NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
REGULATION S OF THE SECURITIES ACT, AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER
THE PROVISIONS OF THE SECURITIES ACT.
STOCK PURCHASE WARRANT
To Purchase up to _______ Shares of Common Stock of
Datatec Systems, Inc.
THIS CERTIFIES that, for value received, __________________ or permitted
assigns (the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after April 3, 2002 (the
"Issue Date") and on or prior to the close of business on the date ending five
(5) years from the Issue Date (the "Termination Date"), but not thereafter, to
subscribe for and purchase from Datatec Systems, Inc., a corporation
incorporated in Delaware (the "Company"), up to _______ shares of Common Stock,
$0.001 par value (the "Common Stock"), of the Company (the "Warrant Shares").
The purchase price of one share of Common Stock (the "Exercise Price") under
this Warrant shall be $1.416 [equal to 120% of the Market Price (as defined in
the Purchase Agreement) of the Common Stock on the Principal Market as of the
Issue Date]. Capitalized terms used and not otherwise defined herein shall have
the meanings set forth for such terms in the Subordinated Secured Convertible
Debentures and Warrants Purchase Agreement dated April 3, 2002, between the
Company and the Investors named therein (the "Purchase Agreement") or in the
Debentures. The Exercise Price and the number of shares for which the Warrant is
exercisable shall be subject to adjustment as provided herein. In the event of
any conflict between the terms of this Warrant and the Purchase Agreement, the
Purchase Agreement shall control.
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant.
(a) Except as provided in Section 4 herein, exercise of the purchase
rights represented by this Warrant may be made at any time or times on or after
the Issue Date, and before the close of business on the Termination Date by the
surrender of this Warrant and the Notice of Exercise Form annexed hereto duly
executed, at the office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the registered Holder hereof
at the address of such Holder appearing on the books of the Company) and upon
payment of the Exercise Price for the shares thereby purchased by wire transfer
or cashier's check drawn on a United States bank, the Holder of this Warrant
shall be entitled to receive a certificate for the number of shares of Common
Stock so purchased. During any such time beginning one year from the date hereof
when a registration statement with respect to the resale of the Warrant Shares
is not in effect, this Warrant may also be exercised in whole or in part by
means of a "cashless exercise" by tendering this Warrant to the Company to
receive a number of shares of Common Stock equal in Market Value to the
difference between the Market Value of the shares of Common Stock issuable upon
such exercise of this Warrant and the total cash Exercise Price of that part of
the Warrant being exercised. "Market Value" for this purpose shall be the
closing price of the Common Stock as reported by Bloomberg L.P. on the date of
such cashless exercise. Certificates for shares purchased hereunder shall be
delivered to the Holder hereof within five (5) Trading Days after the date on
which this Warrant shall have been exercised as aforesaid (the "Delivery Date").
To the extent the Holder has not received certificates representing the number
of Warrant Shares specified in the applicable Notice of Exercise form on or
before the Delivery Date therefor (an "Exercise Default"), the Holder shall have
(i) the right to receive from the Company an amount equal to (A) the aggregate
amount paid by the Holder for shares of Common Stock purchased by the Holder in
order to make delivery on a sale effected in anticipation of receiving Warrant
Shares upon such exercise, minus (B) the aggregate Exercise Price for such
Warrant Shares, or (ii) the right to require the Company to reinstate the
Warrant and deem the exercise resulting in such Exercise Default rescinded, null
and void. This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the Holder
or any other person so designated to be named therein shall be deemed to have
become the Holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior
to the issuance of such shares, have been paid. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share that the Holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the Holder hereof for
2
any issue or transfer tax or other incidental expense in respect of the issuance
of such certificate, all of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in the name of the Holder of this
Warrant or in such name or names as may be directed by the Holder of this
Warrant; provided, however, that in the event certificates for shares of Common
Stock are to be issued in a name other than the name of the Holder of this
Warrant, this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder hereof; and the
Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.
6. Further Assurances. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock, free from all taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.
7. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer; provided, however,
that, without the consent of the Company, the initial Holder of this Warrant may
not sell or otherwise transfer this Warrant to a third party who is not an
affiliate of such holder, unless there exists at such time an Event of Default
under the Debentures or a default under this Warrant. Upon such surrender and,
if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned,
may be exercised by a new Holder for the purchase of shares of Common Stock
without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books
for the registration and the registration of transfer of the Warrants.
3
8. No Rights as Stockholder until Exercise. This Warrant does not
entitle the Holder hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise hereof. Upon the surrender of this Warrant
and the payment of the aggregate Exercise Price, the Warrant Shares so purchased
shall be and be deemed to be issued to such Holder as the record owner of such
shares as of the close of business on the later of the date of such surrender or
payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant certificate
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which shall include the posting of a bond only if required by the Company's
transfer agent and if the Holder is not the purchaser of this Warrant under the
Purchase Agreement or an affiliate of such purchaser), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares.
(a) Stock Splits, etc. The number and kind of securities purchasable
upon the exercise of this Warrant 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 (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to the Holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue any shares
of its capital stock in a reclassification of the Common Stock, then the number
of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder of this Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which he 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 Shares or other securities of the Company which are
purchasable hereunder, the Holder of this Warrant shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares 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.
4
(b) 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 the 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 this 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 this 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 in
writing or by operation of law the due and punctual observance and performance
of each and every covenant and condition of this Warrant 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 shares of Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 11. For purposes of this Section 11,
"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 11 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
(c) Rights of Holders Upon Dilutive Issuances.
(i) Required Adjustments. Subject to the exclusions contained
in Section 11(c)(iv) below, if the Company issues or sells any Common Stock in a
capital raising transaction for a Per Share Selling Price (as defined below)
less than the applicable Exercise Price in effect immediately prior to the time
of such issue or sale (a "Dilutive Issuance"), then forthwith upon such Dilutive
Issuance, the Exercise Price shall be reduced to the Weighted Average Exercise
Price (as defined below). The "Weighted Average Exercise Price" shall be
determined by the following formula:
EP1 = EP* N + C
-------
N + AS
5
where:
EP1 = the Weighted Average Exercise Price;
EP = the former Exercise Price;
N = the number of shares of Common Stock
outstanding immediately prior to such
issuance (or deemed issuance) assuming
exercise or conversion of all outstanding
securities exercisable for or convertible
into Common Stock;
C = the number of shares of Common Stock that
the aggregate consideration received or
deemed to be received by the Company for the
total number of additional securities so
issued or deemed to be issued in the
Dilutive Issuance would purchase if the Per
Share Selling Price were equal to the
Exercise Price;
AS = the number of shares of Common Stock so
issued or deemed to be issued in the
Dilutive Issuance.
Notwithstanding the foregoing, the exercise of Stock Purchase Rights (as defined
below) or conversion of Convertible Securities (as defined below) shall not be
deemed a Dilutive Issuance. The Company shall give to the Investors written
notice of any such Dilutive Issuance within twenty four (24) hours of the
closing thereof.
(ii) Definitions. For the purposes of this Section 11(c), the
term "Per Share Selling Price" shall include the amount actually paid by third
parties for each share of Common Stock. In the event a fee in excess of 6% is
paid by the Company in connection with such transaction, any such excess amount
shall be deducted from the selling price pro rata to all shares sold in the
transaction to arrive at the Per Share Selling Price. A sale in a capital
raising transaction of shares of Common Stock shall include the sale or issuance
of Stock Purchase Rights, Convertible Securities or any other rights, options,
warrants or convertible securities under which the Company is or may become
obligated to issue shares of Common Stock, and in such circumstances the Per
Share Selling Price of the Common Stock covered thereby shall also include the
exercise or conversion price thereof (in addition to the consideration received
by the Company upon such sale or issuance less the excess fee amount, if any, as
provided above). In case of any such security issued in a "Variable Rate
Transaction" or "MFN Transaction" (each as defined below), the Per Share Selling
Price shall be deemed to be the lowest conversion or exercise price at which
such securities are converted or exercised or might have been converted or
exercised in the case of a Variable Rate Transaction, or the lowest adjustment
price in the case of an MFN Transaction, each over the life of such securities.
