THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL NOT SELL,...
Exhibit
4.1
THE
REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
THAT
IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL
NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR
A
PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER
THAN (I) XXXXXX & XXXXXXX, LLC. (“XXXXXX”) OR AN UNDERWRITER OR A SELECTED
DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER
OF XXXXXX OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.
THIS
PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF (I) THE CONSUMMATION
BY
ARGYLE SECURITY ACQUISITION CORPORATION. (“COMPANY”) OF A MERGER, CAPITAL STOCK
EXCHANGE, ASSET ACQUISITION OR OTHER SIMILAR BUSINESS COMBINATION (“BUSINESS
COMBINATION”) (AS DESCRIBED MORE FULLY IN THE COMPANY’S REGISTRATION STATEMENT
(DEFINED HEREIN)) AND (II) JANUARY 24, 2007. VOID AFTER 5:00 P.M. EASTERN TIME,
JANUARY 24, 2011.
UNIT
PURCHASE OPTION
For
the Purchase of
187,500
Units
of
1.
Purchase
Option.
THIS
CERTIFIES THAT, in consideration of $100.00 duly paid by or on behalf of
_____________ (“Holder”), as registered owner of this Purchase Option, to Argyle
Security Acquisition Corporation, Holder is entitled, at any time or from time
to time upon the later of (i) the consummation of a Business Combination and
(ii) January 24, 2007 (“Commencement Date”), and at or before 5:00 p.m., Eastern
Time, January 24, 2011 (“Expiration Date”), but not thereafter, to subscribe
for, purchase and receive, in whole or in part, up to One Hundred Eighty-Seven
Thousand Five Hundred (187,500) units (“Units”) of the Company, each Unit
consisting of one share of common stock of the Company, par value $.0001 per
share (“Common Stock”), and one warrant (“Warrant(s)”) expiring five years from
the effective date (“Effective Date”) of the registration statement
(“Registration Statement”) pursuant to which Units are offered for sale to the
public (“Offering”). Each Unit is the same as the Units being registered for
sale to the public by way of the Registration Statement which includes warrants
(“Public Warrants”) with an exercise price of $5.50 per share (“Warrant Exercise
Price”). If the Expiration Date is a day on which banking institutions are
authorized by law to close, then this Purchase Option may be exercised on the
next succeeding day which is not such a day in accordance with the terms herein.
During the period ending on the Expiration Date, the Company agrees not to
take
any action that would terminate the Purchase Option. This Purchase Option is
initially exercisable at $8.80 per Unit so purchased; provided, however, that
upon the occurrence of any of the events specified in Section 6 hereof, the
rights granted by this Purchase Option, including the exercise price per Unit
and the number of Units (and shares of Common Stock and Warrants) to be received
upon such exercise, shall be adjusted as therein specified. The term “Exercise
Price” shall mean the initial exercise price or the adjusted exercise price,
depending on the context.
2. Exercise.
2.1
Exercise
Form.
In
order to exercise this Purchase Option, the exercise form attached hereto must
be duly executed and completed and delivered to the Company, together with
this
Purchase Option and payment of the Exercise Price for the Units being purchased
payable in cash or by certified check or official bank check. If the
subscription rights represented hereby shall not be exercised at or before
5:00
p.m., Eastern time, on the Expiration Date this Purchase Option shall become
and
be void without further force or effect, and all rights represented hereby
shall
cease and expire.
1
2.2 Legend.
Each
certificate for the securities purchased under this Purchase Option shall bear
a
legend as follows unless such securities have been registered under the
Securities Act of 1933, as amended (“Act”):
“The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (“Act”) or applicable state law. The
securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the Act, or pursuant
to an
exemption from registration under the Act and applicable state law.”
2.3 Cashless
Exercise.
2.3.1
Determination
of Amount.
