EXHIBIT 4.3
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.
COMMON STOCK PURCHASE WARRANT
To Purchase 183,000 Shares of Common Stock of
Xxxx Security International, Inc.
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") CERTIFIES that, for
value received, Xxxxxxx Partners, L.P. (the "Holder"), is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date hereof (the "Initial Exercise Date")
and on or prior to the five year anniversary of the Initial Exercise Date (the
"Termination Date") but not thereafter, to subscribe for and purchase from Xxxx
Security International, Inc., a Delaware corporation (the "Company"), up to
183,000 shares (the "Warrant Shares") of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock (the "Exercise Price") under this Warrant shall be $7.50, subject
to adjustment hereunder. The Exercise Price and the number of Warrant Shares for
which the Warrant is exercisable shall be subject to adjustment as provided
herein. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Securities Purchase Agreement (the "Purchase
Agreement"), dated May 26, 2004 among the Company and the purchasers signatory
thereto.
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1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 7 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at and only at the
office or agency of the Company by the Holder in person or by duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form
annexed hereto properly endorsed. No assignment will be effective, until the
transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.
2. Authorization of Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase 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) Exercise of the purchase rights represented by this Warrant
may be made at any time or times on or after the Initial Exercise Date
and on or before the Termination Date by delivery to the Company of a
duly executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address
of such Holder appearing on the books of the Company); provided,
however, within 5 Trading Days of the date said Notice of Exercise is
delivered to the Company, the Holder shall have surrendered this
Warrant to the Company and the Company shall have received payment of
the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier's check drawn on a United States bank.
Certificates for shares purchased hereunder shall be delivered to the
Holder within 3 Trading Days from the delivery to the Company of the
Notice of Exercise Form, surrender of this Warrant and payment of the
aggregate Exercise Price as set forth above ("Warrant Share Delivery
Date"). This Warrant shall be deemed to have been exercised on the
date the Exercise Price is received by the Company. The Warrant Shares
shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a 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 the
Company fails to deliver to the Holder a certificate or certificates
representing the Warrant Shares pursuant to this Section 3(a) by the
Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise. In addition to any other rights available to
the Holder, if the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant
to an exercise by the Warrant Share Delivery Date, and if after such
day the Holder is required by its broker to purchase (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a "Buy-In"), then the
Company shall as partial liquidated
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damages (1) pay in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (A) the number of Warrant Shares that
the Company was required to deliver to the Holder in connection with
the exercise at issue times (B) the price at which the sell order
giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not
honored or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately preceding
sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In, together with
applicable confirmations and other evidence reasonably requested by
the Company. Nothing herein shall limit a Holder's right to pursue any
other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely
deliver certificates representing shares of Common Stock upon exercise
of the Warrant as required pursuant to the terms hereof.
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(b) 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 Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
(c) The Holder shall not have the right to exercise any portion
of this Warrant, pursuant to Section 3(a) or otherwise, to the extent
that after giving effect to such issuance after exercise, the Holder
(together with the Holder's affiliates), as set forth on the
applicable Notice of Exercise, would beneficially own in excess of
9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to such issuance. For purposes of the
foregoing sentence, the 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 this Warrant with
respect to which the determination of such sentence is being made, but
shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion of
this Warrant beneficially owned by the Holder or any of its affiliates
and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without
limitation, any other Warrants) subject to a limitation on conversion
or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 3(c), beneficial
ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act, it being acknowledged by Holder that the Company is not
representing to Holder that such calculation is in compliance with
Section 13(d) of the Exchange Act and Holder is solely responsible for
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any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 3(c) applies, the
determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder) and of which a portion of this
Warrant is exercisable shall be in the sole discretion of such Xxxxxx,
and the submission of a Notice of Exercise shall be deemed to be such
Holder's determination of whether this Warrant is exercisable (in
relation to other securities owned by such Holder) and of which
portion of this Warrant is exercisable, in each case subject to such
aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
For purposes of this Section 3(c), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (x) the
Company's most recent Form 10-Q or Form 10-K, as the case may be, (y)
a more recent public announcement by the Company or (z) any other
notice by the Company or the Company's Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or
oral request of the Holder, the Company shall within two Trading Days
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 the
conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its affiliates since the date as of which
such number of outstanding shares of Common Stock was reported.
(d) If at any time after one year from the date of issuance of
this Warrant there is no effective Registration Statement
registering the resale of the Warrant Shares by the Holder
in such event, this Warrant may also be exercised at such
time by means of a "cashless exercise" in which the Holder
shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
(A) = the Closing Price on the Trading Day immediately preceding
the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of
this Warrant in accordance with the terms of this Warrant by
means of a cash exercise rather than a cashless exercise.
