UNIT PURCHASE OPTION CLARIFICATION AGREEMENT
This
Unit
Purchase Option Clarification Agreement (this “Agreement”), dated August 10,
2006, is to amend the Unit Purchase Option, dated as of January 30, 2006 (the
“Option”), issued by Argyle Security Acquisition Corporation, a Delaware
corporation, with offices at 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx
00000 (“Company”), to Xxxxxx & Xxxxxxx, LLC, with offices at 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx (“Option Holder”).
WHEREAS,
as
a
result of certain questions that have arisen regarding the accounting treatment
applicable to the Option, the parties hereto deem it necessary and desirable
to
amend the Option to clarify that the Option Holder does not have the right
to
receive a net cash settlement in the event the Company does not maintain a
current prospectus relating to the units, common stock and warrants issuable
upon exercise of the Option at the time such Option is exercisable.
NOW,
THEREFORE,
in
consideration of the mutual agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
agree
to amend the Option as set forth herein.
1. Option.
The
undersigned hereby agree that the Option is hereby amended by adding the
following as Section 2.1.1 to the Option:
“2.1.1
No
Exercise of Purchase Option if a Registration Statement is not
Effective.
Notwithstanding
anything herein to the contrary, the Company shall not be obligated to deliver
any securities pursuant to the exercise of this Purchase Option unless (i)
a
registration statement under the Act with respect to the Units, Warrants and
Common Stock issuable upon such exercise is effective, or (ii) in the opinion
of
counsel to the Company or counsel to the Holder reasonably satisfactory to
the
Company, the exercise of this Purchase Option is exempt from the registration
requirements of the Act and such securities are qualified for sale or exempt
from qualification under applicable securities laws of the states or other
jurisdictions in which the registered holders reside. This Purchase Option
may
not be exercised by, or securities issued to, any registered holder in any
state
in which such exercise or issuance would be unlawful. In
no
event will the Holder be entitled to receive a net-cash settlement or other
consideration in lieu of physical settlement in securities if the securities
underlying this Purchase Option is not covered by an effective registration
statement.”
2. Miscellaneous.
a. Governing
Law; Jurisdiction.
The
validity, interpretation, and performance of this Agreement shall be governed
in
all respects by the laws of the State of New York, without giving effect to
conflict of laws. The Company hereby agrees that any action, proceeding or
claim
against it arising out of or relating in any way to this Agreement shall be
brought and enforced in the courts of the State of New York or the United States
District Court 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 such 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
in
care of the address set forth above or such other address as the undersigned
shall furnish in writing to the other. Such mailing shall be deemed personal
service and shall be legal and binding upon the Company in any action,
proceeding or claim.
b. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and assigns.
c. Entire
Agreement.
This
Agreement sets forth the entire agreement and understanding between the parties
as to the subject matter thereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among them.
Except as set forth in this Agreement, provisions of the original Option which
are not inconsistent with this Agreement shall remain in full force and effect.
This Agreement may be executed in counterparts.
d. Severability.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provision hereof. Furthermore, in lieu
of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar
in
terms to such invalid or unenforceable provision as may be possible and be
valid
and enforceable
IN
WITNESS WHEREOF, the parties hereto have executed this Unit Purchase Option
Clarification Agreement as of the date first written above.
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ARGYLE
SECURITY ACQUISTION CORPORATION
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| By: | /s/ Xxx Chaimovaki | |
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Name: |
Xxx Chaimovski |
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Title: | Co-CEO and Vice Chairman |
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XXXXXX
& XXXXXXX, LLC
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| By: | /s/ Xxxx Xxxxx | |
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Name: |
Xxxx Xxxxx |
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Title: | President |
