presentation
and surrender, to the Warrant Agent at its Principal Office, of the Warrant
Certificates representing the Warrants being redeemed; (c) state that the
rights to exercise the Warrants then outstanding shall terminate at 5:00
p.m. New York time, on the Redemption Date; and (d) if less than all of the
Warrants then outstanding are being redeemed, specify the serial numbers or
portions of the Warrants to be redeemed. The Company shall also make prompt
public announcement of such redemption by publication in The Wall Street
Journal at the time of the Warrant Agent's mailing of the Notice of
Redemption.
3.3 Payment of Redemption Price. On or prior to the opening of
business on the Redemption Date, the Company shall deposit with the Warrant
Agent cash, or an irrevocable letter of credit issued by a national or state
bank and in form reasonably satisfactory to the Warrant Agent, sufficient in
amount to purchase all of the Warrants stated in the Notice of Redemption to
be redeemed. Payment of the Redemption Price shall be made by the Warrant
Agent upon presentation and surrender of the Warrant Certificates
representing such Warrants to the Warrant Agent at its Principal Office. If
the Notice of Redemption shall have been duly given and if the Company shall
have duly deposited with the Warrant Agent the cash or irrevocable letter of
credit required by this Section 3.3, then any Warrants then outstanding and
not exercised by 5:00 p.m., New York time, on the Redemption Date shall no
longer be deemed to be outstanding, and all rights with respect to such
Warrants shall from and after such time and date cease and terminate, except
only for the right of the Holders thereof to receive the Redemption Price,
without interest.
4. ADJUSTMENTS.
4.1 Certain Dividends and Distributions. In the event that at
any time or from time to time after the Original Issue Date the holders of
Common Stock shall have received, or shall have become entitled (on or after
the record date fixed for the determination of shareholders eligible
therefor) to receive, without payment therefor:
(a) any other or additional stock or other securities or
property (other than cash) by way of dividend (howsoever described); or
(b) any other or additional (or less) stock or other securities
or property (including cash) by way of spin-off, split-up, reverse split,
reclassification, recapitalization, combination of shares, or similar
corporate arrangement;
then the Holder of any Warrant, upon the exercise thereof, shall be entitled
to receive the amount of stock and other securities and property (including
cash in the cases referred to in paragraph (c) of this Section 4.1) which
such Holder would hold on the date of such exercise if on the Original Issue
Date he had been the holder of record of the number of shares of Common
Stock called for on the face of such Warrant and thereafter, during the
period from the Original Issue Date to and including the date of such
exercise, (i) had retained such shares and all such other or additional
stock and other securities and property (including cash in the cases
referred to in paragraph (c) of this Section 4. 1) receivable by him as
aforesaid during such period, or (ii) in the case of a reverse split,
combination of shares or similar arrangement, had given up the proportion of
such shares affected by the reverse split, combination of shares or similar
arrangement, in each case giving effect to all adjustments called for during
such period by Sections 4.2 and 4.3.
4.2 Reorganization, Consolidation, Merger, Etc. In the event
that at any time after the Original Issue Date the Company shall:
(a) effect a reorganization; or
(b) consolidate with or merge into any other entity; or
(c) transfer all or substantially all of its properties or
assets to any other entity under any plan or arrangement contemplating the
dissolution of the Company;
then the Holder of any Warrant, upon the exercise thereof at any time after
the consummation of such reorganization, consolidation or merger, or the
effectiveness of such dissolution, as the case may be, shall be entitled to
receive (and the Company or its successor or purchasing entity shall be
obligated to deliver), in lieu of the Common Stock issuable upon such
exercise immediately prior to such consummation or effectiveness, the amount
of stock and other securities and property (including cash) which such
Holder would have been entitled to receive upon such consummation or such
dissolution, as the case may be, if such Holder had so exercised such
Warrant immediately prior thereto, giving effect to all adjustments called
for after the date of such consummation or dissolution, as the case may be,
by Sections 4.1 and 4.3.