In lieu
of the payment of the Exercise Price multiplied by the number of Units for
which
this Purchase Option is exercisable (and in lieu of being entitled to receive
Common Stock and Warrants) in the manner required by Section 2.1, the Holder
shall have the right (but not the obligation) to convert any exercisable but
unexercised portion of this Purchase Option into Units (“Conversion Right”) as
follows: upon exercise of the Conversion Right, the Company shall deliver
to the Holder (without payment by the Holder of any of the Exercise Price in
cash) that number of Units (or that number of shares of Common Stock and
Warrants (or that number of shares of comprising that number of Units)
equal to the quotient obtained by dividing (x) the “Value” (as defined below) of
the portion of the Purchase Option being converted by (y) the Current Market
Value (as defined below). The “Value” of the portion of the Purchase Option
being converted shall equal the remainder derived from subtracting (a) (i)
the
Exercise Price multiplied by (ii) the number of Units underlying the portion
of
this Purchase Option being converted from (b) the Current Market Value of a
Unit
multiplied by the number of Units underlying the portion of the Purchase Option
being converted. As used herein, the term “Current Market Value” per Unit at any
date means: (A) in the event that neither the Units nor Public Warrants are
still trading, the remainder derived from subtracting (x) the exercise price
of
the Warrants multiplied by the number of shares of Common Stock issuable upon
exercise of the Warrants underlying one Unit from (y) (i) the Current Market
Price of the Common Stock multiplied by (ii) the number of shares of Common
Stock underlying one Unit, which shall include the shares of Common Stock
underlying the Warrants included in such Unit; (B) in the event that the Units,
Common Stock and Public Warrants are still trading, (i) if the Units are listed
on a national securities exchange or quoted on the Nasdaq National Market,
Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor exchange),
the
last sale price of the Units in the principal trading market for the Units
as
reported by the exchange, Nasdaq or the NASD, as the case may be, on the last
trading day preceding the date in question; or (ii) if the Units are not listed
on a national securities exchange or quoted on the Nasdaq National Market,
Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor exchange),
but is traded in the residual over-the-counter market, the closing bid price
for
Units on the last trading day preceding the date in question for which such
quotations are reported by the Pink Sheets, LLC or similar publisher of such
quotations; and (C) in the event that the Units are not still trading but the
Common Stock and Public Warrants underlying the Units are still trading, the
Current Market Price of the Common Stock plus the product of (x) the Current
Market Price of the Public Warrants and (y) the number of shares of Common
Stock
underlying the Warrants included in one Unit. The “Current Market Price” shall
mean (i) if the Common Stock (or Public Warrants, as the case may be) is listed
on a national securities exchange or quoted on the Nasdaq National Market,
Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor exchange),
the
last sale price of the Common Stock (or Public Warrants) in the principal
trading market for the Common Stock as reported by the exchange, Nasdaq or
the
NASD, as the case may be, on the last trading day preceding the date in
question; (ii) if the Common Stock (or Public Warrants, as the case may be)
is
not listed on a national securities exchange or quoted on the Nasdaq National
Market, Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor
exchange), but is traded in the residual over-the-counter market, the closing
bid price for the Common Stock (or Public Warrants) on the last trading day
preceding the date in question for which such quotations are reported by the
Pink Sheets, LLC or similar publisher of such quotations; and (iii) if the
fair
market value of the Common Stock cannot be determined pursuant to clause (i)
or
(ii) above, such price as the Board of Directors of the Company shall determine,
in good faith. In the event the Public Warrants have expired and are no longer
exercisable, no “Value” shall be attributed to the Warrants underlying this
Purchase Option. Additionally, in the event this Purchase Option is exercised
pursuant to this Section 2.3 and the Public Warrants are still trading, the
“Value” shall be reduced by the difference between the Warrant Exercise Price
and the exercise price of the Public Warrants.
2.3.2 Mechanics
of Cashless Exercise.
The
Cashless Exercise Right may be exercised by the Holder on any business day
on or
after the Commencement Date and not later than the Expiration Date by delivering
the Purchase Option with the duly executed exercise form attached hereto with
the cashless exercise section
2
completed
to the Company, exercising the Cashless Exercise Right and specifying the total
number of Units the Holder will purchase pursuant to such Cashless Exercise
Right.
3. Transfer.
3.1 General
Restrictions.
The
registered Holder of this Purchase Option, by its acceptance hereof, agrees
that
it will not sell, transfer, assign, pledge or hypothecate this Purchase Option
for a period of one year following the Effective Date to anyone other than
(i)
Xxxxxx or an underwriter or a selected dealer in connection with the Offering,
or (ii) a bona fide officer or partner of Xxxxxx or of any such underwriter
or
selected dealer. On and after the first anniversary of the Effective Date,
transfers to others may be made subject to compliance with or exemptions from
applicable securities laws. In order to make any permitted assignment, the
Holder must deliver to the Company the assignment form attached hereto duly
executed and completed, together with the Purchase Option and payment of all
transfer taxes, if any, payable in connection therewith. The Company shall
within five business days transfer this Purchase Option on the books of the
Company and shall execute and deliver a new Purchase Option or Purchase Options
of like tenor to the appropriate assignee(s) expressly evidencing the right
to
purchase the aggregate number of Units purchasable hereunder or such portion
of
such number as shall be contemplated by any such assignment.
3.2 Restrictions
Imposed by the Act.
The
securities evidenced by this Purchase Option shall not be transferred unless
and
until (i) the Company has received the opinion of counsel for the Holder that
the securities may be transferred pursuant to an exemption from registration
under the Act and applicable state securities laws, the availability of which
is
established to the reasonable satisfaction of the Company, or (ii) a
registration statement or a post-effective amendment to the Registration
Statement relating to such securities has been filed by the Company and declared
effective by the Securities and Exchange Commission and compliance with
applicable state securities law has been established.
4. New
Purchase
Options to be Issued.
4.1 Partial
Exercise or Transfer.