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 which 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 such fraction multiplied by
the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for 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 or in such
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name or names as may be directed by the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
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. Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
7. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws and
the conditions set forth in Sections 1 and 7(e) hereof and to the
provisions of Section 4.1 of the Purchase Agreement, this Warrant and
all rights hereunder are transferable, in whole or in part, 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. 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 Warrant Shares 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.
(e) If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this
Warrant shall not be registered pursuant to an effective registration
statement under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition
of allowing such transfer (i) that the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion
of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the
effect that
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such transfer may be made without registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that
the holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and
(iii) that the transferee be an "accredited investor" as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under
the Securities Act or a qualified institutional buyer as defined in
Rule 144A(a) under the Securities Act.
8. No Rights as Shareholder until Exercise. This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price (or by means of a cashless exercise), 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 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, in
the case of the Warrant, shall not include the posting of any bond), 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 holders of its outstanding Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares,
(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 shall
be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it 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 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 that
are purchasable
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pursuant hereto immediately after 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.
(b) Anti-Dilution Provisions. During the Exercise Period, the
Exercise Price shall be subject to adjustment from time to time as
provided in this Section 11(b). In the event that any adjustment of
the Exercise Price as required herein results in a fraction of a cent,
such Exercise Price shall be rounded up or down to the nearest cent.
(i) Adjustment of Exercise Price. If and whenever the
Company issues or sells, or in accordance with Section 11(b)(ii)
hereof is deemed to have issued or sold, any shares of Common
Stock for an effective consideration per share of less than the
then Exercise Price or for no consideration (such lower price,
the "Base Share Price" and such issuances collectively, a
"Dilutive Issuance"), then the Exercise Price shall be reduced by
multiplying the Exercise Price by a fraction, the numerator of
which is the number of shares of Common Stock issued and
outstanding immediately prior to the Dilutive Issuance plus the
number of shares of Common Stock which the offering price for
such Dilutive Issuance would purchase at the then Exercise Price,
and the denominator of which shall be the sum of the number of
shares of Common Stock issued and outstanding immediately prior
to the Dilutive Issuance plus the number of shares of Common
Stock so issued or issuable in connection with the Dilutive
Issuance. Such adjustment shall be made whenever shares of Common
Stock or Common Stock Equivalents are issued.
(ii) Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under Section
11(b) hereof, the following will be applicable:
(A) Issuance of Rights or Options. If the Company in
any manner issues or grants any warrants, rights or options,
whether or not immediately exercisable, to subscribe for or
to purchase Common Stock or Common Stock Equivalents (such
warrants, rights and options to purchase Common Stock or
Common Stock Equivalents are hereinafter referred to as
"Options") and the effective price per share for which
Common Stock is issuable upon the exercise of such Options
is less than the Exercise Price ("Below Base Price
Options"), then the maximum total number of shares of Common
Stock issuable upon the exercise of all such Below Base
Price Options (assuming full exercise, conversion or
exchange of Common Stock Equivalents, if applicable) will,
as of the date of the issuance or grant of such Below Base
Price Options, be deemed to be outstanding and to have been
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issued and sold by the Company for such price per share and
the maximum consideration payable to the Company upon such
exercise (assuming full exercise, conversion or exchange of
Common Stock Equivalents, if applicable) will be deemed to
have been received by the Company. For purposes of the
preceding sentence, the "effective price per share for which
Common Stock is issuable upon the exercise of such Below
Base Price Options" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as
consideration for the issuance or granting of all such Below
Base Price Options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company
upon the exercise of all such Below Base Price Options,
plus, in the case of Common Stock Equivalents issuable upon
the exercise of such Below Base Price Options, the minimum
aggregate amount of additional consideration payable upon
the exercise, conversion or exchange thereof at the time
such Common Stock Equivalents first become exercisable,
convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise
of all such Below Base Price Options (assuming full
conversion of Common Stock Equivalents, if applicable). No
further adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon the exercise
of such Below Base Price Options or upon the exercise,
conversion or exchange of Common Stock Equivalents issuable
upon exercise of such Below Base Price Options.
(B) Issuance of Common Stock Equivalents. If the
Company in any manner issues or sells any Common Stock
Equivalents, whether or not immediately convertible (other
than where the same are issuable upon the exercise of
Options) and the effective price per share for which Common
Stock is issuable upon such exercise, conversion or exchange
is less than the Exercise Price, then the maximum total
number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Common Stock Equivalents
will, as of the date of the issuance of such Common Stock
Equivalents, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share and
the maximum consideration payable to the Company upon such
exercise (assuming full exercise, conversion or exchange of
Common Stock Equivalents, if applicable) will be deemed to
have been received by the Company. For the purposes of the
preceding sentence, the "effective price per share for which
Common Stock is issuable upon such exercise, conversion or
exchange" is determined by dividing (i) the total amount, if
any, received or receivable by the Company as consideration
for the issuance or sale of all such Common Stock
Equivalents, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the
exercise, conversion or exchange thereof at the time such
Common Stock Equivalents first become exercisable,
convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Common Stock Equivalents.
