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AMENDMENT NO. 1 TO WARRANT AGREEMENT
This Amendment No. 1 to Warrant Agreement is entered into as of June 5,
1997, by and between Data Dimensions, Inc., a Delaware corporation (the
"Company") and Cruttenden ▇▇▇▇ Incorporated, a California corporation
("Cruttenden").
WHEREAS, the Company and Cruttenden are parties to that certain Warrant
Agreement dated as of March 29, 1996 (the "Warrant Agreement"); and
WHEREAS, the parties now wish to amend the Warrant Agreement in certain
respects.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein and in the Warrant Agreement and for other good and valuable
consideration, the parties hereto agree as follows:
1. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings assigned to them in the Warrant Agreement.
2. The Warrant Agreement is hereby amended by adding the following
language as a new paragraph 11.6:
"11.6 Optional Conversion
(a) In addition to and without limiting the rights of the
holder of this Warrant under the terms of this Warrant, the
holder of this Warrant shall have the right (the "Conversion
Right") to convert this Warrant or any portion thereof into
shares of Common Stock as provided in this paragraph 11.6 at
any time or from time to time after the first anniversary of
the date hereof and prior to its expiration, subject to the
restrictions set forth in paragraph (c) below. Upon exercise
of the Conversion Right with respect to a particular number of
shares subject to this Warrant (the "Converted Warrant
Shares"), the Company shall deliver to the holder of this
Warrant, without payment by the holder of any exercise price
or any cash or other consideration, that number of shares of
Common Stock equal to the quotient obtained by dividing the
Net Value (as hereinafter defined) of the Converted Warrant
Shares by the fair market value (as defined in paragraph (d)
below) of a single share of Common Stock, determined in each
case as of the close of business on the Conversion Date (as
hereinafter defined). The "Net Value" of the Converted Warrant
Shares shall be determined by subtracting the aggregate
warrant purchase price of the Converted Warrant Shares from
the aggregate fair market value of the Converted Warrant
Shares. Notwithstanding anything in
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this paragraph 11.6 to the contrary, the Conversion Right
cannot be exercised with respect to a number of Converted
Warrant Shares having a Net Value below $100. No fractional
shares shall be issuable upon exercise of the Conversion
Right, and if the number of shares to be issued in accordance
with the foregoing formula is other than a whole number, the
Company shall pay to the holder of this Warrant an amount in
cash equal to the fair market value of the resulting
fractional share.
(b) The Conversion Right may be exercised by the holder of
this Warrant by the surrender of this Warrant at the principal
office of the company together with a written statement
specifying that the holder thereby intends to exercise the
Conversion Right and indicating the number of shares subject
to this Warrant which are being surrendered (referred to in
paragraph (a) above as the Converted Warrant Shares) in
exercise of the Conversion Right. Such conversion shall be
effective upon receipt by the Company of this Warrant together
with the aforesaid written statement, or on such later date as
is specified therein (the "Conversion Date"), but not later
than the expiration date of this Warrant. Certificates for the
shares of Common Stock issuable upon exercise of the
Conversion Right, together with a check in payment of any
fractional share and, in the case of a partial exercise, a new
warrant evidencing the shares remaining subject to this
Warrant, shall be issued as of the Conversion Date and shall
be delivered to the holder of this Warrant within 7 days
following the Conversion Date.
(c) In the event the Conversion Right would, at any time this
Warrant remains outstanding, be deemed by the Company's
independent certified public accountants to give rise to a
charge to the Company's earnings for financial reporting
purposes, then the Conversion Right shall automatically
terminate upon the Company's written notice to the holder of
this Warrant of such adverse accounting treatment.
(d) For purposes of this paragraph 11.6, the "fair market
value" of a share of Common Stock as of a particular date
shall be the average of the daily closing prices for 20
consecutive trading days before the Conversion Date. The
closing price for each day shall be the last such reported
sales price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and
asked prices regular way for such day, in each case on the
principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if not
listed or admitted to trading, the average of the closing bid
and asked prices of the Common Stock in the over-the counter
market as reported by the Nasdaq Stock Market or Nasdaq
SmallCap System or, if not approved for quotation on the
Nasdaq Stock Market or Nasdaq Small Cap System, the average of
the closing bid and
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asked prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to
time by the Company for that purpose.
3. The Warrant Agreement is hereby amended by deleting paragraph 15.1
(Demand Registration Rights) in its entirety.
4. All other terms of the Warrant Agreement remain in full force and
effect.
5. This Amendment may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original; but such
counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day, month and year first written above.
CRUTTENDEN ▇▇▇▇ INCORPORATED DATA DIMENSIONS, INC.
By /s/ By /s/
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Its Its
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