EXHIBIT 4.5
Explanatory note to attached:
Representatives' Option for the Purchase of Common Stock
The Representative is a co-managing underwriter pursuant to an Underwriting
Agreement dated , 2005 ("Underwriting Agreement") with A4S Security, Inc.
("A4S") relating to the offering of 1,200,000 Units of A4S. Each Unit consists
of one share of A4S's common stock and one warrant to purchase common stock, all
as more fully described in the Underwriting Agreement and in a Warrant Agreement
dated , 2005 between A4S and Corporate Stock Transfer, as warrant agent.
The Units will be traded on the Nasdaq SmallCap Market ("Nasdaq") and the
Archipelago Exchange ("ArcaEx")until such time as A4S has (i) delivered a Notice
of Separation to holders of Units and the warrant agent advising that the Units
can be detached and separated into common stock and warrants; and (ii) provided
for the separate listing of such common shares and warrants on Nasdaq and
ArcaEx. Each Unit will be divided into its separate component of one share of
common stock and one warrant upon the earlier of ninety (90) days from the date
of the Prospectus, or thirty (30) days after the Underwriters have fully
exercised their over-allotment option. Since the underwriters' options and
warrants are not exercisable for 180 days from the date of issuance, the
attached Representative's Options assume that the Units have been separated into
their separate component parts of common stock and warrants.
Date: , 2005 A4S SECURITY, INC.
---------------------
THE REPRESENTATIVE'S OPTION EVIDENCED AND REPRESENTED BY THIS CERTIFICATE
(THE "REPRESENTATIVE'S OPTION") AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF (THE "OPTION SHARES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, PURSUANT TO A REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND WITH THE SECURITIES ADMINISTRATORS
OF CERTAIN STATES UNDER THE SECURITIES ("BLUE SKY") LAWS OF SUCH STATES.
HOWEVER, NEITHER THE REPRESENTATIVE'S OPTION NOR THE UNDERLYING COMMON
STOCK MAY BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED EXCEPT PURSUANT TO
(i) A POST-EFFECTIVE AMENDMENT TO SUCH REGISTRATION STATEMENT, (ii) A
SEPARATE REGISTRATION STATEMENT UNDER SUCH ACT, OR (iii) AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND UNDER THE APPLICABLE BLUE SKY LAWS.
THIS REPRESENTATIVE'S OPTION MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
EXCEPT AS OTHERWISE PROVIDED HEREIN AND THE HOLDER OF THIS REPRESENTATIVE'S
OPTION, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR
ASSIGN THIS REPRESENTATIVE'S OPTION EXCEPT AS OTHERWISE PROVIDED HEREIN.
A4S SECURITY, INC.
Representatives' Option for the Purchase of Common Stock
No. UW-001 __________ Representatives' Options
THIS CERTIFIES that, for receipt in hand of $60 and other value received,
NEWBRIDGE SECURITIES CORPORATION (the "Holder"), is entitled to subscribe for
and purchase from A4S SECURITY, INC., a Colorado corporation (the "Company"),
upon the terms and conditions set forth herein, at any time, or from time to
time, after , 2005 and before 5:00 p.m. Colorado time on , 2010 (the "Exercise
Period"), shares of Common Stock (the "Option Shares"), at a price of $ per
Option Share (the "Exercise Price"), or 120% of the assumed $ offering price per
share of the Common Stock included in the Units to be sold by the Company in a
public offering under Registration Statement Form SB-2, No. 333-124238 (the
"Public Offering") at or prior to the date hereof.
The term the "Holder" as used herein shall include any transferee to
whom this Representatives' Option has been transferred in accordance with the
terms of this Representatives' Option. As used herein the term "this
Representatives' Option" shall mean and include this Representatives' Option and
any Representatives' Option or Representatives' Options hereafter issued as a
consequence of the exercise or transfer of this Representatives' Option in whole
or in part, and the term "Common Stock" shall mean and include the Company's
Common Stock with ordinary voting power, which class at the date hereof is
publicly traded.
1. (a) This Representatives' Option may not be sold, transferred,
assigned, pledged or hypothecated until , 2005 (180 days after the effective
date of the registration statement on which it is initially registered) except
that it may be transferred, in whole or in part, (i) to one or more officers or
partners of the Holder (or the officers or partners of any such partner); (ii)
to a member of the underwriting syndicate and/or its officers or partners; (iii)
by reason of reorganization of the Company; or (iv) by operation of law. After ,
2005, this Representatives' Option may be sold, transferred, assigned or
hypothecated in accordance with applicable law.