Subject
to the restrictions in Section 3 hereof, this Purchase Option may be
exercised or assigned in whole or in part. In the event of the exercise or
assignment hereof in part only, upon surrender of this Purchase Option for
cancellation, together with the duly executed exercise or assignment form and
funds sufficient to pay any Exercise Price and/or transfer tax, the Company
shall cause to be delivered to the Holder without charge a new Purchase Option
of like tenor to this Purchase Option in the name of the Holder evidencing
the
right of the Holder to purchase the number of Units purchasable hereunder as
to
which this Purchase Option has not been exercised or assigned.
4.2 Lost
Certificate.
Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Purchase Option and of reasonably satisfactory
indemnification or the posting of a bond, the Company shall execute and deliver
a new Purchase Option of like tenor and date. Any such new Purchase Option
executed and delivered as a result of such loss, theft, mutilation or
destruction shall constitute a substitute contractual obligation on the part
of
the Company.
5. Registration
Rights.
5.1 Demand
Registration.
5.1.1 Grant
of Right.
The
Company, upon written demand (“Initial Demand Notice”) of the Holder(s) of at
least 51% of the Purchase Options and/or the underlying Units and/or the
underlying securities (“Majority Holders”), agrees to register (the “Demand
Registration”) on one occasion, all or any portion of the Purchase Options
requested by the Majority Holders in the Initial Demand Notice and all of the
securities underlying such Purchase Options, including the Units, Common Stock,
the Warrants and the Common Stock underlying the Warrants (collectively, the
“Registrable Securities”). On such occasion, the Company will file a
registration statement or a post-effective amendment to the Registration
Statement covering the Registrable Securities within sixty days after receipt
of
the Initial Demand Notice and use its best efforts to have such registration
statement or post-effective amendment declared effective as soon as possible
thereafter. The demand for registration may be made at any time during a period
of five years beginning on the Effective Date. The Initial Demand Notice shall
specify the number of shares of Registrable Securiites proposed to be sold
and
the intended method(s) of distribution thereof. The Company covenants and agrees
to give written notice of its receipt of any Initial Demand Notice by any
Holder(s) to all other registered Holders of the Purchase Options and/or the
Registrable Securities within ten days
3
from
the
date of the receipt of any such Initial Demand Notice. Each holder of
Registrable Securities who wishes to include all or a portion of such holder’s
Registrable Securities in the Demand Registration (each such holder including
shares of Registrable Securities in such registration, a “Demanding Holder”)
shall so notify the Company within fifteen (15) days after the receipt by the
holder of the notice from the Company. Upon any such request, the Demanding
Holders shall be entitled to have their Registrable Securities included in
the
Demand Registration.
5.1.2. Effective
Registration.
A
registration will not count as a Demand Registration until the registration
statement filed with the Commission with respect to such Demand Registration
has
been declared effective and the Company has complied with all of its obligations
under this Agreement with respect thereto; provided, however, that if, after
such registration statement has been declared effective, the offering of
Registrable Securities pursuant to a Demand Registration is interfered with
by
any stop order or injunction of the Commission or any other governmental agency
or court, the registration statement with respect to such Demand Registration
will be deemed not to have been declared effective, unless and until, (i) such
stop order or injunction is removed, rescinded or otherwise terminated, and
(ii)
a majority-in-interest of the Demanding Holders thereafter elect to continue
the
offering.
5.1.3. Underwritten
Offering.
If the
Majority Holders so elect and such holders so advise the Company as part of
the
Initial Demand Notice, the offering of such Registrable Securities pursuant
to
such Demand Registration shall be in the form of an underwritten offering.
In
such event, the right of any holder to include its Registrable Securities in
such registration shall be conditioned upon such holder’s participation in such
underwriting and the inclusion of such holder’s Registrable Securities in the
underwriting to the extent provided herein. All Demanding Holders proposing
to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Majority Holders.
5.1.4. Reduction
of Offering.
If the
managing underwriter or underwriters for a Demand Registration that is to be
an
underwritten offering advises the Company and the Demanding Holders in writing
that the dollar amount or number of shares of Registrable Securities which
the
Demanding Holders desire to sell, taken together with all other shares of Common
Stock or other securities which the Company desires to sell and the shares
of
Common Stock, if any, as to which registration has been requested pursuant
to
written contractual piggy-back registration rights held by other stockholders
of
the Company who desire to sell, exceeds the maximum dollar amount or maximum
number of shares that can be sold in such offering without adversely affecting
the proposed offering price, the timing, the distribution method, or the
probability of success of such offering (such maximum dollar amount or maximum
number of shares, as applicable, the “ Maximum
Number of Shares ”),
then
the Company shall include in such registration: (i) first, the Registrable
Securities as to which Demand Registration has been requested by the Demanding
Holders (pro rata in accordance with the number of shares that each such Person
has requested be included in such registration, regardless of the number of
shares held by each such Person (such proportion is referred to herein as “
Pro
Rata ”))
that
can be sold without exceeding the Maximum Number of Shares; (ii) second, to
the
extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number
of
Shares; (iii) third, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clauses (i) and (ii), the shares of Common
Stock or other securities registrable pursuant to the terms of the Registration
Rights Agreement between the Company and the initial investors in the Company,
dated as of January 24, 2006 (the “ Registration
Rights Agreement ”
and
such registrable securities, the “ Investor
Securities ”)
as to
which “piggy-back” registration has been requested by the holders thereof, Pro
Rata, that can be sold without exceeding the Maximum Number of Shares; and
(iv)
fourth, to the extent that the Maximum Number of Shares have not been reached
under the foregoing clauses (i), (ii), and (iii), the shares of Common Stock
or
other securities for the account of other persons that the Company is obligated
to register pursuant to written contractual arrangements with such persons
and
that can be sold without exceeding the Maximum Number of Shares.