4.3 Other Adjustments.
4.3.1 In General. In the event that the Company shall, at any
time or from time to time after the Original Issue Date, in any case to
which the provisions of Sections 4.1 or 4.2 are not applicable, issue, sell
or otherwise dispose of shares of Common Stock without consideration, or for
a consideration per share less than the Exercise Price in effect on the date
of such issuance, sale or disposition (in each case, a "Disposition"), then
and simultaneously with such Disposition:
(a) the Exercise Price shall be reduced to a price determined by
dividing:
(i) an amount equal to the sum of (A) the total number
of shares of Common Stock outstanding immediately prior to the
Disposition multiplied by the Exercise Price in effect on the date
of the Disposition, plus (B) the consideration, if any, received by
the Company upon the Disposition; by
(ii) the total number of shares of Common Stock
outstanding immediately after the Disposition; and
(b) the number of shares issuable upon exercise of such Warrant
shall be increased by multiplying such number by a fraction, the numerator
of which is the Exercise Price in effect immediately prior to the reduction
provided by this Section 4.3.1 and the denominator of which is the Exercise
Price in effect immediately after such reduction.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 4.3.1 by reason of the issuance of shares of Common Stock (1) upon
exercise of any Warrant, or (2) pursuant to any other commitment of the
Company outstanding on the Original Issue Date, including without limitation
that certain over-allotment option granted to the Underwriters in connection
with the Offering.
4.3.2 Convertible Securities.
(a) In the event that the Company shall at any time or from time
to time after the Original Issue Date issue, sell or otherwise dispose of
any securities which are convertible into or exchangeable for Common Stock
(in each case, an "Issue" of "Convertible Securities"), then a price per
share for which Common Stock is issuable upon the conversion or exchange
thereof shall be determined by dividing:
(i) an amount equal to the sum of (A) the aggregate
amount received or receivable by the Company as consideration for
the Issue of such Convertible Securities, plus (B) the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof; by
(ii) the maximum number of shares of Common Stock
issuable upon the conversion or exchange of all of such Convertible
Securities.
If the price per share so determined shall be less than the Exercise Price
in effect on the date of Issue, then such Issue shall be deemed to be a
"Disposition" (within the meaning of Section 4.3.1) for cash, as of the date
of Issue, and at the price per share so determined, of the maximum number of
shares of Common Stock issuable upon the conversion or exchange of all of
such Convertible Securities, and the appropriate adjustments provided by
Section 4.3.1 shall be made.
(b) In the event that such Convertible Securities shall by their
terms provide for increase(s), with the passage of time, in the amount of
additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, or in the rate of conversion or exchange thereof, then
forthwith upon the effectiveness of any such increase, the Exercise Price
and number of shares, as adjusted pursuant to paragraph (a) of this Section
4.3.2, shall be readjusted to reflect the same.
(c) In the event that the rights of conversion or exchange of
any such Convertible Securities shall expire or be cancelled or otherwise
not in effect without having been exercised, then the Exercise Price and
number of shares, as adjusted pursuant to paragraph (a) of this Section
4.3.2, shall forthwith be readjusted, and thereafter shall be the Exercise
Price and number of shares which would have resulted had an adjustment been
made pursuant to paragraph (a) of this Section 4.3.2 taking into account
only (1) the aggregate amount actually received by the Company as
consideration for the Issue of all such Convertible Securities which were
actually converted or exchanged, (2) the aggregate amount of additional
consideration, if any, actually received by the Company upon the conversion
or exchange thereof, and (3) the number of shares of Common Stock actually
issued upon the conversion or exchange of such Convertible Securities.
4.3.3 Rights, Options Etc.
(a) In the event that the Company shall at any time or from time
to time after the Original Issue Date grant or issue any options (other than
options under the Company's 1994 Stock Option Plan in effect on the Original
Issue Date and warrants described in the Prospectus), warrants or other
rights to subscribe for, purchase or otherwise acquire Common Stock (in each
case, an "Issue" of "Rights"), then a price per share for which Common Stock
is issuable upon the exercise thereof shall be determined by dividing:
(i) an amount equal to the sum of (A) the aggregate
amount, if any, received or receivable by the Company as
consideration for the Issue of such Rights, plus (B) the minimum
aggregate amount of additional consideration payable to the Company
upon the exercise thereof; by
(ii) the maximum number of shares of Common Stock
issuable upon the exercise of all of such Rights.
If the price per share so determined shall be less than the Exercise Price
in effect on the date of Issue, then such Issue shall be deemed to be a
"Disposition" (within the meaning of Section 4.3.1) for cash, as of the date
of Issue, and at the price per share so determined, of the maximum number of
shares of Common Stock issuable upon the exercise of all of such Rights, and
the appropriate adjustments provided by Section 4.3.1 shall be made.