This Representatives' Option may be exercised during the Exercise Period as to
the whole or any lesser number of Option Shares, by the surrender of this
Representatives' Option (with the election attached hereto duly executed) to the
Company at its office at 000 X. Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000, or such other
place as is designated in writing by the Company, together with a certified or
bank cashier's check payable to the order of the Company in an amount equal to
the Exercise Price multiplied by the number of Option Shares for which this
Representatives' Option is being exercised.
(b) Upon written request of the Holder, and in lieu of payment for the
Option Shares by check in accordance with paragraph 2(a) hereof, the Holder may
exercise the Representatives' Option (or any portion thereof) for and receive
the number of Option Shares equal to a fraction, the numerator of which equals
(i) the amount by which the average of the Current Market Price of the Common
Stock for the three days preceding the date of exercise exceeds the Exercise
Price per Share, multiplied by (ii) the number of Option Shares to be purchased;
the denominator of which equals the Current Market Price.
(c) For the purposes of any computation under this Representatives'
Option, the "Current Market Price" at any date shall be the closing price of the
Common Stock on the business day next preceding the event requiring an
adjustment hereunder. If the principal trading market for such securities is an
exchange, the closing price shall be the reported last sale price on such
exchange on such day provided if trading of such Common Stock is listed on any
consolidated tape, the closing price shall be the reported last sale price set
forth on such consolidated tape. If the principal trading market for such
securities is the over-the-counter market, the closing price shall be the last
reported sale price on such date as set forth by The Nasdaq Stock Market, Inc.,
or, if the security is not quoted on such market, the average closing bid and
asked prices as set forth in the National Quotation Bureau pink sheet or the
Electronic Bulletin Board System for such day. Notwithstanding the foregoing, if
there is no reported last sale price or average closing bid and asked prices, as
the case may be, on a date prior to the event requiring an adjustment hereunder,
then the current market price shall be determined as of the latest date prior to
such day for which such last sale price or average closing bid and asked price
is available.
3. Upon each exercise of this Representatives' Option, the Holder shall
be deemed to be the holder of record of the Option Shares issuable upon such
exercise, notwithstanding that the transfer books of the Company shall then be
closed or certificates representing such Option Shares shall not then have been
actually delivered to the Holder. As soon as practicable after each such
exercise of this Representatives' Option, the Company shall issue and deliver to
the Holder a certificate or certificates for the Option Shares issuable upon
such exercise, registered in the name of the Holder or its designee. If this
Representatives' Option should be exercised in part only, the Company shall,
upon surrender of this Representatives' Option for cancellation, execute and
deliver a new Representatives' Option evidencing the right of the Holder to
purchase the balance of the Option Shares (or portions thereof) subject to
purchase hereunder.
4. The Representatives' Option shall be registered in a
Representatives' Option Register as they are issued. The Company shall be
entitled to treat the registered holder of any Representatives' Option on the
Representatives' Option Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Representatives' Option on the part of any other person. The
Representatives' Option shall be transferable only on the books of the Company
upon delivery thereof duly endorsed by the Holder or by his duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In all cases of transfer by an attorney,
executor, administrator, guardian or other legal representative, duly
authenticated evidence of his or its authority shall be produced. Upon any
registration of transfer, the Company shall deliver a new Representatives'
Option or Representatives' Options to the person entitled thereto. The
Representatives' Option may be exchanged, at the option of the Holder thereof,
for another Representatives' Option, or other Representatives' Option of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of Option Shares (or portions thereof) upon
surrender to the Company or its duly authorized agent. Notwithstanding the
foregoing, the Company shall have no obligation to cause Representatives' Option
to be transferred on its books to any person if, in the opinion of counsel to
the Company, such transfer does not comply with the provisions of the Securities
Act of 1933, as amended (the "Act"), or applicable state blue sky laws and the
rules and regulations thereunder.
-2-
5. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of this Representatives' Option, such number of shares of Common
Stock as shall, from time to time, be sufficient therefor. The Company covenants
that all Option Shares issuable upon exercise of this Representatives' Option
shall be validly issued, fully paid, nonassessable, and free of preemptive
rights.
