Exhibit 10.1
9% SENIOR SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT
THIS 9% SENIOR SUBORDINATED CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as
of October 15, 2004 (this "Agreement"), is entered into by and among DYNTEK,
INC., a Delaware corporation (the "Company"), and THE PURCHASERS listed on
Exhibit 1 hereto (collectively, the "Purchasers" or the "Holders").
RECITALS:
WHEREAS, the Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemptions from registration provided by
Regulation D ("Regulation D") promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act") and/or Section 4(2) of the Securities Act;
WHEREAS, the Purchasers wish to purchase, and the Company wishes to sell
and issue to the Purchasers, upon the terms and subject to the conditions stated
in this Agreement, an aggregate of $4,438,775 in principal amount of the
Company's 9% Senior Subordinated Convertible Notes due October 15, 2007 in the
form attached hereto as Exhibit A (the "Notes" and collectively, with the
Underlying Shares (as defined below) and the Warrants (as defined below), the
"Securities"), which Notes shall be convertible into shares of common stock of
the Company, $.0001 par value per share (the "Common Stock"), in accordance with
the terms of this Agreement and the Notes. The "Underlying Shares" shall mean
the shares of Common Stock issued or issuable upon conversion of the Notes,
permitted payment of principal or interest on the Notes, or exercise of the
Warrants or the Placement Warrants or the Additional Warrants (both as defined
below);
WHEREAS, in connection with the sale of the Notes, the Company will also
issue to the Purchasers warrants to purchase shares of the Company's Common
Stock and, upon the terms and subject to the conditions of this Agreement, may
issue to the Purchasers additional warrants to purchase shares of the Company's
Common Stock under certain circumstances in the form attached hereto as Exhibit
B (each a "Warrant" and collectively, the "Warrants"). The exercise price and
the number of shares of Common Stock which may be purchased from the Company
pursuant to the Warrants shall be determined as set forth herein and in each
Warrant; and
WHEREAS, in connection with the consummation of the transactions
contemplated by this Agreement, the parties hereto are also entering into, of
even date herewith, a registration rights agreement (the "Registration Rights
Agreement"). This Agreement, together with the Notes, the Registration Rights
Agreement and the Warrants are hereinafter collectively referred to as the
"Transaction Documents".
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
AGREEMENTS:
AGREEMENT TO PURCHASE; CLOSING
Purchase of Notes. Subject to the terms and conditions set forth herein, the
Company hereby agrees to issue and sell to the Purchasers, and the Purchasers
severally and not jointly hereby agree to purchase from the Company an aggregate
of $4,438,775 principal amount of Notes in the amounts set forth opposite each
Purchaser's name on Exhibit 1 hereto. The Purchasers' aggregate purchase price
(the "Purchase Price") for the Notes to be purchased hereunder is $4,283,418. In
connection with the purchase of the Notes by the Purchasers, the Company shall
issue to the Purchasers at the Closing (as defined below) the Warrants in the
amounts set forth opposite each Purchaser's name on Exhibit 1 hereto.
Closing. The closing (the "Closing") of the purchase and sale of the Notes and
the issuance of the Warrants will take place at the offices of the Purchasers on
October 15, 2004, or at such other place and time as may be mutually agreed by
the Purchasers and the Company. The date of the Closing is referred to herein as
the "Closing Date." At the Closing, the Company will deliver to the Purchasers
the Notes and the Warrants, in exchange for payment by the Purchasers of an
aggregate of $4,283,418, by wire transfer of immediately available funds payable
to the Company. Each of the Notes shall be registered in the names of the
respective Purchasers.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION
Each of the Purchasers hereby represents and warrants to the Company as to
itself only that:
Accredited Investors. Such Purchaser is: (i) experienced in making investments
of the kind contemplated by this Agreement; (ii) able, by reason of business and
financial experience, to protect its own interests in connection with the
transactions contemplated by this Agreement; (iii) able to afford the entire
loss of its investment in the Securities; (iv) an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D; and (v) not a broker-dealer or
an affiliate of a broker-dealer as such terms are defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
No Public Distribution. Such Purchaser is acquiring the Securities for its own
account, for investment purposes only, and not with a present view towards the
public sale or distribution thereof, except pursuant to a sale or sales that are
registered under the Securities Act or exempt from such registration; provided,
however, that by making the representations herein, the Purchaser does not agree
to hold any of the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act. Such Purchaser has not been organized for the purpose of investing in
securities of the Company, although such investment is consistent with its
purposes.
Subsequent Offers and Sales. All subsequent offers and sales of the Securities
by such Purchaser shall be made pursuant to an effective registration statement
under the Securities
-2-
Act or pursuant to an applicable exemption from such registration; with any
offers and sales which are being made pursuant to an applicable exemption from
registration being accompanied by a legal opinion obtained by such Purchaser,
which legal opinion shall be reasonably satisfactory to the Company and the
Company's legal counsel.
Accuracy of Purchasers' Representations and Warranties. Such Purchaser
understands that the Securities are being offered and sold to it in reliance
upon exemptions from the registration requirements of the United States federal
securities laws, and that the Company is relying upon the truth and accuracy of
such Purchaser's representations and warranties contained in the Transaction
Documents and any ancillary documents thereto, as applicable, and such
Purchaser's compliance with the Transaction Documents and any ancillary
documents thereto, in order to determine the availability of such exemptions and
the eligibility of such Purchaser to acquire the Securities in accordance with
the terms and provisions of the Transaction Documents.