5.1.5 Withdrawal.
If a
majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect
to
withdraw from such offering by giving written notice to the Company and the
underwriter or underwriters of their request to withdraw prior to the
effectiveness of the registration statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of the
Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then such registration shall not count as a Demand Registration
provided for in Section 5.1.
4
5.1.6 Terms.
The
Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including the expenses of any legal counsel selected
by
the Holders to represent them in connection with the sale of the Registrable
Securities, but the Holders shall pay any and all underwriting commissions.
The
Company agrees to use its reasonable best efforts to qualify or register the
Registrable Securities in such States as are reasonably requested by the
Majority Holder(s); provided, however, that in no event shall the Company be
required to register the Registrable Securities in a State in which such
registration would cause (i) the Company to be obligated to qualify to do
business in such State, or would subject the Company to taxation as a foreign
corporation doing business in such jurisdiction or (ii) the principal
stockholders of the Company to be obligated to escrow their shares of capital
stock of the Company. The Company shall cause any registration statement or
post-effective amendment filed pursuant to the demand rights granted under
Section 5.1.1 to remain effective for a period of nine consecutive months from
the effective date of such registration statement or post-effective amendment.
5.2. “Piggy-Back”
Registration.
5.2.1. Grant
of Right.
In
addition to the demand right of registration, the Holders of the Purchase
Options shall have the right for a period of seven years commencing on the
Effective Date, to include the Registrable Securities as part of any other
registration of securities filed by the Company (other than in connection with
a
transaction contemplated by Rule 145(a) promulgated under the Act or pursuant
to
Form S-8); provided, however, that if, in the written opinion of the Company’s
managing underwriter or underwriters, if any, for such offering, the inclusion
of the Registrable Securities, when added to the securities being registered
by
the Company or the selling stockholder(s), will exceed the maximum amount of
the
Company’s securities which can be marketed (i) at a price reasonably related to
their then current market value, and (ii) without materially and adversely
affecting the entire offering, then the Company will still be required to
include the Registrable Securities, but may require the Holders to agree, in
writing, to delay the sale of all or any portion of the Registrable Securities
for a period of 90 days from the effective date of the offering, provided,
further, that if the sale of any Registrable Securities is so delayed, then
the
number of securities to be sold by all stockholders in such public offering
during such 90 day period shall be apportioned pro
rata among
all
such selling stockholders, including all holders of the Registrable Securities,
according to the total amount of securities of the Company owned by said selling
stockholders, including all holders of the Registrable Securities. The Company
shall give written notice of such proposed filing to the Holders of the Purchase
Options as soon as practicable, but in no event less than ten (10) days before
the anticipated filing date, which notice shall describe the amount and type
of
securities to be included in such offering, the intended method(s) of
distribution, and the name of the proposed managing underwriter or underwriters,
if any, of the offering, and offer the Holders in such notice the
opportunity to register the sale of such number of shares of Registrable
Securities as such holders may request in writing within five (5) days following
receipt of such notice (a “Piggy-Back Registration”). All Holders proposing to
distribute their Registrable Securities through a Piggy-Back Registration that
involves an underwriter or underwriters shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected
for such Piggy-Back Registration.
5.2.2. Withdrawal.
Any
Holder of Registrable Securities may elect to withdraw such Xxxxxx’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the registration statement. The Company (whether on its own
determination or as the result of a withdrawal by persons making a demand
pursuant to written contractual obligations) may withdraw a registration
statement at any time prior to the effectiveness of the registration statement.
Notwithstanding any such withdrawal, the Company shall pay all expenses incurred
by the holders of Registrable Securities in connection with such Piggy-Back
Registration as provided in Section 5.2.3.
5.2.3. Terms.
The
Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including the expenses of any legal counsel selected
by
the Holders to represent them in connection with the sale of the Registrable
Securities but the Holders shall pay any and all underwriting commissions
related to the Registrable Securities. In the event of such a proposed
registration, the Company shall furnish the then Holders of outstanding
Registrable Securities with not less than fifteen days written notice prior
to
the proposed date of filing of such registration statement. Such notice to
the
Holders shall continue to be given for each applicable registration statement
filed (during the period in which the Purchase Option is exercisable) by the
Company until such time as all of the Registrable Securities have been
registered and sold. The holders of the Registrable Securities shall exercise
the “piggy-back” rights provided for herein by giving written notice, within ten
days of the receipt of the Company’s notice of its intention to file a
registration statement. The Company shall cause
5
any
registration statement filed pursuant to the above “piggyback” rights to remain
effective for at least nine months from the date that the Holders of the
Registrable Securities are first given the opportunity to sell all of such
securities.