(a) If the Company shall at any time subdivide its outstanding Common
Stock by recapitalization, reclassification or split-up thereof, the number of
Option Shares subject to this Representatives' Option immediately prior to such
subdivision shall be proportionately increased, and if the Company shall at any
time combine the outstanding Common Stock by recapitalization, reclassification
or combination thereof, the number of Option Shares subject to this
Representatives' Option immediately prior to such combination shall be
proportionately decreased. Any corresponding adjustment to the Exercise Price
shall become effective at the close of business on the record date for such
subdivision or combination.
(b) If the Company after the date hereof shall distribute to the
holders of its Common Stock any securities or other assets (other than a
distribution of Common Stock or a cash distribution made as a dividend payable
out of earnings or out of any earned surplus legally available for dividends
under the laws of the jurisdiction of incorporation of the Company), the Board
of Directors shall be required to make such equitable adjustment in the Exercise
Price in effect immediately prior to the record date of such distribution as may
be necessary to preserve the rights substantially proportionate to those enjoyed
hereunder by the Holder immediately prior to such distribution. Any such
adjustment made in good faith by the Board of Directors shall be final and
binding upon the Holder and shall become effective as of the record date for
such distribution.
(c) No adjustment in the number of Option Shares subject to this
Representatives' Option shall be required unless such adjustment would require
an increase or decrease in such number of Option Shares of at least 1% of the
then adjusted number of Option Shares issuable upon exercise of this
Representatives' Option, provided, however, that any adjustments which by reason
of the foregoing are not required at the time to be made shall be carried
forward and taken into account and included in determining the amount of any
subsequent adjustment; and provided further, however, that in case the Company
shall at any time subdivide or combine the outstanding Common Stock or issue any
additional Common Stock as a dividend, said percentage shall forthwith be
proportionately increased in the case of a combination or decreased in the case
of a subdivision or dividend of Common Stock so as to appropriately reflect the
same. If the Company shall make a record of the holders of its Common Stock for
the purpose of entitling them to receive any dividend or distribution and
legally abandon its plan to pay or deliver such dividend or distribution then no
adjustment in the number of Option Shares subject to this Representatives'
Option shall be required by reason of the making of such record.
(d) Whenever the number of Option Shares purchasable upon the exercise
of this Representatives' Option is adjusted as provided herein, the Exercise
Price shall be adjusted (to the nearest one tenth of a cent) by respectively
multiplying such Exercise Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Option Shares
purchasable upon the exercise of this Representatives' Option immediately prior
to such adjustment, and the denominator of which shall be the number of Option
Shares purchasable immediately thereafter.
-3-
(e) In case of any reclassification of the outstanding Common Stock
(other than a change covered by (a) hereof or which solely affects the par value
of such 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 which does not result in
any reclassification or capital reorganization of the outstanding Common Stock),
or in the case of any sale or conveyance to another corporation 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 Representatives' Option shall
have the right thereafter (until the expiration of the right of exercise of this
Representatives' 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 receivable
upon such reclassification, capital reorganization, merger or consolidation, or
upon the dissolution following any sale or other transfer, by a holder of the
number of Option Shares obtainable upon the exercise of this Representatives'
Option immediately prior to such event; and if any reclassification also results
in a change in Common Stock covered by (a) above, then such adjustment shall be
made pursuant to both this paragraph (e) and paragraph (a). The provisions of
this paragraph (e) shall similarly apply to successive re-classifications, or
capital reorganizations, mergers or consolidations, sales or other transfers.
If the Company after the date hereof shall issue or agree to issue
Common Stock, Options or Convertible Securities, other than as described herein,
and such issuance or agreement would in the opinion of the Board of Directors of
the Company materially affect the rights of the Holders of the Representatives'
Option, the Exercise Price and the number of Option Shares purchasable upon
exercise of the Representatives' Option shall be adjusted in such matter, if
any, and at such time as the Board of Directors of the Company, in good faith,
may determine to be equitable in the circumstances. The minutes or unanimous
consent approving such action shall set forth the Board of Director's
determination as to whether an adjustment is warranted and the manner of such
adjustment. In the absence of such determination, any Holder may request in
writing that the Board of Directors make such determination. Any such
determination made in good faith by the Board of Directors shall be final and
binding upon the Holders. If the Board fails, however, to make such
determination within sixty (60) days after such request, such failure shall be
deemed a determination that an adjustment is required.