Financial Information. Such Purchaser: (i) has been provided with and has
reviewed all requested information concerning the business of the Company,
including, without limitation, the Company's audited financial statements for
the fiscal year ended June 30, 2004 and (ii) has had all requested access to the
management of the Company and has had the opportunity to ask questions of the
management of the Company.
Capacity and Authority. Such Purchaser has the requisite capacity and authority
to execute, deliver and perform each of the Transaction Documents and any and
all ancillary documents thereto and to consummate the transactions contemplated
thereby.
Due Execution. This Agreement and the other Transaction Documents, and any
ancillary documents thereto and the transactions contemplated hereby and thereby
that have been executed and delivered by such Purchaser, have been duly and
validly authorized by such Purchaser and such agreements, when executed and
delivered by each of the other parties thereto will each be a valid and binding
agreement of such Purchaser, enforceable against such Purchaser in accordance
with their respective terms, except to the extent that enforcement of such
agreements may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and to general principles of equity.
Brokers. Such Purchaser has not employed, engaged or retained, or otherwise
incurred any liability to, any person as a broker, finder, agent or other
intermediary in connection with the transactions contemplated herein.
No General Solicitation. Such Purchaser has not learned of the investment in the
Securities as a result of any public advertising or general solicitation.
Residency. The Purchaser is a resident of (or, if an entity, has its principal
place of business in) the jurisdiction set forth below such Purchaser's name on
the signature page hereto.
-3-
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to such Purchaser that:
Organization. The Company is a corporation duly organized and validly existing
under the laws of the State of Delaware. Each of the Company's operating
subsidiaries is a corporation duly organized and validly existing under the laws
of its respective jurisdiction of incorporation. Each of the Company and its
operating subsidiaries is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a Material Adverse
Effect (as hereinafter defined) on the Company. All of the outstanding capital
stock of the Company's subsidiaries is owned either directly or indirectly by
the Company. The Company and its subsidiaries have all requisite corporate power
and authority, and hold all licenses, permits and other required authorizations
from governmental authorities, necessary to conduct their business as it is now
being conducted or proposed to be conducted and to own or lease their properties
and assets as they are now owned or held under lease, except to the extent the
failure to hold such licenses, permits and other authorizations would not have a
Material Adverse Effect on the Company.
Capitalization. On the date hereof, the authorized capital of the Company
consists of 150,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, $.0001 par value per share ("Preferred Stock"). As of October
15, 2004, there were 58,896,647 shares of Common Stock issued and outstanding
and 1,542,543 shares of Preferred Stock issued and outstanding. Except (i) as
disclosed in the Company's SEC Reports, and (ii) grants of rights to purchase
shares of the Company's Common Stock under the Company's 2001 Employee Stock
Option Plan (the "Option Plan") after the Company's fiscal year end, there are
no options, warrants and convertible securities of the Company, and any other
rights to acquire securities of the Company (collectively, the "Derivative
Securities"). All outstanding securities of the Company are validly issued,
fully paid and nonassessable. No stockholder of the Company is entitled to any
preemptive rights with respect to the purchase of or sale of any securities by
the Company. Except as contemplated herein, shares reserved for issuance under
the Company's Option Plan, or as set forth in Schedule 3(b), none of the shares
of capital stock of the Company is reserved for any purpose, other than the
issuance upon exercise or conversion of the Derivative Securities, and the
Company is neither subject to any obligation (contingent or otherwise), nor has
any option, to repurchase or otherwise acquire or retire any shares of its
capital stock, except for repurchase rights of the Company under option
agreements or restricted stock agreements with service providers of the Company.
Issuance of the Securities and Warrant Shares. The Notes are duly authorized,
issued and delivered and the Underlying Shares when issued in accordance with
the terms of the Notes or the Warrants, as the case may be, will be duly
authorized and validly issued, fully paid and nonassessable, free and clear of
any liens imposed by or through the Company, will not be subject to preemptive
rights, and will not subject the holder thereof to personal liability by reason
of being such a holder. There are no preemptive rights of any stockholder of the
Company to acquire the Securities or the Warrants. The Company has duly reserved
from its authorized and unissued shares of Common Stock 16,000,000 shares of
Common Stock for issuance upon conversion of the Notes, exercise of the
Warrants, the Placement Warrants, the Additional Warrants (both as defined
below), and permitted payments of principal and interest on the Notes.
-4-
Legality. The Company has the requisite corporate power and authority to enter
into each of the Transaction Documents and to issue and deliver the Securities.
Due Execution. The Transaction Documents, and the transactions contemplated
thereby, have been duly and validly authorized by the Company. The Transaction
Documents have been duly executed and delivered by the Company and are each the
legal, valid and binding agreement and obligation of the Company, enforceable in
accordance with their respective terms, except to the extent that enforcement of
such agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or hereafter in
effect relating to creditors' rights generally and to general principles of
equity.
Non-contravention. The execution and delivery of the Transaction Documents, and
the consummation by the Company of the transactions contemplated thereby, does
not (i) result in a violation of either the Certificate of Incorporation or
By-laws of the Company, or (ii) constitute a default under (or an event which
with notice or lapse of time or both could become a default) or give to others
any rights of termination, amendment or cancellation of, any material agreement,
indenture or instrument to which the Company is a party unless the same shall
have been waived or consented to by the other party, or result in a violation of
any law, rule, regulation, order, judgment or decree (foreign or domestic and
including federal and state securities laws and regulations) applicable to the
Company or by which any material property or asset of the Company is bound or
affected other than any of the foregoing which would not have a Material Adverse
Effect (as hereinafter defined). Except as set forth in Schedule 3(f), neither
the filing of the registration statement required to be filed by the Company
pursuant to the Registration Rights Agreement nor the offering or sale of the
Notes, the Warrants and the Underlying Shares as contemplated by this Agreement
gives rise to any rights, other than those which have been waived or satisfied
on or prior to the date hereof, for or relating to the registration of any
shares of the Common Stock.