5.3. Damages.
Should
the registration or the effectiveness thereof required by Sections 5.1 and
5.2
hereof be delayed by the Company or the Company otherwise fails to comply with
such provisions, the Company shall, in addition to any other equitable or other
relief available to the Holder(s), be liable for any and all incidental, special
and consequential damages sustained by the Holder(s), including, but not limited
to, the loss of any profits that might have been received by the holder upon
the
sale of shares of Common Stock or Warrants (and shares of Common Stock
underlying the Warrants) underlying this Purchase Option.
5.4
. General
Terms.
5.4.1. Indemnification.
The
Company shall indemnify the Holder(s) of the Registrable Securities to be sold
pursuant to any registration statement hereunder and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”),
against all loss, claim, damage, expense or liability (including all reasonable
attorneys’ fees and other expenses reasonably incurred in investigating,
preparing or defending against litigation, commenced or threatened, or any
claim
whatsoever whether arising out of any action between the underwriter and the
Company or between the underwriter and any third party or otherwise) to which
any of them may become subject under the Act, the Exchange Act or otherwise,
arising from such registration statement but only to the same extent and with
the same effect as the provisions pursuant to which the Company has agreed
to
indemnify the underwriters contained in Section 5 of the Underwriting Agreement
between the Company, Xxxxxx and the other underwriters named therein dated
the
Effective Date. The Holder(s) of the Registrable Securities to be sold pursuant
to such registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage, expense or liability (including all reasonable attorneys’ fees and other
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished by or on behalf
of
such Holders, or their successors or assigns, in writing, for specific inclusion
in such registration statement to the same extent and with the same effect
as
the provisions contained in Section 5 of the Underwriting Agreement pursuant
to
which the underwriters have agreed to indemnify the Company.
5.4.2. Exercise
of Purchase Options.
Nothing
contained in this Purchase Option shall be construed as requiring the Holder(s)
to exercise their Purchase Options or Warrants underlying such Purchase Options
prior to or after the initial filing of any registration statement or the
effectiveness thereof.
5.4.3. Documents
Delivered to Holders.
The
Company shall furnish Rodman, as representative of the Holders participating
in
any of the foregoing offerings, a signed counterpart, addressed to the
participating Holders, of (i) an opinion of counsel to the Company, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under any underwriting agreement related thereto), and (ii) a “cold
comfort” letter dated the effective date of such registration statement (and, if
such registration includes an underwritten public offering, a letter dated
the
date of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company’s financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement
(and
the prospectus included therein) and, in the case of such accountants’ letter,
with respect to events subsequent to the date of such financial statements,
as
are customarily covered in opinions of issuer’s counsel and in accountants’
letters delivered to underwriters in underwritten public offerings of
securities. The Company shall also deliver promptly to Xxxxxx, as representative
of the Holders participating in the offering, the correspondence and memoranda
described below and copies of all correspondence between the Commission and
the
Company, its counsel or auditors and all memoranda relating to discussions
with
the Commission or its staff with respect to the registration statement and
permit Xxxxxx, as representative of the Holders, to do such investigation,
upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply
with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. (“NASD”). Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and
at
such reasonable times and as often as Xxxxxx, as
6
representative
of the Holders, shall reasonably request. The Company shall not be required
to
disclose any confidential information or other records to Xxxxxx, as
representative of the Holders, or to any other person, until and unless such
persons shall have entered into reasonable confidentiality agreements (in form
and substance reasonably satisfactory to the Company), with the Company with
respect thereto.
5.4.4. Underwriting
Agreement.
The
Company shall enter into an underwriting agreement with the managing
underwriter(s), if any, selected by any Holders whose Registrable Securities
are
being registered pursuant to this Section 5, which managing underwriter shall
be
reasonably acceptable to the Company. Such agreement shall be reasonably
satisfactory in form and substance to the Company, each Holder and such managing
underwriters, and shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter. The Holders shall be parties
to
any underwriting agreement relating to an underwritten sale of their Registrable
Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties
to
or agreements with the Company or the underwriters except as they may relate
to
such Holders and their intended methods of distribution. Such Holders, however,
shall agree to such covenants and indemnification and contribution obligations
for selling stockholders as are customarily contained in agreements of that
type
used by the managing underwriter. Further, such Holders shall execute
appropriate custody agreements and otherwise cooperate fully in the preparation
of the registration statement and other documents relating to any offering
in
which they include securities pursuant to this Section 5. Each Holder shall
also
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be reasonably required to effect the registration of the Registrable
Securities.