(i) Upon occurrence of each event requiring an adjustment of the
Exercise Price and of the number of Option Shares purchasable upon exercise of
this Representatives' Option in accordance with, and as required by, the terms
hereof, the Company shall forthwith employ a firm of certified public
accountants (who may be the regular accountants for the Company) who shall
compute the adjusted Exercise Price and the adjusted number of Option Shares
purchasable at such adjusted Exercise Price by reason of such event in
accordance herewith. The Company shall give to each Holder of the
Representatives' Option a copy of such computation which shall be conclusive and
shall be binding upon such Holders unless contested by Holders by written notice
to the Company within thirty (30) days after receipt thereof.
(ii) In case the Company after the date hereof shall propose (A) to pay
any dividend payable in stock to the holders of its Common Stock or to make any
other distribution (other than cash dividends) to the holders of its Common
Stock or to grant rights to subscribe to or purchase any additional shares of
any class or any other rights or options, (B) to effect any reclassification
involving merely the subdivision or combination of outstanding Common Stock, or
(C) any capital reorganization or any consolidation or merger, or any sale,
transfer or other disposition of its property, assets and business substantially
as an entirety, or the liquidation, dissolution or winding up of the Company,
then in each such case, the Company shall obtain the computation described above
and if an adjustment to the Exercise Price is required, the Company shall notify
the Holders of the Representatives' Option of such proposed action, which shall
specify the record date for any such action or if no record date is established
with respect thereto, the date on which such action shall occur or commence, or
the date of participation therein by the holders of Common Stock if any such
date is to be fixed, and shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action on the
Exercise Price and the number, or kind, or class of shares or other securities
or property obtainable upon exercise of this Representatives' Option after
giving effect to any adjustment which will be required as a result of such
action. Such notice shall be given at least twenty (20) days prior to the record
date for determining holders of the Common Stock for purposes of any such
action, and in the case of any action for which a record date is not established
then such notice shall be mailed at least twenty (20) days prior to the taking
of such proposed action.
-4-
(iii) Failure to file any certificate or notice or to give any notice,
or any defect in any certificate or notice, shall not affect the legality or
validity of the adjustment in the Exercise Price or in the number, or kind, or
class of shares or other securities or property obtainable upon exercise of the
Representatives' Option or of any transaction giving rise thereto.
(f) The Company shall not be required to issue fractional Option Shares
upon any exercise of the Representatives' Option. As to any final fraction of a
Share which the Holder of a Representatives' Option 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 the same fraction of the
current market price of a share of such stock on the business day preceding the
day of exercise. The Holder of a Representatives' Option, by his acceptance of a
Representatives' Option, expressly waives any right to receive any fractional
Option Shares.
(g) Regardless of any adjustments pursuant to this section in the
Exercise Price or in the number, or kind, or class of shares or other securities
or other property obtainable upon exercise of a Representatives' Option, a
Representatives' Option may continue to express the Exercise Price and the
number of Option Shares obtainable upon exercise at the same price and number of
Option Shares as are stated herein.
(h) The number of Option Shares, the Exercise Price and all other terms
and provisions of the Company's agreement with the Holder of this
Representatives' Option shall be determined exclusively pursuant to the
provisions hereof.
(i) The above provisions of this section 6 shall similarly apply to
successive transactions which require adjustments.
(j) Notwithstanding any other language to the contrary herein, (i) the
anti-dilution terms of this Representatives' Option will not be enforced so as
to provide the Holder the right to receive, or for the accrual of, cash
dividends prior to the exercise of this Representatives' Option, and (ii) the
anti-dilution terms of this Representatives' Option will not be enforced in such
a manner as to provide the Holder with disproportionate rights, privileges and
economic benefits not provided to purchasers of the Common Stock in the Public
Offering.