(b) In the event that such Rights shall by their terms provide
for increase(s), with the passage of time, in the amount of additional
consideration payable to the Company upon the exercise thereof, then
forthwith upon the effectiveness of any such increase, the Exercise Price
and number of shares, as adjusted pursuant to paragraph (a) of this Section
4.3.3, shall be readjusted to reflect the same.
(c) In the event that any such Rights shall expire or be
cancelled or otherwise no longer in effect without having been exercised,
then the Exercise Price and number of shares, as adjusted pursuant to
paragraph (a) of this Section 4.3.3, shall forthwith be readjusted, and
thereafter shall be the Exercise Price and number of shares which would have
resulted had an adjustment been made pursuant to paragraph (a) of this
Section 4.3.3 taking into account only (1) the aggregate amount, if any,
actually received by the Company as consideration for the Issue of all such
Rights which were actually exercised, (2) the aggregate amount of additional
consideration actually received by the Company upon the exercise thereof,
and (3) the number of shares of Common Stock actually issued upon the
exercise of such Rights.
4.4 No Adjustments for Minimum Amounts. No adjustment shall be
made pursuant to Section 4.3 until the number of additional shares of Common
Stock issued or issuable as contemplated by Section 4.3 exceeds 5 percent of
the number of shares of Common Stock outstanding immediately after the
Offering. Thereafter no adjustment shall be made pursuant to Section 4.3
until the cumulative adjustment in the Exercise Price shall be five cents or
more; provided, however, that in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be
made at the time of and together with the next subsequent adjustment that,
together with any adjustments so carried forward, shall amount to at least
five cents.
4.5 Certificate as to Adjustments. In the event that any
adjustment (or readjustment) is required to be made pursuant to the
provisions of this Section 4, and in each such case, the Company shall, at
its expense, promptly cause such adjustment to be calculated in accordance
with the terms hereof and set forth in a certificate, signed by the
Company's chief financial officer, which shows in detail all of the facts
upon which such adjustment is based, the method of calculation thereof, and
the number of shares of Common Stock then outstanding or deemed to be
outstanding. The Company shall, within 20 days after such adjustment is
required to be made, mail a copy of such certificate to each Holder of a
Warrant and to the Warrant Agent. The Warrant Agent shall not be deemed to
have knowledge of any adjustment unless and until it shall have received
such certificate, and may rely on such certificate without further inquiry.
5. OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT
CERTIFICATES.
5.1 Rights of Warrant Holders. No Warrant Certificate shall
entitle the Holder thereof to any of the rights of a shareholder of the
Company, including without limitation the right to vote, to receive
dividends and other distributions, or to receive notice of or to attend
meetings of shareholders or any other proceedings of the Company.
5.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates.
If any Warrant Certificate shall be lost, stolen, mutilated or destroyed,
the Company in its discretion may direct the Warrant Agent to execute and
deliver, in exchange and substitution for such Warrant Certificate, a new
Warrant Certificate for the number of Warrants represented by the Warrant
Certificate so lost, stolen, mutilated or destroyed, but only upon the
Company's receipt of evidence of such loss, theft, mutilation or destruction
of such Warrant Certificate and of the ownership thereof, and a bond or
indemnity, if requested, all satisfactory to the Company and the Warrant
Agent. Applicants for such substitute Warrant Certificates shall also
comply with such other reasonable regulations and pay other reasonable
charges incidental thereto as the Company or the Warrant Agent may
prescribe. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
6. SPLIT-UP, COMBINATION, EXCHANGE, TRANSFER AND CANCELLATION OF
WARRANT CERTIFICATES.