Approvals. Other than the filing of a registration statement with the SEC, as
contemplated by the Registration Rights Agreement, and the receipt by the
Company of approval from the SEC for such registration statement to be declared
effective, no authorization, approval or consent of any court, governmental
body, regulatory agency, self-regulatory organization, stock exchange or market
or the stockholders of the Company is required to be obtained by the Company for
the entry into or the performance of the Transaction Documents.
SEC Filings; Financial Statements.
(1) The Company has filed, and as of the Closing will have filed,
all required registration statements, prospectuses, reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated by reference) required to be filed by it with the
SEC since 2000. The Company has made available to the Purchasers all such
registration statements, prospectuses, reports, schedules, forms,
statements and other documents in the form filed with the SEC. All such
required registration statements, prospectuses, reports, schedules, forms,
statements and other documents (including those that the Company may file
subsequent to the date of this Agreement), as amended, are referred to
herein as the "SEC Reports." As of their respective dates, the SEC Reports
(i) were prepared in accordance and complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to
such SEC Reports, and (ii) did not
-5-
at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the
extent corrected prior to the date of this Agreement by a subsequently
filed SEC Report. None of the Company's subsidiaries is required to file
any forms, reports or other documents with the SEC.
(2) Each of the consolidated financial statements (including, in
each case, any related note thereto) contained in the SEC Reports (the
"Financials"), including each SEC Report filed after the date of this
Agreement until the Closing: (i) complied or will comply as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (ii) was or will be prepared in accordance with U.S.
generally accepted accounting principles ("GAAP"), consistently applied,
during the periods involved (except as may be indicated in the note
thereto or, in the case of unaudited interim financial statements, as may
be permitted by the SEC on Form 10-Q, Form 8-K or any successor form under
the Exchange Act), and (iii) fairly presented or will fairly present in
all material respects the consolidated financial position of the Company
and its consolidated subsidiaries as at the respective dates thereof and
the consolidated results of the Company's operations and cash flows for
the periods indicated. The balance sheet of the Company contained in the
SEC Reports as of June 30, 2004 is hereinafter referred to as the "Balance
Sheet." Except as disclosed in the Financials, since the date of the
Balance Sheet and through the date of this Agreement, neither the Company
nor any of its subsidiaries has any liabilities required under GAAP to be
set forth on a consolidated balance sheet (absolute, accrued, contingent
or otherwise) which, individually or in the aggregate, would be reasonably
expected to have a Material Adverse Effect on the Company, except for
liabilities incurred since the date of the Balance Sheet in the ordinary
course of business consistent with past practices, and liabilities
incurred pursuant to this Agreement.
-6-
[Intentionally left blank]
Absence of Certain Changes. Since June 30, 2004, there has been no material
adverse change in the business, properties, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole (each, a
"Material Adverse Effect").
Insurance. The Company and its subsidiaries maintain property and casualty,
general liability, personal injury and other similar types of insurance that are
reasonably adequate and consistent with industry standards and historical claims
experience. The Company and its subsidiaries have not received notice from, and
have no knowledge of any threat by, any insurer (that has issued any insurance
policy to the Company or its subsidiaries) that such insurer intends to deny
coverage under or cancel, discontinue or not renew any insurance policy covering
the Company or any of its subsidiaries presently in force.
Compliance with Law. To the knowledge of the Company, the Company and its
subsidiaries have complied in all material respects with all applicable statutes
and regulations of the United States and of all states, municipalities and
applicable agencies and foreign jurisdictions or bodies in respect of the
conduct of its business and operations, and the failure, if any, by the Company
or its subsidiaries to have fully complied with any such statute or regulation
has not resulted in a Material Adverse Effect.
Absence of Litigation. Except as disclosed in the SEC Reports, to the knowledge
of the Company, there is no action, suit, formal inquiry or investigation, or
proceeding before or by any court, public board or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened, against or
affecting the Company or any of its subsidiaries, in which an unfavorable
decision, ruling or finding would have a Material Adverse Effect or adversely
affect the transactions contemplated by the Transaction Documents or the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, the Transaction Documents.
Investment Company Act. The Company and its subsidiaries are not conducting, and
will not conduct, their business in a manner which would cause any of them to
become an "investment company," as defined in Section 3(a) of the Investment
Company Act of 1940, as amended.
Private Offering; Trust Indenture Act. Subject to the accuracy of the
Purchasers' representations and warranties set forth in Section 2 hereof, the
offer, sale and issuance of the Securities, as contemplated by this Agreement,
are exempt from the registration requirements of the Securities Act and the
Company is not required to qualify an indenture relating to the Notes under the
Trust Indenture Act of 1939, as amended. Prior to the effectiveness of the
registration statement contemplated by the Registration Rights Agreement, the
Company agrees not to take any action that would render the issuance and sale of
such Securities subject to the registration requirements of the Securities Act.
The Company has not offered or sold the Securities by any form of general
solicitation or general advertising, as such terms are used in Rule 502(c) under
the Securities Act.
Full Disclosure. Neither this Agreement, the other Transaction Documents nor any
of the schedules, exhibits, written statements, documents or certificates
prepared or supplied by the Company with respect to the transactions
contemplated hereby contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained
-7-
herein or therein not misleading in light of the circumstances under which made.