If shares are issued for a consideration other than cash, the Per Share Selling
Price shall be the fair market value of such consideration as determined in good
faith by independent certified public accountants mutually acceptable to the
Company and the Investors. "Variable Rate Transaction" means a
6
transaction in which the Company issues or sells (A) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (1) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities, or (2) with a
fixed conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such security or upon the
occurrence of specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock, or (B) any
securities of the Company issued or issuable pursuant to an "equity line"
structure which provides for the sale, from time to time, of securities of the
Company which are registered for resale pursuant to the Securities Act. "MFN
Transaction" means a transaction in which the Company issues or sells any equity
securities in a capital raising transaction or series of related transactions
(the "New Offering") which grants to an investor (the "New Investor") the right
to receive additional shares based upon future equity raising transactions of
the Company on terms more favorable than those granted to the New Investor in
the New Offering. "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities that are convertible into or exchangeable
for, with or without payment of additional consideration, shares of Common
Stock. "Stock Purchase Rights" shall mean any warrants, options or other rights
to subscribe for, purchase or otherwise acquire any shares of Common Stock or
any Convertible Securities. Convertible Securities and Stock Purchase Rights
shall be deemed outstanding and issued or sold at the time of such issue or
sale.
(iii) Adjustment Mechanism. If an adjustment of the Exercise
Price is required pursuant to Section 11(c)(i), the Company shall deliver to the
Investors within three (3) business days of the closing of the transaction
giving rise to the adjustment (the "Delivery Date") written confirmation
reflecting the adjusted Exercise Price.
(iv) Exclusions. Section 11(c) shall not apply to (i) sales of
shares of Common Stock by the Company upon conversion or exercise of any
convertible securities, options or warrants outstanding prior to the date hereof
pursuant to the terms of such securities, options or warrants on the date
hereof; or (ii) sales of shares of Common Stock by the Company pursuant to the
provisions of any option plan in existence on the date hereof or a subsequently
adopted and stockholder-approved employee option or similar plan.
(v) Readjustment of Exercise Price. In the event of any change
in (i) the consideration, if any, payable upon exercise of any Stock Purchase
Rights or upon the conversion or exchange of any Convertible Securities or (ii)
the rate at which any Convertible Securities are convertible into or
exchangeable for shares of Common Stock, the applicable Exercise Price as
computed upon the original issue thereof shall forthwith be readjusted to the
Exercise Price that would have been in effect at such time had such Stock
Purchase Rights or Convertible Securities provided for such changed purchase
price, consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. On the expiration of any Stock Purchase
Rights not exercised or of any right to convert or exchange under any
Convertible Securities not exercised, the applicable Exercise Price then in
effect shall forthwith be increased to the Exercise Price that would have been
in effect at the time of such expiration
7
had such Stock Purchase Rights or Convertible Securities never been issued. No
readjustment of the Exercise Price pursuant to this Subsection shall require any
adjustment to the amount paid or number of shares of Common Stock received by
the Holder upon any exercise of this Warrant prior to the date upon which such
readjustment to the Exercise Price shall occur.
(d) Nominal Adjustment. The Company shall not be required to make an
adjustment in the Exercise Price under this Section 11 if such adjustment is
less than $0.01 per share of Common Stock. However, the Company shall be
required to carry forward on its books all adjustments that would have been made
but for this Section 11(d) and shall take such adjustment into account when
making subsequent adjustments under this Section 11. All calculations under this
Section 11 shall be made to the nearest cent.
12. Voluntary Adjustment by the Company. The Company may, at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
13. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the Holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and Other Property) purchasable upon the
exercise of this Warrant and the Exercise Price of such Warrant Shares (and
Other Property) after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made. Such notice, in the absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
14. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right; or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation; or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 30 days' prior written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining rights
to vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and
8
(ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 30
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (x) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, (y) the date on which the holders of Common Stock shall
be entitled to any such dividend, distribution or right, and the amount and
character thereof, and (z) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or Other
Property deliverable upon such disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 16(d).
15. Authorized Shares.
(a) The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Principal Market upon which the Common
Stock may be listed.