6.1 Split-Up, Combination, Exchange and Transfer of Warrant
Certificates. Prior to the Expiration Date, and subject to the provisions
of Section 6.2, Warrant Certificates may be split up, combined or exchanged
for other Warrant Certificates representing a like aggregate number of
Warrants, or may be transferred in whole or in part. Any Holder desiring to
split up, combine or exchange one or more Warrant Certificates shall make
such request in writing delivered to the Warrant Agent at its Principal
Office, and shall surrender the Warrant Certificate(s) so to be split up,
combined or exchange at such office. Subject to any applicable laws, rules
or regulations restricting transferability, any restriction on
transferability that may appear on a Warrant Certificate in accordance with
the terms hereof, or any "stop-transfer" instructions the Company may give
to the Warrant Agent to implement any such restrictions (which instructions
the Company is expressly authorized to give), transfer of outstanding
Warrant Certificate(s) may be effected by the Warrant Agent from time to
time upon the books of the Company to be maintained by the Warrant Agent for
that purpose, upon surrender of the Warrant Certificate(s) to the Warrant
Agent at its Principal Office, with the assignment form set forth in the
Warrant Certificate duly executed by the Holder with Signatures Guaranteed.
Upon any such surrender for split-up, combination, exchange or transfer, the
Warrant Agent shall execute and deliver to the person entitled thereto one
or more Warrant Certificates, as so requested. The Warrant Agent shall not
be required to effect any split-up, combination, exchange or transfer which
will result in the issuance of a Warrant Certificate evidencing a fraction
of a Warrant. The Warrant Agent may, prior to the issuance of any new
Warrant Certificate, require the Holder to pay a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with the
split-up, combination, exchange or transfer of Warrant Certificates.
6.2 Cancellation of Warrant Certificates. Any Warrant
Certificate surrendered upon the exercise of Warrants, or for split-up,
combination, exchange or transfer, or purchased or otherwise acquired by the
Company, shall be cancelled and shall not be reissued by the Company and,
except as provided by Section 2.5 (exercise of less than all of the Warrants
evidenced by a Warrant Certificate) or by Section 6.1 (split-up,
combination, exchange or transfer), no Warrant Certificate shall be issued
in place of a cancelled Warrant Certificate. Any Warrant Certificate so
cancelled shall be destroyed by the Warrant Agent unless otherwise directed
by the Company.
7. PROVISIONS CONCERNING THE WARRANT AGENT AND OTHER MATTERS.
7.1 Payment of Taxes and Charges. The Company shall from time
to time promptly pay to the Warrant Agent, or make provisions satisfactory
to the Warrant Agent for the payment of, all taxes and charges that may be
imposed by the United States or by any state upon the Company or the Warrant
Agent in connection with the issuance or delivery of shares of Common Stock
upon the exercise of any Warrants; provided, however, that any transfer
taxes in connection with the issuance of Warrant Certificates or
certificates for shares of Common Stock in any name other than that of the
Holder of the Warrant Certificate surrendered shall be paid by such Holder
and, in such case, the Company shall not be required to issue or deliver any
Warrant Certificate or certificate for shares of Common Stock until such
taxes shall have been paid or it has been established to the Company's
satisfaction that no tax is due.
7.2 Resignation or Removal of Warrant Agent; Appointment of New
Warrant Agent. The Warrant Agent may resign its duties and be discharged
from all further duties and liabilities hereunder after giving one month's
notice to the Company, except that such shorter notice may be given as the
Company shall, in writing, accept as sufficient. Upon comparable notice to
the Warrant Agent, the Company may remove the Warrant Agent. In any such
event, the Company shall promptly appoint a new Warrant Agent, as
hereinafter provided, and the resignation or removal of the Warrant Agent
shall not be effective until a new Warrant Agent has been duly appointed and
has accepted such appointment. If the Company shall fail to appoint a new
Warrant Agent within 30 days after (a) it has removed the Warrant Agent, or
(b) it has been notified, whether by the Warrant Agent or by any Holder of a
Warrant Certificate, of the resignation or incapacity of the Warrant Agent,
then any Holder of a Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any new Warrant
Agent appointed hereunder shall execute, acknowledge and deliver to the
former Warrant Agent last in office, and to the Company, an instrument
accepting such appointment under substantially the same terms and conditions
as are contained herein, and thereupon such new Warrant Agent, without any
further act or deed, shall become vested with the rights, powers, duties and
responsibilities of the Warrant Agent, and the former Warrant Agent shall
cease to be the Warrant Agent. Notwithstanding the foregoing, if for any
reason it becomes necessary or expedient to have the former Warrant Agent
execute and deliver any further assurance, conveyance, act or deed, the same
shall be done at the expense of the Company and shall be legally and validly
executed and delivered by the former Warrant Agent.