5.4.5. Rule
144 Sale.
Notwithstanding anything contained in this Section 5 to the contrary, the
Company shall have no obligation pursuant to Sections 5.1 or 5.2 for the
registration of Registrable Securities held by any Holder (i) where such
Holder would then be entitled to sell under Rule 144 within any three-month
period (or such other period prescribed under Rule 144 as may be provided
by amendment thereof) all of the Registrable Securities then held by such
Holder, and (ii) where the number of Registrable Securities held by such
Holder is within the volume limitations under paragraph (e) of
Rule 144 (calculated as if such Holder were an affiliate within the meaning
of Rule 144).
5.4.6. Supplemental
Prospectus.
Each
Holder agrees, that upon receipt of any notice from the Company of the happening
of any event as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, such Holder will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Xxxxxx’s receipt of the copies of a supplemental or
amended prospectus, and, if so desired by the Company, such Holder shall deliver
to the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of such destruction) all copies, other than permanent
file
copies then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
6. Adjustments.
6.1. Adjustments
to Exercise Price and Number of Securities.
The
Exercise Price and the number of Units underlying the Purchase Option shall
be
subject to adjustment from time to time as hereinafter set forth:
6.1.1. Stock
Dividends - Split-Ups.
If
after the date hereof, and subject to the provisions of Section 6.4 below,
the
number of outstanding shares of Common Stock is increased by a stock dividend
payable in shares of Common Stock or by a split-up of shares of Common Stock
or
other similar event, then, on the effective date thereof, the number of shares
of Common Stock underlying each of the Units purchasable hereunder shall be
increased in proportion to such increase in outstanding shares. In such case,
the number of shares of Common Stock, and the exercise price applicable thereto,
underlying the Warrants underlying each of the Units purchasable hereunder
shall
be adjusted in accordance with the terms of the Warrants. For example, if the
Company declares a two-for-one stock dividend and at the time of such dividend
this Purchase Option is for the purchase of one Unit at $8.80 per whole Unit
(each Warrant underlying the Units is exercisable for $5.50 per share), upon
effectiveness of
7
the
dividend, this Purchase Option will be adjusted to allow for the purchase of
one
Unit at $8.80 per Unit, each Unit entitling the holder to receive two shares
of
Common Stock and two Warrants (each Warrant exercisable for $2.75 per share).
6.1.2. Aggregation
of Shares.
If
after the date hereof, and subject to the provisions of Section 6.4, the number
of outstanding shares of Common Stock is decreased by a consolidation,
combination or reclassification of shares of Common Stock or other similar
event, then, on the effective date thereof, the number of shares of Common
Stock
underlying each of the Units purchasable hereunder shall be decreased in
proportion to such decrease in outstanding shares. In such case, the number
of
shares of Common Stock, and the exercise price applicable thereto, underlying
the Warrants underlying each of the Units purchasable hereunder shall be
adjusted in accordance with the terms of the Warrants.
6.1.3. Replacement
of Securities upon Reorganization, etc.
In case
of any reclassification or reorganization of the outstanding shares of Common
Stock other than a change covered by Section 6.1.1 or 6.1.2 hereof or that
solely affects the par value of such shares of Common Stock, or in the case
of
any merger or consolidation of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or entity of the property of the Company
as an
entirety or substantially as an entirety in connection with which the Company
is
dissolved, the Holder of this Purchase Option shall have the right thereafter
(until the expiration of the right of exercise of this Purchase Option) to
receive upon the exercise hereof, for the same aggregate Exercise Price payable
hereunder immediately prior to such event, the kind and amount of shares of
stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution
following any such sale or transfer, by a Holder of the number of shares of
Common Stock of the Company obtainable upon exercise of this Purchase Option
and
the underlying Warrants immediately prior to such event; and if any
reclassification also results in a change in shares of Common Stock covered
by
Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to
Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this
Section 6.1.3 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other transfers.
6.1.4. Changes
in Form of Purchase Option.
This
form of Purchase Option need not be changed because of any change pursuant
to
this Section, and Purchase Options issued after such change may state the same
Exercise Price and the same number of Units as are stated in the Purchase
Options initially issued pursuant to this Agreement. The acceptance by any
Holder of the issuance of new Purchase Options reflecting a required or
permissive change shall not be deemed to waive any rights to an adjustment
occurring after the Commencement Date or the computation thereof.
6.2. Substitute
Purchase Option.
In case
of any consolidation of the Company with, or merger of the Company with, or
merger of the Company into, another corporation (other than a consolidation
or
merger which does not result in any reclassification or change of the
outstanding Common Stock), the corporation formed by such consolidation or
merger shall execute and deliver to the Holder a supplemental Purchase Option
providing that the holder of each Purchase Option then outstanding or to be
outstanding shall have the right thereafter (until the stated expiration of
such
Purchase Option) to receive, upon exercise of such Purchase Option, the kind
and
amount of shares of stock and other securities and property receivable upon
such
consolidation or merger, by a holder of the number of shares of Common Stock
of
the Company for which such Purchase Option might have been exercised immediately
prior to such consolidation, merger, sale or transfer. Such supplemental
Purchase Option shall provide for adjustments which shall be identical to the
adjustments provided in Section 6. The above provision of this Section shall
similarly apply to successive consolidations or mergers.