7. The issuance of any Option Shares or other securities upon the
exercise of this Representatives' Option and the delivery of certificates or
other instruments representing such securities, or other securities, shall be
made without charge to the Holder for any tax or other charge in respect of such
issuance. The Company shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue and delivery of any
certificate in a name other than that of the Holder and the Company shall not be
required to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
8. (a) If, at any time after , 2005 (180 days after the Effective Date
of the Registration Statement), and ending , 20111 (five years after the
Effective Date of the Registration Statement), the Company shall file a
registration statement (other than on Form S-4, Form S-8, or any successor form)
with the Securities and Exchange Commission (the "Commission") while Option
Shares are available for purchase upon exercise of this Representatives' Option
or while any Option Shares (collectively, the "Representatives' Option and the
underlying Option Shares, the "Representatives' Securities") are outstanding,
the Company shall, on one occasion only, give the Holder and all the then
holders of such Representatives' Securities at least 30 days prior written
notice of the filing of such registration statement. If requested by the Holder
or by any such holder in writing within 20 days after receipt of any such
notice, the Company shall, at the Company's sole expense (other than the fees
and disbursements of counsel for the Holder or such holder and the underwriting
discounts and non-accountable expenses, if any, payable in respect of the
securities sold by the Holder or any such holder), register or qualify the
Option Shares of the Holder or any such holders who shall have made such request
-5-
concurrently with the registration of such other securities, all to the extent
requisite to permit the public offering and sale of the Option Shares requested
to be registered, and will use its best efforts through its officers, directors,
auditors and counsel to cause such registration statement to become effective as
promptly as practicable. Notwithstanding the foregoing, if the managing
underwriter of any such offering shall advise the Company in writing that, in
its opinion, the distribution of all or a portion of the Option Shares requested
to be included in the registration concurrently with the securities being
registered by the Company would materially adversely affect the distribution of
such securities by the Company for its own account, then the Holder or any such
holder who shall have requested registration of his or its Option Shares shall
delay the offering and sale of such Option Shares (or the portions thereof so
designated by such managing underwriter) for such period, not to exceed 90 days,
as the managing underwriter shall request, provided that no such delay shall be
required as to any Option Shares if any securities of the Company are included
in such registration statement for the account of any person other than the
Company and the Holder unless the securities included in such registration
statement for such other person shall have been reduced pro rata to the
reduction of the Option Shares which were requested to be included in such
registration.
(b) If at any time after , 2005 (180 days after the Effective Date of
the Registration Statement), and before , 2009 (five years after the Effective
Date of the Registration Statement), the Company shall receive a written request
from holders of Representatives' Securities who, in the aggregate, own (or upon
exercise of all Option Shares will own) a majority of the total number of Option
Shares, the Company shall, as promptly as practicable, prepare and file with the
Commission a registration statement sufficient to permit the public offering and
sale of the Option Shares, and will use its best efforts through its officers,
directors, auditors and counsel to cause such registration statement to become
effective as promptly as practicable; provided, however, that the Company shall
only be obligated to file and obtain effectiveness of one such registration
statement for which all expenses incurred in connection with such registration
(other than the fees and disbursements of counsel for the Holder or such holders
and underwriting discounts and nonaccountable expenses, if any, payable in
respect of the Option Shares sold by the Holder or any such holder) shall be
borne by the Company.
(c) In the event of a registration pursuant to the provisions of this
paragraph 8, the Company shall use its best efforts to cause the Option Shares
so requested to be registered or qualified for sale under the securities or blue
sky laws of such jurisdictions as the Holder or such holders may reasonably
request; provided, however, that the Company shall not be required to qualify to
do business in any state by reason of this paragraph 8(c) in which it is not
otherwise required to qualify to do business and provided further, that the
Company has no obligation to qualify the Option Shares where such qualification
would cause any unreasonable delay or expenditure by the Company.
(d) The Company shall keep effective any registration or qualification
contemplated by this paragraph 8 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document and communication for such period of time as
shall be required to permit the Holder or such holders to complete the offer and
sale of the Option Shares covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of nine months from the date on which the Holder and such holders are
first free to sell such Option Shares; provided, however, that if the Company is
required to keep any such registration or qualification in effect with respect
to securities other than the Option Shares beyond such period, the Company shall
keep such registration or qualification in effect as it relates to the Option
Shares for so long as such registration or qualification remains or is required
to remain in effect in respect of such other securities.
(e) In the event of a registration pursuant to the provisions of this
paragraph 8, the Company shall furnish to the Holder and to each such holder
such reasonable number of copies of the registration statement and of each
amendment and supplement thereto (in each case, including all exhibits), such
reasonable number of copies of each prospectus contained in such registration
statement and each supplement or amendment thereto (including each preliminary
prospectus), all of which shall conform to the requirements of the Act and the
rules and regulations thereunder, and such other documents as the Holder or such
holders may reasonably request in order to facilitate the disposition of the
Option Shares included in such registration.