Except as disclosed in the Schedules attached hereto and except for matters
affecting the industry of the Company as a whole, there exists no fact or
circumstance which, to the knowledge of the Company upon due inquiry, could
reasonably be anticipated to have a Material Adverse Effect or could reasonably
be anticipated to adversely affect the ability of the Company to perform its
obligations set forth in the Transaction Documents.
Brokerage Fees. The Company and its subsidiaries have not incurred any liability
for any consulting fees or agent's commissions in connection with the offer and
sale of the Securities and the transactions contemplated by this Agreement,
except that the Company shall, at Closing, pay a placement fee of $360,000 and
issue the Placement Warrants (as defined below) to Xxxxxx Capital LLC.
Intellectual Property. The Company or its subsidiaries own or possess the
license or rights to use all trademarks, service marks, copyrights or similar
property rights necessary or appropriate for the businesses they conduct. There
are no pending suits or proceedings against the Company challenging any such
intellectual property rights, and, to the knowledge of the Company, the Company
is not in violation of the intellectual property rights of any other entity.
Labor Relations. There are no complaints, charges or claims against the Company
pending or filed with any governmental authority, arbitrator or court based on,
arising out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by any Company, and the Company has
not received any notice of such complaint, charge or claim.
Benefit Plans and Agreements. Except as disclosed in the SEC Reports, there are
no employee, profit sharing, stock option, stock purchase, pension, retirement,
bonus, severance or deferred compensation plans or arrangements or any other
welfare or benefit plans or any unfunded liabilities in respect of any such
plans or arrangements of the Company, as well as all employment agreements,
whether written or oral, with any person, and any contracts with any labor
unions.
List of Material Contracts and Other Data. The SEC Reports contain a complete
list of all material contracts, as defined by Item 601 of Regulation S-K, to
which each Company is a party or by which its assets or business may be bound or
affected, presently outstanding. Each of the material contracts of the Company
is in full force and effect, and neither such Company nor, to the knowledge of
the Company, any party to such material contract of the Company is in violation
of or in default in the performance, observance or fulfillment of any
obligation, agreement, covenant or condition contained therein. The Company has
not received any notice from any party to any material contract of the Company
that such party intends not to perform, observe or fulfill any its obligations,
agreements, covenants or conditions under such material contract of the Company.
Tax Matters.
(a) To the knowledge of the Company, there are no outstanding Tax
deficiencies, assessments, or adjustments for Taxes with respect to the Company
or any assets, property or operations of the Company. Except as disclosed in the
SEC Reports, (i) there are no liens for Taxes
-8-
upon the assets of the Company, (ii) the Company has not requested any extension
of time within which to file any Tax Return which has not since been filed,
(iii) there are no material waivers or consents given by the Company and
currently outstanding regarding the application of the statute of limitations
with respect to any Taxes or Tax Returns, (iv) the Company has not received
written notice of any pending federal, state, local or foreign audits or other
administrative proceedings or court proceedings against the Company with regard
to any Taxes or Tax Returns, and (v) no claim or notice of claim has been made
or given at any time by any taxing authority in any jurisdiction in which the
Company does not file Tax Returns indicating that the Company is or may be
subject to taxation by such jurisdiction. The Company has no liability for Taxes
of any other Person under the provisions of state, local or foreign Law similar
to Section 1502 of the Code, as a transferee or successor, by contract, or
otherwise.
(b) The Company does not have any material Tax sharing, Tax
allocation, Tax indemnification and similar agreements, if any, under which the
Company will have any obligations following the Closing.
(w) NASDAQ Compliance. The issuance of the Notes, the Warrants, the
Placement Warrants and the Underlying Shares will not contravene Rule 4350(i) of
the National Association of Securities Dealers, Inc. or require a vote of
shareholders of the Company.
CERTAIN COVENANTS AND ACKNOWLEDGMENTS
Transfer Restrictions. Such Purchaser acknowledges that, except as provided in
the Registration Rights Agreement, (i) none of the Securities has been, or is
being, registered under the Securities Act, and such Securities may not be
transferred unless (A) subsequently registered thereunder or (B) they are
transferred pursuant to an exemption from such registration; and (ii) any sale
of the Securities made in reliance upon Rule 144 under the Securities Act may be
made only in accordance with the terms of said Rule, accompanied by a legal
opinion obtained by such Purchaser which is reasonably satisfactory to the
Company's legal counsel. Notwithstanding the foregoing or anything else
contained herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement. The
provisions of Sections 4(a) and 4(b) hereof, together with the rights and
obligations of the Purchasers under the Transaction Documents, shall be binding
upon any subsequent transferees of the Securities.
Restrictive Legend. Such Purchaser acknowledges and agrees that, until such time
as the Securities shall have been registered under the Securities Act or such
Purchaser demonstrates to the reasonable satisfaction of the Company and its
legal counsel that such registration shall no longer be required, the Notes and
certificates evidencing the Securities shall bear a restrictive legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY
-9-
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION SHALL
NO LONGER BE REQUIRED.
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the Securities Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, or (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without registration under the Securities Act and
such sale or transfer is effected. The Purchaser agrees to sell all Securities,
including those represented by a certificate(s) from which the legend has been
removed, in compliance with applicable prospectus delivery requirements, if any.