6.3. Elimination
of Fractional Interests.
The
Company shall not be required to issue certificates representing fractions
of
shares of Common Stock or Warrants upon the exercise of the Purchase Option,
nor
shall it be required to issue scrip or pay cash in lieu of any fractional
interests, it being the intent of the parties that all fractional interests
shall be eliminated by rounding any fraction up to the nearest whole number
of
Warrants, shares of Common Stock or other securities, properties or rights.
7. Reservation
and Listing.
The
Company shall at all times reserve and keep available out of its authorized
shares of Common Stock, solely for the purpose of issuance upon exercise of
the
Purchase Options or the Warrants underlying the Purchase Option, such number
of
shares of Common Stock or other securities, properties or rights as
8
shall
be
issuable upon the exercise thereof. The Company covenants and agrees that,
upon
exercise of the Purchase Options and payment of the Exercise Price therefor,
all
shares of Common Stock and other securities issuable upon such exercise shall
be
duly and validly issued, fully paid and non-assessable and not subject to
preemptive rights of any stockholder. The Company further covenants and agrees
that upon exercise of the Warrants underlying the Purchase Options and payment
of the respective Warrant exercise price therefor, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable and not subject to preemptive rights
of
any stockholder. As long as the Purchase Options shall be outstanding, the
Company shall use its best efforts to cause all (i) Units and shares of
Common Stock issuable upon exercise of the Purchase Options, (ii) Warrants
issuable upon exercise of the Purchase Options and (iii) shares of Common Stock
issuable upon exercise of the Warrants included in the Units issuable upon
exercise of the Purchase Option to be listed (subject to official notice of
issuance) on all securities exchanges (or, if applicable on the Nasdaq National
Market, SmallCap Market, OTC Bulletin Board or any successor trading market)
on
which the Units, the Common Stock or the Public Warrants issued to the public
in
connection herewith may then be listed and/or quoted.
8. Certain
Notice Requirements.
8.1. Holder’s
Right to Receive Notice.
Nothing
herein shall be construed as conferring upon the Holders the right to vote
or
consent as a stockholder for the election of directors or any other matter,
or
as having any rights whatsoever as a stockholder of the Company. If, however,
at
any time prior to the expiration of the Purchase Options and their exercise,
any
of the events described in Section 8.2 shall occur, then, in one or more of
said
events, the Company shall give written notice of such event at least fifteen
days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, distribution, conversion or exchange of securities or subscription
rights, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of the
closing of the transfer books, as the case may be. Notwithstanding the
foregoing, the Company shall deliver to each Holder a copy of each notice given
to the other stockholders of the Company at the same time and in the same manner
that such notice is given to the stockholders.
8.2. Events
Requiring Notice.
The
Company shall be required to give the notice described in this Section 8 upon
one or more of the following events: (i) if the Company shall take a record
of
the holders of its shares of Common Stock for the purpose of entitling them
to
receive a dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company, or (ii) the Company shall offer to all the holders of
its
Common Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company,
or
any option, right or warrant to subscribe therefor, or (iii) a dissolution,
liquidation or winding up of the Company (other than in connection with a
consolidation or merger) or a sale of all or substantially all of its property,
assets and business shall be proposed.
8.3. Notice
of Change in Exercise Price.
The
Company shall, promptly after an event requiring a change in the Exercise Price
pursuant to Section 6 hereof, send notice to the Holders of such event and
change (“Price Notice”). The Price Notice shall describe the event causing the
change and the method of calculating same and shall be certified as being true
and accurate by the Company’s President and Chief Financial Officer.
8.4. Transmittal
of Notices.
All
notices, requests, consents and other communications under this Purchase Option
shall be in writing and shall be deemed to have been duly made when hand
delivered, or mailed by express mail or private courier service: (i) If to
the registered Holder of the Purchase Option, to the address of such Holder
as
shown on the books of the Company, or (ii) if to the Company, to the following
address or to such other address as the Company may designate by notice to
the
Holders:
000
Xxxxxxx Xxxxx, Xxxxx 000
San
Antonio, Texas 78216
Attn:
Xxx
Xxxxxx, Co-Chief Executive Officer
9. Miscellaneous.
9.1. Amendments.
The
Company and Xxxxxx may from time to time supplement or amend this Purchase
Option without the approval of any of the Holders in order to cure any
ambiguity, to correct or supplement any provision contained herein that may
be
defective or inconsistent with any other provisions herein, or to make
9
any
other
provisions in regard to matters or questions arising hereunder that the Company
and Xxxxxx may xxxx necessary or desirable and that the Company and Xxxxxx
xxxx
shall not adversely affect the interest of the Holders. All other modifications
or amendments shall require the written consent of and be signed by the party
against whom enforcement of the modification or amendment is sought.