(b) The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company will (i) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(ii) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
(c) Before taking any action which would cause an adjustment
reducing the current Exercise Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Exercise Price.
9
(d) Before taking any action which would result in an adjustment in
the number of shares of Common Stock for which this Warrant is exercisable or in
the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
16. Additional Exercise Restrictions. In no event shall any holder be
entitled to exercise this Warrant for shares of Common Stock in excess of that
number of shares of Common Stock that, upon giving effect to such exercise,
would cause the aggregate number of shares of Common Stock beneficially owned by
the holder and its "affiliates" (as defined in Rule 405 under the Securities
Act) to exceed 9.99% of the outstanding shares of the Common Stock of the
Company following such exercise. For purposes of this Section 16, the aggregate
number of shares of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of the Warrant with respect to which the determination is being made,
but shall exclude the number of shares of Common Stock that would be issuable
upon (i) exercise of any remaining, unexercised portion of this Warrant and (ii)
exercise or conversion of the unexercised or unconverted portion of any other
Securities (including, without limitation, any warrants or convertible preferred
stock or convertible Debentures) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder and its affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 16, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Section 16, in determining the number of
outstanding shares of Common Stock a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock outstanding.
For any reason at any time, upon the written or oral request of the Holder, the
Company shall immediately confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
exercises of portions of the Warrant by such Holder since the date as of which
such number of outstanding shares of Common Stock was reported. To the extent
that the limitation contained in this Section 16 applies, the determination of
whether the Warrant is exercisable (in relation to other securities owned by a
Holder) and of which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of Exercise shall be
deemed to be the Holder's determination that the Warrant is exercisable, in each
case subject to such aggregate percentage limitation, and the Company shall have
no obligation or right to verify or confirm the accuracy of such determination.
Nothing contained herein shall be deemed to restrict the right of a Holder to
exercise the Warrant at such time as such exercise will not violate the
provisions of this Section 16. The Holder may waive the provisions of this
Section 16 as to itself (and solely as to itself) upon a change of control of
the Company, and the provisions of this Section 16 shall continue to apply until
such change of control of the Company (or such later date as may be specified in
such notice of waiver). No exercise in violation of this Section 16, but
otherwise in accordance with this Warrant, shall affect the status of the Common
Stock issued upon such exercise as validly issued, fully paid and nonassessable.
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17. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding upon any successors
or assigns of the Company. This Warrant shall constitute a contract and be
governed under the laws of New York without regard to its conflict of law
principles or rules, and be subject to venue pursuant to the terms set forth in
the Purchase Agreement.
(b) Restrictions. The Holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice the Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company fails to comply with any provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder, (but only to the extent the Holder prevails in
enforcing such rights).
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.
(e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of the Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(f) Remedies. The Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of the Holder. The provisions of this Warrant are intended
to be for the benefit of all holders from time to time of this Warrant and shall
be enforceable by any such Holder or holder of Warrant Shares.
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(h) Indemnification. The Company agrees to indemnify and hold
harmless the Holder from and against any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against the Holder in any manner relating to or arising out of any
failure by the Company to perform or observe in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Warrant;
provided, however, that the Company will not be liable hereunder to the extent
that any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are
found in a final non-appealable judgment by a court to have resulted from the
Holder's bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
(i) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(j) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(k) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the Company has caused this Stock Purchase
Warrant to be executed by its officer thereunto duly authorized.
Dated: April 3, 2002
DATATEC SYSTEMS, INC.
By: /s/ Xxxxx Xxxx
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Name: Xxxxx X. Xxxx
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Title: Chief Executive Officer
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NOTICE OF EXERCISE
To: [Transfer Agent]
(1) The undersigned hereby elects to purchase ________
shares of Common Stock (the "Common Stock") of Datatec Systems, Inc. pursuant to
the terms of the attached Warrant, and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if any.
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(2) Please issue a certificate or certificates
representing said shares of Common Stock in the name of the undersigned or in
such other name as is specified below:
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(Name)
-------------------------------
(Address)
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Dated: ,
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Signature
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to exercise the Warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
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Dated:
--------------, ----------
Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
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Signature Guaranteed:
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NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.