No further adjustment to the Exercise Price will be made
upon the actual issuance of such Common Stock upon exercise,
conversion or exchange of such Common Stock Equivalents.
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(C) Change in Option Price or Conversion Rate. If there
is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of
any Options; (ii) the amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or
exchange of any Common Stock Equivalents; or (iii) the rate
at which any Common Stock Equivalents are convertible into
or exchangeable for Common Stock (in each such case, other
than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time
of such change will be readjusted to the Exercise Price
which would have been in effect at such time had such
Options or Common Stock Equivalents still outstanding
provided for such changed additional consideration or
changed conversion rate, as the case may be, at the time
initially granted, issued or sold.
(D) Calculation of Consideration Received. If any
Common Stock, Options or Common Stock Equivalents are
issued, granted or sold for cash, the consideration received
therefor for purposes of this Warrant will be the amount
received by the Company therefor, before deduction of
reasonable commissions, underwriting discounts or allowances
or other reasonable expenses paid or incurred by the Company
in connection with such issuance, grant or sale. In case any
Common Stock, Options or Common Stock Equivalents are issued
or sold for a consideration part or all of which shall be
other than cash, the amount of the consideration other than
cash received by the Company will be the fair market value
of such consideration, except where such consideration
consists of securities, in which case the amount of
consideration received by the Company will be the fair
market value (closing bid price, if traded on any market)
thereof as of the date of receipt. In case any Common Stock,
Options or Common Stock Equivalents are issued in connection
with any merger or consolidation in which the Company is the
surviving corporation, the amount of consideration therefor
will be deemed to be the fair market value of such portion
of the net assets and business of the non-surviving
corporation as is attributable to such Common Stock, Options
or Common Stock Equivalents, as the case may be. The fair
market value of any consideration other than cash or
securities will be determined in good faith by an investment
banker or other appropriate expert of national reputation
selected by the Company and reasonably acceptable to the
holder hereof, with the costs of such appraisal to be borne
by the Company.
(E) Exceptions to Adjustment of Exercise Price.
Notwithstanding the foregoing, no adjustment will be made
under this Section 11(b) in respect of an Exempt Issuance.
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(iii) Offerings of Other Property to Common Stock
Holders. If the Company, at any time prior to the
Termination Date, shall distribute to all holders of Common
Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets or rights or warrants to subscribe
for or purchase any security other than the Common Stock
(which shall be subject to Section 11(b)(i)), then in each
such case the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior
to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which
the denominator shall be the Closing Price determined as of
the record date mentioned above, and of which the numerator
shall be such Closing Price on such record date less the
then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the
Common Stock as determined by the Board of Directors in good
faith. In either case the adjustments shall be described in
a statement provided to the Holders of the portion of assets
or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the
record date mentioned above.
(iv) Minimum Adjustment of Exercise Price. No
adjustment of the Exercise Price shall be made in an amount
of less than 1% of the Exercise Price in effect at the time
such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be
made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Exercise
Price.
12. 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 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 the due and punctual observance
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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 Warrant Shares for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 12. For purposes of this Section 12,
"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 12 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
13. 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.
14. 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
give notice thereof to the Holder, which notice shall state the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or 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.
15. 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 Holder prompt
notice of the record date of such transaction on the date and in the manner it
provides notice to its other shareholders; provided, however, any such notice is
provided in such a way as to give the Holder reasonable opportunity to exercise
any of its rights under this Warrant. Each such written notice
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shall be sufficiently given if addressed to Xxxxxx at the last address of Xxxxxx
appearing on the books of the Company and delivered in accordance with Section
17(d).
16. Authorized Shares. 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 Trading Market upon
which the Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder, 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 Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable 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.
Before taking any action which would result in an adjustment in the number
of Warrant Shares 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.
17. Miscellaneous.
(a) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase Agreement.
(b) Restrictions. The Holder 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 Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies, notwithstanding all
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rights hereunder terminate on the Termination Date. If the Company
willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay
to 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 Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder 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
any affirmative action by Holder to exercise this Warrant or purchase
Warrant Shares, and no enumeration herein of the rights or privileges of
Holder, shall give rise to any liability of 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. 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 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.
(h) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Holder.
(i) 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.
(j) 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.
********************
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: May 26, 2004
XXXX SECURITY INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
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NOTICE OF EXERCISE
To: Xxxx Security International, Inc.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in
subsection 3(d), to exercise this Warrant with respect to the
maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 3(d).
(3) Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
________________________________________
The Warrant Shares shall be delivered to the following:
________________________________________
________________________________________
________________________________________
(4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D under the Securities Act of 1933, as amended.
[PURCHASER]
By: ______________________________
Name:
Title:
Dated: ___________________________
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
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
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 a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