Disclosure of Transaction. The Company shall issue a press release describing
the material terms of the transactions contemplated hereby as soon as
practicable after the Closing but in no event later than one (1) Trading Day
after Closing. The Company shall also file with the SEC a Current Report on Form
8-K describing the material terms of the transactions contemplated hereby (and
attaching as exhibits thereto this Agreement, the Registration Rights Agreement
and the Warrants) as soon as practicable following the date of execution of this
Agreement but in no event more than two (2) Trading Days following the date of
execution of this Agreement. "Trading Day" means any day during which Nasdaq
shall be open for trading.
Reporting Status; Eligibility to Use Form S-3. The Company's Common Stock is
registered under Section 12(g) of the 1934 Act. So long as the Purchaser
beneficially owns any of the Securities the Company shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would permit such termination. The Company currently meets, and will take all
necessary action to continue to meet, the "registrant eligibility" requirements
set forth in the general instructions to Form S-3 applicable to both "primary"
and "resale" registrations on Form S-3 during the Registration Period (as
defined in the Registration Rights Agreement).
Listing. The Company shall promptly secure the listing of the Underlying Shares
upon the Nasdaq, and each other national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance) and, so long as any of the Purchasers
owns any of the Securities, shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Underlying Shares issuable
upon exercise of or otherwise pursuant to the Warrants. The Company will obtain
and, so long as the Purchaser owns any of the Securities, maintain the listing
and trading of its Common Stock on the Nasdaq SmallCap, the Nasdaq National
Market, the New York Stock Exchange, or the American Stock Exchange and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Nasdaq SmallCap and any other
exchanges or automated quotation systems on which the Common Stock is then
listed. The Company shall promptly provide to the Purchaser copies of any
notices it receives from the Principal Exchange and any other exchanges or
automated quotation systems on which the
-10-
Common Stock is then listed regarding the continued eligibility of the Common
Stock for listing on such exchanges and quotation systems.
State Securities Filings. The Company shall from time to time promptly take such
action as either the Purchasers or any of its representatives, if applicable,
may reasonably request to qualify the Securities for offering and sale under the
securities laws (other than United States federal securities laws) of the
jurisdictions in the United States as shall be so identified to the Company, and
to comply with such laws so as to permit the continuance of sales therein,
except that the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this subsection (d) be obligated to be so
qualified, or to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction.
Use of Proceeds. The Company will use the net proceeds from the sale of the
Notes to finance acquisitions and to pay the costs associated therewith and for
general corporate purposes.
Registration Rights. The Company acknowledges that if the Notes are converted or
the Warrants are exercised, it has provided each of the Purchasers with certain
registration rights under the Securities Act as set forth in the Registration
Rights Agreement.
Reservation of Common Stock Issuable upon Conversion of Notes and Exercise of
Warrants. The Company hereby agrees at all times to reserve and keep available
out of its authorized but unissued shares of Common Stock, solely for the
purpose of providing for the full conversion of Notes and exercise of the
Warrants, such number of shares of Common Stock as shall from time to time equal
the number of shares sufficient to permit the full conversion of Notes and
exercise of the Warrants, the Placement Warrants, the Additional Warrants (both
as defined below), and the use of such shares to make permitted payments of
principal and interest on the Notes. All calculations pursuant to this
subsection (g) shall be made without regard to any restrictions on beneficial
ownership.
Covenant as to Common Stock. The Company covenants that all shares of Common
Stock which may be issued upon conversion of the Notes and/or exercise of the
Warrants, the Placement Warrants, or the Additional Warrants (both as defined
below), or payment of principal or interest on the Notes will, upon issuance
pursuant to the terms of the Notes and/or the Warrants, or the Placement
Warrants (as defined below), or payment of principal or interest on the Notes,
as the case may be, be fully paid and nonassessable.
TRANSFER AGENT INSTRUCTIONS
The Company shall issue irrevocable instructions to its transfer agent to
issue certificates, registered in the name of each Purchaser or its nominee, for
the Underlying Shares upon conversion of the Notes or exercise of the Warrants
in accordance with the terms thereof, each in such amounts as specified from
time to time by each Purchaser to the Company (the "Irrevocable Transfer Agent
Instructions"). Prior to registration of the Underlying Shares under the
Securities Act or the date on which the Underlying Shares may be sold pursuant
to Rule 144 without any restriction as to the number of securities as of a
particular date that can then be immediately sold, all such certificates shall
bear the restrictive legend specified in Section 4(b) of this Agreement. The
Company warrants that no instruction, other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, will be given by the Company to its
transfer agent and
-11-
that the Underlying Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent provided in this Agreement and
the Registration Rights Agreement. Nothing in this Section shall affect in any
way the Purchaser's obligations and agreement set forth in Section 4(b) hereof
to comply with all applicable prospectus delivery requirements, if any, upon
resale of the Securities and to comply with the plan of distribution portion of
the prospectus contained in the Registration Statement (as defined in the
Registration Rights Agreement). If a Purchaser provides the Company with an
opinion of counsel, reasonably satisfactory to the Company in form, substance
and scope, to the effect that a public sale or transfer of such Securities may
be made without registration under the Securities Act and such sale or transfer
is effected, the Company shall permit the transfer, and, in the case of the
Underlying Shares, promptly instruct its transfer agent to issue one or more
certificates, free from any restrictive legend, in such name and in such
denominations as specified by such Purchaser.