9.2. Headings.
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Purchase Option.
10. Entire
Agreement.
This
Purchase Option (together with the other agreements and documents being
delivered pursuant to or in connection with this Purchase Option) constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
10.1. Binding
Effect.
This
Purchase Option shall inure solely to the benefit of and shall be binding upon,
the Holder and the Company and their permitted assignees, respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Purchase Option or any provisions herein
contained.
10.2. Governing
Law; Submission to Jurisdiction.
This
Purchase Option shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts
of
law principles that would result in the application of the substantive laws
of
another jurisdiction. The Company hereby agrees that any action, proceeding
or
claim against it arising out of, or relating in any way to this Purchase Option
shall be brought and enforced in the courts of the State of New York or of
the
United States of America for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The Company
hereby waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any process or summons to be served upon the
Company may be served by transmitting a copy thereof by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 8 hereof. Such mailing shall be deemed personal service
and
shall be legal and binding upon the Company in any action, proceeding or claim.
The Company and the Holder agree that the prevailing party(ies) in any such
action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
10.3. Waiver,
Etc.
The
failure of the Company or the Holder to at any time enforce any of the
provisions of this Purchase Option shall not be deemed or construed to be a
waiver of any such provision, nor to in any way affect the validity of this
Purchase Option or any provision hereof or the right of the Company or any
Holder to thereafter enforce each and every provision of this Purchase Option.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Purchase Option shall be effective unless set forth in a
written instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such breach,
non-compliance or non-fulfillment shall be construed or deemed to be a waiver
of
any other or subsequent breach, non-compliance or non-fulfillment.
10.4. Execution
in Counterparts.
This
Purchase Option may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together shall constitute one and
the
same agreement, and shall become effective when one or more counterparts has
been signed by each of the parties hereto and delivered to each of the other
parties hereto.
10.5. Exchange
Agreement.
As a
condition of the Holder’s receipt and acceptance of this Purchase Option, Xxxxxx
agrees that, at any time prior to the complete exercise of this Purchase Option
by Holder, if the Company and Xxxxxx enter into an agreement (“Exchange
Agreement”) pursuant to which they agree that all outstanding Purchase Options
will be exchanged for securities or cash or a combination of both, then Holder
shall agree to such exchange and become a party to the Exchange Agreement.
10.6. Underlying
Warrants.
At any
time after exercise by the Holder of this Purchase Option, the Holder may
exchange his Warrants for Public Warrants.
10
IN
WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by
its
duly authorized officer as of the 30th
day of
January, 2006.
| |
|
|
| By: | ||
|
Name:
Xxx Xxxxxx
|
||
| Title: Co-Chief Executive Officer | ||
11
Form
to
be used to exercise Purchase Option:
000
Xxxxxxx Xxxxx, Xxxxx 000
San
Antonio, Texas 78216
Attn:
Xxx
Xxxxxx, Co-Chief Executive Officer
Date:
,
200
The
undersigned hereby elects irrevocably to exercise all or a portion of the within
Purchase Option and to purchase Units
of
Argyle Security Acquisition Corporation and hereby makes payment of
$ (at
the
rate of $ per
Unit)
in payment of the Exercise Price pursuant thereto. Please issue the Common
Stock
and Warrants as to which this Purchase Option is exercised in accordance with
the instructions given below.
or
The
undersigned hereby elects irrevocably to convert its right to purchase
Units
purchasable under the within Purchase Option by surrender of the unexercised
portion of the attached Purchase Option (with a “Value” based of $ based
on
a “Market Price” of $ ).
Please
issue the securities comprising the Units as to which this Purchase Option
is
exercised in accordance with the instructions given below.
| Signature | |
| Signature Guaranteed |
INSTRUCTIONS
FOR REGISTRATION OF SECURITIES
| Name | |
|
(Print
in Block Letters)
|
|
| Address |
NOTICE:
The signature to this form must correspond with the name as written upon the
face of the within Purchase Option in every particular without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank,
other
than a savings bank, or by a trust company or by a firm having membership on
a
registered national securities exchange.
12
ASSIGNMENT
(To
be
executed by the registered Holder to effect a transfer of the within Purchase
Option):
FOR
VALUE
RECEIVED, does
hereby sell, assign and transfer unto the
right
to purchase Units
of
Argyle Security Acquisition Corporation. (“Company”) evidenced by the within
Purchase Option and does hereby authorize the Company to transfer such right
on
the books of the Company.
Dated:
,
,
200
| Signature | |
| Signature Guaranteed |
NOTICE:
The signature to this form must correspond with the name as written upon the
face of the within Purchase Option in every particular without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank, other
than a savings bank, or by a trust company or by a firm having membership on
a
registered national securities exchange.
13