7.3 Notice of Appointment. No later than the effective date of
the appointment of a new Warrant Agent the Company shall cause notice
thereof to be mailed to the former Warrant Agent and the transfer agent for
the Common Stock, and shall forthwith cause a copy of such notice to be
mailed to each Holder of a Warrant Certificate. Failure to mail such
notice, or any defect contained therein, shall not affect the legality or
validity of the appointment of the successor Warrant Agent.
7.4 Merger of Warrant Agent. Any company into which the Warrant
Agent may be merged or with which it may be consolidated or any company
resulting from any merger or consolidation to which the Warrant Agent may be
a party, shall be the successor Warrant Agent under this Agreement without
further act or deed, so long as such company would be eligible for
appointment as a successor Warrant Agent under the provisions of Section
7.2. Any such successor Warrant Agent may adopt the prior countersignature
of any predecessor Warrant Agent, and may distribute Warrant Certificates
countersigned but not distributed by such predecessor Warrant Agent, or may
countersign Warrant Certificates in its own name.
7.5 Company Responsibilities. The Company shall: (a) pay the
Warrant Agent reasonable remuneration for its services as Warrant Agent
hereunder, and reimburse the Warrant Agent upon demand for all expenses,
advances and expenditures that the Warrant Agent may reasonably incur in the
execution of its duties hereunder (including reasonable fees and expenses of
its counsel); (b) provide the Warrant Agent, upon request, with sufficient
funds to pay any cash due; and (c) perform, execute, acknowledge and deliver
or cause to be performed, executed, acknowledged and delivered all further
and other acts, instruments and assurances as may reasonably be required by
the Warrant Agent for the carrying out or performance by the Warrant Agent
of the provisions of this Agreement.
7.6 Certification for the Benefit of Warrant Agent. Whenever in
the performance of its duties under this Agreement the Warrant Agent shall
deem it necessary or desirable that any matter be proved or established or
that any instructions with respect to the performance of its duties
hereunder be given by the Company prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established or such instructions may be given, by a certificate or
instrument signed by the Chief Executive Officer, the President, any Vice
President, the Treasurer or all of the Directors of the Company and
delivered to the Warrant Agent. Such certificate or instrument may be
relied upon by the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement, but in its discretion
the Warrant Agent may in lieu thereof accept other evidence of such matter
or may require such further additional evidence as it may deem reasonable.
7.7 Liability of Warrant Agent. The Warrant Agent shall be
liable hereunder for its own negligence or willful misconduct. The Warrant
Agent shall act hereunder solely as an agent for the Company and its duties
shall be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Warrant Certificates (except
its countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been made by
the Company only. The Warrant Agent shall not incur any liability or
responsibility to the Company or to any Holder of any Warrant Certificate
for any action taken, or omitted to be taken, in reliance on any notice,
resolution, waiver, consent, order, certificate or other paper, document or
instrument reasonably believed by the Warrant Agent to be genuine and to
have been signed, sent or presented by the proper party or parties. The
Warrant Agent shall not be: (a) under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof by the
Company, or in respect of the validity or execution of any Warrant
Certificate (except its countersignature thereof); (b) responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Warrant Certificate; (c) responsible for the making of
any adjustment required under the provisions of Section 4, or for the
manner, method or amount of any such adjustment or the facts that would
require any such adjustment; or (d) deemed, by any act hereunder, to make
any representation or warranty as to the authorization or reservation of any
shares of Common Stock or other securities to be issued pursuant to this
Agreement or any Warrant Certificate, or as to whether any shares of Common
Stock or other securities will when issued be validly authorized and issued
and fully paid and non-assessable.
7.8 Use of Attorney, Agents and Employees. The Warrant Agent
may execute and exercise any of the rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its attorneys,
agents or employees.
7.9 Conflict of Interest. The Warrant Agent and any
shareholder, director, officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrant Certificates.
7.10 Indemnification. The Company shall indemnify the Warrant
Agent and save it harmless from and against any and all losses, expenses or
liabilities, including judgments, costs and reasonable counsel fees, arising
out of or in connection with its agency under this Agreement, except as a
result of the negligence or willful misconduct of the Warrant Agent.