CONDITIONS TO THE COMPANY'S OBLIGATION TO ISSUE THE NOTES AND WARRANTS
The Purchasers understand that the Company's obligation to issue the Notes
and the Warrants on the Closing Date to the Purchasers pursuant to this
Agreement is conditioned upon the satisfaction by the Purchasers or the waiver
by the Company of each of the following conditions:
The accuracy on the Closing Date of the representations and warranties of the
Purchasers contained in this Agreement, as if made on the Closing Date, and the
performance by the Purchasers, including, but not limited to, the delivery by
the Purchasers to the Company of the Purchase Price for the purchase of the
Securities, on or before the Closing Date, of all covenants and agreements of
the Purchasers contained in the Transaction Documents and required to be
performed on or before the Closing Date.
The absence or inapplicability of any and all laws, rules or regulations
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
The Purchasers shall have executed each of the Transaction Documents and any and
all ancillary documents thereto and delivered the same to the Company.
The Company shall have received from the Purchasers such other certificates and
documents as it or its representatives, if applicable, shall reasonably request,
and all proceedings taken by the Purchasers in connection with this Agreement
and the other Transaction Documents and all documents and papers relating to
such Transaction Documents shall be reasonably satisfactory to the Company.
CONDITIONS TO THE PURCHASERS' OBLIGATIONS TO PURCHASE THE NOTES
The Company understands that the Purchasers' obligations to purchase the
Notes and acquire the Warrants on the Closing Date is conditioned upon the
satisfaction by the Company or the waiver by the Purchasers of each of the
following conditions:
-12-
The accuracy on the Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on the Closing Date, and the
performance by the Company, on or before the Closing Date, of all covenants and
agreements of the Company contained in the Transaction Documents and required to
be performed on or before the Closing Date.
The Company shall have executed the Transaction Documents and any and all
ancillary documents thereto and delivered same to the Purchasers.
The Company shall, at the Closing, have delivered to Xxxxxx Capital LLC a
placement fee of $360,000 in immediately available funds and warrants
substantially identical in form to the Warrants, to purchase 692,308 shares of
Common Stock (the "Placement Warrants") and shall have provided reimbursement of
$25,000 for Purchaser's counsel fees.
The Company shall have delivered to the Purchasers who have not previously
participated in any financing of the Company warrants substantially identical to
the Warrants (except that such warrants shall expire on June 10, 2005 and shall
have an initial exercise price of $1.25 per share), to purchase an aggregate of
554,540 shares of Common Stock (the "Additional Warrants").
On the Closing Date, the Purchasers shall have received an opinion of counsel
for the Company, dated the Closing Date in the form attached hereto as Exhibit
B.
On the Closing Date, the Purchasers shall have received a certificate executed
by the President or the Chief Executive Officer of the Company and by the Chief
Financial Officer of the Company, stating that all of the representations and
warranties of the Company set forth in the Transaction Documents are accurate as
of the Closing Date and that the Company has performed all of its covenants and
agreements required to be performed under the Transaction Documents on or before
the Closing Date.
The Purchasers shall have received an incumbency certificate, dated as of the
Closing Date, for the officers of the Company executing this Agreement and the
other Transaction Documents, and any other documents or instruments delivered in
connection with the Transaction Documents at the Closing.
The Purchasers shall have received a certificate of the Secretary of the
Company, dated the Closing Date, as to the continued and valid existence of the
Company and its operating subsidiaries, certifying the attached copy of the
By-laws of the Company, the authorization of the execution, delivery and
performance of the Transaction Documents, and the resolutions adopted by the
Board authorizing the actions to be taken by the Company contemplated by the
Transaction Documents.
The Purchasers shall have received from the Company such other certificates and
documents as they or their representatives, if applicable, shall reasonably
request, and all proceedings taken by the Company in connection with the
Transaction Documents contemplated by this Agreement and the other Transaction
Documents and all documents and papers relating to such Transaction Documents
shall be reasonably satisfactory to the Purchasers.
No injunction, order, investigation, claim, action or proceeding before any
court or
-13-
governmental body shall be pending or threatened wherein an unfavorable
judgment, decree or order would restrain, impair or prevent the carrying out of
this Agreement or the other Transaction Documents or any of the transactions
contemplated hereby or thereby, declare unlawful the transactions contemplated
by this Agreement or the other Transaction Documents or cause any such
transaction to be rescinded.
The Company shall have obtained in writing or made all consents, waivers,
approvals, orders, permits, licenses and authorizations of, any registrations,
declarations, notices to and filings and applications with, any governmental
authority or any other person or entity (including, without limitation,
securityholders and creditors of the Company) required to be obtained or made in
order to enable the Company to observe and comply with all its obligations under
this Agreement and the other Transaction Documents and to consummate the
transactions contemplated hereby.
On the Closing Date Purchasers who, in a prior financing (the "Prior Financing")
of the Company received Series A Warrants of the Company dated April 29, 2004
(the "Series A Warrants") to purchase shares of Common Stock of the Company at
an initial Exercise Price of $1.50 per share and who have purchased Notes
pursuant to this Agreement shall have been informed by the Company in writing
that the Exercise Price (as defined in the Series A Warrants) shall have been
reduced, on the Closing Date, to $0.50 per share. To the extent a Purchaser
purchases hereunder the same or a greater percentage of the total principal
amount of Notes offered under this Agreement as his percentage participation in
the Prior Financing, the Exercise Price in the Series A Warrants for all shares
of Common Stock for which such Warrant is exercisable shall be so reduced. If
such Purchaser's participation in the purchase of the Notes offered under this
Agreement is less than its percentage participation in the Prior Financing, the
percentage of its Series A Warrants as to which the Exercise Price will be so
reduced will be proportionately reduced (so that, for example, if such a
Purchaser's percentage participation in the purchase of the Notes is 15% of the
aggregate Principal Amount ($4,438,775) offered under this Agreement, but its
participation in the Prior Financing was 30%, then only one half of the shares
of Common Stock for which such Purchaser's Series A Warrant is exercisable will
have its Exercise Price so reduced).