-6-
(f) In the event of a registration pursuant to the provisions of this
paragraph 8, the Company shall furnish the Holder and each holder of any Option
Shares so registered with an opinion of its counsel to the effect that (i) the
registration statement has become effective under the Act and no order
suspending the effectiveness of the registration statement, preventing or
suspending the use of the registration statement, any preliminary prospectus,
any final prospectus, or any amendment or supplement thereto has been issued,
nor to such counsel's actual knowledge has the Securities and Exchange
Commission or any securities or blue sky authority of any jurisdiction
instituted or threatened to institute any proceedings with respect to such an
order and (ii) the registration statement and each prospectus forming a part
thereof (including each preliminary prospectus), and any amendment or supplement
thereto, complies as to form with the Act and the rules and regulations
thereunder. Such counsel shall also provide a Blue Sky Memorandum setting forth
the jurisdictions in which the Option Shares have been registered or qualified
for sale pursuant to the provisions of paragraph 8(c).
(g) The Company agrees that until all the Option Shares have been sold
under a registration statement or pursuant to Rule 144 under the Act, or until
the Option Shares may be sold under Rule 144 (k), it shall keep current in
filing all reports, statements and other materials required to be filed with the
Commission to permit holders of the Option Shares to sell such securities under
Rule 144.
(h) The Holder and any holders who propose to register their Option
Shares under the Act, shall execute and deliver to the Company a selling
stockholder questionnaire on a form to be provided by the Company.
(i) The Company shall not be required by the terms hereof to file a
Registration Statement if, in the opinion of counsel to the holders of the
Option Shares and counsel for the Company (or, should they not agree, in the
opinion of another counsel experienced in securities law matters acceptable to
counsel for the holders of Option Shares and the Company), the proposed public
offering or other transfer as to which such Registration Statement is requested
to be filed is exempt from applicable federal and state securities laws, rules,
regulations and would result in unaffiliated purchasers or transferees obtaining
securities that are not "restricted securities" as that term is defined in Rule
144 under the Act.
9. (a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Holder, any holder of any of the
Representatives' Securities, their officers, directors, partners, employees,
agents and counsel, and each person, if any, who controls any such person within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), from and against any and all loss,
liability, charge, claim, damage and expense whatsoever (which shall include,
for all purposes of this Section 9, but not be limited to, attorneys' fees and
any and all expense whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
registration statement, preliminary prospectus or final prospectus (as from time
to time amended and supplemented), or any amendment or supplement thereto, or
(B) in any application or other document or communication (in this Section 9
collectively called an "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify any of the Option Shares under
the securities or blue sky laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company with respect to
the Holder or any holder of any of the Representatives' Securities by or on
behalf of such person expressly for inclusion in any registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant or agreement of the Company contained in this
-7-
Representatives' Option. The foregoing agreement to indemnify shall be in
addition to any liability the Company may otherwise have, including liabilities
arising under this Representatives' Option. If any action is brought against the
Holder or any holder of any of the Representatives' Securities or any of its
officers, directors, partners, employees, agents or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability it may otherwise have to Holder or any holder of any
of the Representatives' Securities) and the Company shall promptly assume the
defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses. Such
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in connection with
the defense of such action or the Company shall not have promptly employed
counsel reasonably satisfactory to such indemnified party or parties to have
charge of the defense of such action or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent.
(b) The Holder and each holder agrees to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering the Option Shares held by the
Holder and each holder and each other person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to the
Holder and each holder in paragraph 9(a), but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to the
Holder and each holder by or on behalf of the Holder and each holder expressly
for inclusion in any such registration statement, preliminary prospectus, or
final prospectus, or any amendment or supplement thereto, or in any application,
as the case may be. If any action shall be brought against the Company or any
other person so indemnified based on any such registration statement,
preliminary prospectus, or final prospectus, or any amendment or supplement
thereto, or in any application, and in respect of which indemnity may be sought
against the Holder and each holder pursuant to this paragraph 9(b), the Holder
and each holder shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of paragraph 9(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to paragraph 9(a)
or 9(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise because the
indemnification provided for in this Section 9 is for any reason held to be
unenforceable by the Company and the Holder and any holder, then the Company
(including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement and any controlling person of the Company), as one
entity, and the Holder and any holder of any of the Option Shares included in
such registration in the aggregate (including for this purpose any contribution
by or on behalf of the Holder or any holder), as a second entity, shall
contribute to the losses, liabilities, claims, damages and expenses whatsoever
to which any of them may be subject, on the basis of relevant equitable
considerations such as the relative fault of the Company and the Holder or any
such holder in connection with the facts which resulted in such losses,
liabilities, claims, damages and expenses. The relative fault, in the case of an
untrue statement, alleged untrue statement, omission or alleged omission, shall
-8-
be determined by, among other things, whether such statement, alleged statement,
omission or alleged omission relates to information supplied by the Company, by
the Holder or by any holder of Option Shares included in such registration, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement, alleged statement, omission or alleged
omission. The Company and the Holder agree that it would be unjust and
inequitable if the respective obligations of the Company and the Holder for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages and expenses (even if the Holder
and the other indemnified parties were treated as one entity for such purpose)
or by any other method of allocation that does not reflect the equitable
considerations referred to in this paragraph 9(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this paragraph 9(c), each person,
if any, who controls the Holder or any holder of any of the Representatives'
Securities within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, partner, employee, agent and counsel of
each such person, shall have the same rights to contribution as such person 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, each officer of the Company who
shall have signed any such registration statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the provisions of this paragraph 9(c). Anything in this paragraph
9(c) to the contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without its
written consent. This paragraph 9(c) is intended to supersede any right to
contribution under the Act, the Exchange Act or otherwise.