8. IN GENERAL.
8.1 Changes to Agreement. The Warrant Agent, together with the
Company, may, without the consent or concurrence of any Holder of a Warrant
Certificate, by supplemental agreement or otherwise, make any changes or
corrections in this Agreement that the Warrant Agent and the Company shall
have been advised by counsel (a) are required to cure any ambiguity or to
correct any defective or inconsistent provision or clerical omission or
mistake or manifest error herein contained, (b) add to the covenants and
agreements thereafter to be observed, or (c) result in the surrender of any
right or power reserved to or conferred upon the Company or the Warrant
Agent in this Agreement; but which changes or corrections do not or will not
adversely affect, alter or change the rights, privileges or immunities of
the Holders of Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any respect
except with the consent in writing of the Holders of Warrant Certificates
representing not less than 50 percent of the Warrants then outstanding; and
provided further, that no change in the number or nature of the securities
purchasable upon the exercise of any Warrant or the payment of the Exercise
Price therefor, or the acceleration of the Expiration Date, shall be made
without the consent in writing of the Holder of a Warrant Certificate, other
than such changes as are specifically prescribed by this Agreement as
originally executed.
8.2 Assignment. All of the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns.
8.3 Successor to the Company. The Company shall not merge or
consolidate with or into any other corporation or other entity, or sell or
otherwise transfer its property, assets and business substantially as an
entirety to a successor entity, unless the entity resulting from such
merger, consolidation, sale or transfer (if not the Company) shall expressly
assume, by supplemental agreement satisfactory in form and substance to the
Warrant Agent and delivered to the Warrant Agent, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
8.4 Notices. Any notice, demand or other communication given
under this Agreement shall be in writing. Any such notice, demand or other
communication given to the Company shall be sufficiently given when it is
deposited with the United States Postal Service for first-class or
registered mail delivery, with postage prepaid and addressed (until another
address is filed in writing by the Company with the Warrant Agent) as
follows:
Data Systems Network Corporation
00000 Xxxx 00 Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, President
Any such notice, demand or other communication given to the Warrant Agent
shall be sufficiently given when it is deposited with the United States
Postal Service for first-class or registered mail delivery, with postage
prepaid and addressed (until another address is filed in writing by the
Warrant Agent with the Company) as follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: , President
Any such notice, demand or other communication given to the Holder of any
Warrant Certificate shall be sufficiently given, whether or not such Holder
actually receives such notice, three days after it is deposited with the
United States Postal Service for first-class or registered mail delivery,
with postage prepaid and addressed to such Holder at his last address as
shown on the books of the Company maintained by the Warrant Agent. Any such
notice, demand or other communication shall otherwise be deemed given when
received by the party for whom it was intended.
8.5 Defects in Notice. Failure to file any certificate or
notice or to mail any notice, or any defect in any certificate or notice
pursuant to this Agreement shall not affect in any way the rights of any
Holder of a Warrant Certificate or the legality or validity of any
adjustment made pursuant to Section 4, or any transaction giving rise to any
such adjustment, or the legality or validity of any action taken by the
Company.
8.6 Governing Law. The validity, interpretation and
construction of this Agreement, of each Warrant Certificate issued
hereunder, and of the respective terms and provisions thereof, shall be
governed by the laws of the State of New York (without regard to the
principles of conflicts of law thereof).
8.7 Standing. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended, or shall
be construed, to confer upon, or give to, any person or entity other than
the Company, the Warrant Agent and the Holders of the Warrant Certificates,
any right, remedy or claim under or by reason of this Agreement or of any
covenant, condition, stipulation, promise or agreement contained herein; and
all covenants, conditions, stipulations, promises and agreements contained
in this Agreement shall be for the sole and exclusive benefit of the Company
and the Warrant Agent and their respective successors and assigns, and the
Holders of the Warrant Certificates.
8.8 Sections; Headings. Unless the context otherwise requires,
all references herein to a "Section" shall mean the appropriate Section of
this Agreement. The descriptive headings of the Sections of this Agreement
are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
8.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an
original, but all of which together shall constitute but one and the same
instrument.
8.10 Availability of the Agreement. The Warrant Agent shall keep
copies of this Agreement available for inspection by Holders of Warrants
during normal business hours at its Principal Office. Copies of this
Agreement may be obtained upon written request made to the Company at the
address set forth in Section 8.4.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto under their respective corporate seals as of the day and year
first above written.
DATA SYSTEMS NETWORK CORPORATION
By: /S/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
Its: President
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By: /S/ Xxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxx X. Xxxxxx
Its: Vice President