On the Closing Date Purchasers who, in a prior financing (the "Prior Financing")
of the Company received Series B Warrants of the Company dated April 27, 2004
(the "Series B Warrants") to purchase shares of Common Stock of the Company at
an initial Exercise Price of $1.25 per share and who have purchased Notes
pursuant to this Agreement shall have been informed by the Company in writing
that the Termination Date (as defined in the Series B Warrants) shall have been
extended to June 10, 2005. To the extent a Purchaser purchases hereunder the
same or a greater percentage of the total principal amount of Notes offered
under this Agreement as his percentage participation in the Prior Financing, the
Termination Date in the Series B Warrants for all shares of Common Stock for
which such Warrant is exercisable shall be so extended. If such Purchaser's
participation in the purchase of the Notes offered under this Agreement is less
than its percentage participation in the Prior Financing, the percentage of its
Series B Warrants as to which the Termination Date will be so extended will be
proportionately reduced (so that, for example, if such a Purchaser's percentage
participation in the purchase of the Notes is 15% of the aggregate Principal
Amount ($4,438,775) offered under this Agreement, but its participation in the
Prior Financing was 30%, then only one half of the shares of Common Stock for
which such Purchaser's Series B Warrant is exercisable will have its Termination
Date so extended).
-14-
INDEMNIFICATION
Indemnification of Purchasers by the Company. The Company hereby agrees to
indemnify and hold harmless each of the Purchasers, their affiliates, their
investment advisors, their managing members, and each of their respective
officers, managers, members, directors, partners, shareholders, and employees
(collectively, the "Purchasers Indemnitees"), from and against any and all
losses, claims, damages, judgments, penalties, liabilities and deficiencies
(collectively, "Losses"), and agrees to reimburse the Purchasers Indemnitees for
all out-of-pocket expenses (including the reasonable fees and expenses of legal
counsel), in each case promptly as incurred by the Purchasers Indemnitees and to
the extent arising out of or in connection with:
(i) a misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement
(or the other Transaction Documents), the annexes, schedules or
exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Company pursuant to this Agreement (or the
other Transaction Documents); or
(ii) a failure by the Company to perform any of its covenants,
agreements, undertakings or obligations set forth in this Agreement
(or the other Transaction Documents), the annexes, schedules or
exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Company pursuant to this Agreement (or the
other Transaction Documents).
Indemnification of the Company by Purchasers. The Purchasers hereby agree to
indemnify and hold harmless the Company, its affiliates and their respective
officers, directors, partners and members (collectively, the "Company
Indemnitees"), from and against any and all Losses, and agrees to reimburse the
Company Indemnitees for all out-of-pocket expenses (including the reasonable
fees and expenses of legal counsel), to the extent arising out of or in
connection with any misrepresentation, omission of fact or breach of any of the
Purchasers' representations, warranties or covenants contained in this
Agreement, or the Registration Rights Agreement and any failure by the
Purchasers to perform any of its covenants, agreements, undertakings or
obligations set forth in this Agreement, or the Registration Rights Agreement.
Notwithstanding anything to the contrary in this Agreement, the aggregate
payments for indemnification (including the reasonable fees and expenses of
legal counsel) made by the Purchasers to the Company pursuant to this Section
12(b) shall not exceed the Purchase Price.
Third Party Claims. Promptly after receipt by either party hereto seeking
indemnification pursuant to this Section 12 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section 12 is being sought (the "Indemnifying Party") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is materially prejudiced and
forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the
-15-
Indemnifying Party, the Indemnified Party shall have the right to employ
separate legal counsel and to participate in the defense of such Claim, and the
Indemnifying Party shall bear the reasonable fees, out-of-pocket costs and
expenses of such separate legal counsel to the Indemnified Party if (and only
if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party and the Indemnifying
Party reasonably shall have concluded that representation of the Indemnified
Party and the Indemnifying Party by the same legal counsel would not be
appropriate due to actual or, as reasonably determined by legal counsel to the
Indemnified Party, potentially differing interests between such parties in the
conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party, or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by the
Indemnified Party. Except as provided above, the Indemnifying Party shall not,
in connection with any Claim in the same jurisdiction, be liable for the fees
and expenses of more than one firm of legal counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party (which consent shall
not unreasonably be withheld) settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnified Party from all liabilities with respect to such Claim or judgment.
EXPENSES
The Company covenants and agrees with the Purchasers that the Company shall pay
or cause to be paid the following: (i) all expenses in connection with
registration or qualification of the Underlying Shares for offering and sale
under federal securities laws, and state securities laws; (ii) a placement fee
of $360,000 and Placement Warrants, payable at Closing to Xxxxxx Capital LLC;
and (iii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section, including the fees and disbursements of the Company's counsel,
accountants and other professional advisors, if any. Additionally, the Company
agrees to reimburse Xxxxxx Capital LLC for their legal expenses for negotiating
and closing the issuance of the Notes and the Warrants and relating to the
implementation of the registration rights, which expense reimbursement will not
exceed $25,000.
Other than as set forth in Section 13(a) above, each of the parties hereto agree
that they shall each be responsible for and pay their own expenses and fees,
including all legal, accounting and other professional fees, associated with the
transactions contemplated by Transaction Documents.