10. Unless the Option Shares have been registered or an exemption from
such registration is available, the Option Shares issued upon exercise of this
Representatives' Option shall be subject to a stop transfer order and the
certificate or certificates evidencing any such Option Shares shall bear the
following legend or a legend substantially similar thereto:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR
HAVE THEY BEEN REGISTERED UNDER THE SECURITIES ("BLUE SKY") LAWS OF ANY STATE.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS
THEY HAVE FIRST BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND UNDER THE
APPLICABLE STATE SECURITIES ("BLUE SKY") LAWS OR UNLESS THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND LAWS IS ESTABLISHED TO THE
SATISFACTION OF THE COMPANY, WHICH MAY NECESSITATE A WRITTEN OPINION OF SELLER'S
COUNSEL SATISFACTORY TO COMPANY COUNSEL.
11. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Representatives' Option (and upon
surrender of any Representatives' Option if mutilated), and upon reimbursement
of the Company's reasonable incidental expenses, including the posting of a lost
penalty bond if necessary, the Company shall execute and deliver to the Holder
thereof a new Representatives' Option of like date, tenor and denomination.
12. The Holder of any Representatives' Option shall not have, solely on
account of such status, any rights of a stockholder of the Company, either at
law or in equity, or to any notice of meetings of stockholders or of any other
proceedings of the Company, except as provided in this Representatives' Option.
13. This Representatives' Option shall be construed in accordance with
the laws of the State of Colorado, without giving effect to conflict of laws.
Dated: , 2005
---------------------
-9-
A4S SECURITY, INC.
By:
--------------------------
Xxxxxxx Xxxxxxx, President
[SEAL]
-10
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the attached Representatives' Option.)
FOR VALUE RECEIVED, hereby sells, assigns and transfers unto Representatives'
Option to purchase shares of Common Stock of A4A SECURITY, INC. (the "Company"),
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint attorney to transfer such Representatives' Option on the
books of the Company, with full power of substitution.
Dated:
---------------------
Signature:
-----------------------------
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to the name as written
upon the face of this Representatives' Option in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by an eligible guarantor institution which is a participant in a
Securities Transfer Association recognized program.
-11-
ELECTION TO EXERCISE
(To be executed by the holder if such holder desires to
exercise the attached Representatives' Option)
The undersigned hereby exercises his or its rights to subscribe for shares of
Common Stock covered by the within Representatives' Option (each as defined in
the within Representatives' Option) and tenders payment herewith in the amount
of $ , or the undersigned elects to exercise its rights in accordance with the
terms of Section 2(b) of the Representatives' Option, and requests that
certificates for such Common Stock be issued in the name of, and delivered to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print Name, Address and Social Security or Tax Identification Number)
and, if such number of shares of Common Stock (or portions thereof) shall not be
all the Common Stock covered by the within Representatives' Option, that a new
Representatives' Option for the balance of the Representatives' Option covered
by the within Representatives' Option be registered in the name of, and
delivered to, the undersigned at the address stated below.
Name:
---------------------------------------------------------------------------
(Print)
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
---------------------------------
(Signature)
NOTICE
The signature on the foregoing Assignment must correspond to the name as written
upon the face of this Representatives' Option in every particular, without
alteration or enlargement or any change whatsoever. Signature(s) must be
guaranteed by an eligible guarantor institution which is a participant in a
Securities Transfer Association recognized program.
-12-