SURVIVAL
The representations and warranties of the Company and the Purchasers shall
survive the Closing until twelve (12) months following the Closing Date. The
Company makes no representations or warranties in any oral or written
information provided to the Purchasers, other than the representations and
warranties included herein. The agreements and covenants of the Company and the
Purchasers, including indemnification obligations under Section 12, shall
-16-
survive the execution and delivery of this Agreement and the delivery of the
Securities hereunder until such time as the Notes are paid in full and the
Warrants are exercised or expire.
MISCELLANEOUS
Governing Law; Jurisdiction. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of New York, without giving
effect to conflicts of laws issues. Each of the parties submits to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement or
any of the transactions contemplated hereby, and hereby waives, to the maximum
extent permitted by law, any objection, including any objections based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions.
Counterparts. This Agreement may be signed in two or more counterparts, each of
which shall be deemed an original.
Headings. The headings of this Agreement are for convenience of reference only
and shall not form part of, or affect the interpretation of, this Agreement.
Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or unenforceability of this Agreement in any other jurisdiction.
Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. Neither the Company nor
the Purchaser shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing,
the Purchaser may assign its rights hereunder to any of its "affiliates," as
that term is defined under the Exchange Act, without the consent of the Company.
Remedies. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Purchaser by vitiating the intent
and purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Agreement will be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Agreement, that the Purchaser
shall be entitled, in addition to all other available remedies in law or in
equity, to an injunction or injunctions to prevent or cure any breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, without the necessity of showing economic loss and
without any bond or other security being required.
Independent Nature of Purchasers.
The Company acknowledges that the obligations of each Purchaser under this
Agreement, the Registration Rights Agreement, the Note, the Warrants and any
other document entered into in connection with this Agreement, the Note, the
Registration Rights Agreement, the Warrants and the transactions contemplated
hereby and thereby (the "Transaction Documents") are several and not
-17-
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under the Transaction Documents. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiaries which may have
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and, as between the Purchasers no Purchaser or any of its agents or
employees shall have any liability to any Purchaser relating to or arising from
any such information, materials, statements or opinions. The Company further
acknowledges that nothing contained in the Transaction Documents, and no action
taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute
the Purchasers as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated hereby. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
Each Purchaser was introduced to the Company by Xxxxxx Capital, LLC which has
acted solely as agent for the Company and not for any Purchaser. Each Purchaser
has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents. For reasons of administrative
convenience only, the Transaction Documents have been prepared by counsel for
one of the Purchasers. Such counsel does not represent all of the Purchasers but
only such Purchaser and the other Purchasers have retained their own individual
counsel with respect to the transactions contemplated hereby. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers. The Company acknowledges that such procedure with
respect to the Transaction Documents in no way creates a presumption that the
Purchasers are in any way acting in concert or as a group with respect to the
Transaction Documents or the transactions contemplated hereby or thereby.
Amendments. This Agreement and the Notes may be amended or provisions hereof or
thereof may be waived with the written consent of the holders of a majority in
principal amount of Notes at such time outstanding, provided that no amendment
to the interest rate, term, or conversion price of a Note, or to the
anti-dilution protection provisions, principal amortization requirements,
principal prepayment provisions or this amendment provision shall be binding on
a holder of a Note that has not consented in writing to the amendment or waiver
of such provisions.
Merger. This Agreement, together with the other Transaction Documents,
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
Notices. Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by five days advance written
notice to each of the
-18-
other parties hereto.
Company: DynTek, Inc.
00000 Xxx Xxxxxx Xxx.
Xxxxx 000
Xxxxxx, XX 00000
ATTENTION:
Tel.: 000-000-0000
with a copy to:
Xxxxxxxxxxx X. Xxxx
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Direct Phone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxx@XXXX.xxx
Purchasers: To the addresses as set forth on Exhibit 1
with a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTENTION: Xxxxxx X. Xxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
[REMAINDER OF PAGE BLANK]
-19-
IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
undersigned.
COMPANY:
DYNTEK, INC.
By: _____________________________
Name:
Title:
PURCHASERS:
By: _____________________________
Name:
Title:
SCHEDULE 3(b)
The Company entered into a Stock Purchase Agreement on September 29, 2004 for
the purchase of all of the outstanding shares of capital stock of Redrock
Communications Solutions, Inc. Pursuant to the terms of the Stock Purchase
Agreement, the Company is obligated to issue shares of Common Stock with a value
of $500,000, as partial consideration thereunder.
Schedule 3(f)
1. The warrants issued in connection with the Company's December 2003 private
placement through Rockwood, as placement agent, contain antidilution provisions
that may be triggered by the transactions contemplated by this Agreement.
2. The Amended and Restated Secured Convertible Term Note payable to Laurus
Master Fund, LTD (the "Laurus Note") in the principal amount of $6,000,000
contains antidilution provisions upon the issuance of securities by the Company
with a purchase price or conversion price below the then conversion price under
the Laurus Note.
3. The Company entered into a Stock Purchase Agreement on September 29, 2004 for
the purchase of all of the outstanding shares of capital stock of Redrock
Communications Solutions, Inc. Pursuant to the terms of the Stock Purchase
Agreement, the shareholders of Redrock who receive shares of the Company are
entitled to piggyback registration rights.
4. The Company has entered into a letter of intent for the acquisition of
Integration Technologies, Inc. The letter of intent contemplates that the
Company will issue shares of its Common Stock with an approximate value of
between $2.14 and $3.21 million on June 30, 2005. The recipients of the shares
will be entitled to certain registration rights.