Contract
Exhibit
4.1
THIS
WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGIS-TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE
SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRA-TION STATEMENT
FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE
AND SCOPE, REASONABLY ACCEPTABLE TO THE COMPANY’S COUNSEL, THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION
S
UNDER SUCH ACT.
|
Right
to Purchase
________
Shares
of Common Stock, par value $.01 per
share
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STOCK
PURCHASE WARRANT
THIS
CERTIFIES THAT,
for
value received, _____________or its registered assigns, is entitled to purchase
from MSGI Security Solutions, Inc., a Nevada corporation (the “Company”), at any
time or from time to time during the period specified in Paragraph 2
hereof, __________fully paid and nonassessable shares of the Company’s Common
Stock, par value $.01 per share (the “Common Stock”), at an exercise price per
share equal to $____ (the “Exercise Price”). The term “Warrant Shares,” as used
herein, refers to the shares of Common Stock purchasable hereunder. The Warrant
Shares and the Exercise Price are subject to adjustment as provided in Paragraph
4 hereof. The term “Warrants” means this Warrant.
This
Warrant is subject to the following terms, provisions, and conditions:
1. Manner
of Exercise; Issuance of Certificates; Payment for Shares.
Subject
to the provisions hereof, this Warrant may be exercised by the holder hereof,
in
whole or in part, by the surrender of this Warrant, together with a completed
exercise agreement in the form attached hereto (the “Exercise Agreement”), to
the Company during normal business hours on any business day at the Company’s
principal executive offices (or such other office or agency of the Company
as it
may designate by notice to the holder hereof), and upon payment to the Company
in cash, by certified or official bank check or by wire transfer for the account
of the Company of the Exercise Price for the Warrant Shares specified in the
Exercise Agreement or, if the resale of the Warrant Shares by the holder is
not
then registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), delivery to the
Company of a written notice of an election to effect a “Cashless Exercise” (as
defined in Section 10(c) below) for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to
the
holder hereof or such holder’s designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares as set forth above. Certificates
for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding five (5) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be
in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the
time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall
not
then have been exercised.
2. Period
of Exercise.
This
Warrant is exercisable at any time or from time to time on or after the date
Stockholder Approval (as defined in the Securities Purchase Agreement) is
obtained and before 6:00 p.m., New York, New York time on the _____ anniversary
of the date of issuance (the “Exercise Period”).
3. Certain
Agreements of the Company.
The
Company hereby covenants and agrees as follows:
(a) Shares
to be Fully Paid.
All
Warrant Shares will, upon issuance in accordance with the terms of this Warrant,
be validly issued, fully paid, and nonassessable and free from all taxes, liens,
and charges with respect to the issue thereof.
(b) Reservation
of Shares.
During
the Exercise Period, the Company shall at all times have authorized, and
reserved for the purpose of issuance upon exercise of this Warrant, a
suf-ficient number of shares of Common Stock to provide for the exercise of
this
Warrant.
(c) Listing.
The
Company shall promptly secure the listing of the shares of Common Stock issuable
upon exercise of the Warrant upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and
shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and
shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of
the
same class shall be listed on such national securities exchange or automated
quotation system.
(d) Successors
and Assigns.
This
Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation, or acquisition of all or sub-stantially all the Company’s
assets.
4. Antidilution
Provisions.
During
the Exercise Period, the Exercise Price and the number of Warrant Shares shall
be subject to adjustment from time to time as provided in this Paragraph
4.
In
the
event that any adjustment of the Exercise Price as required herein results
in a
fraction of a cent, such Exercise Price shall be rounded up to the nearest
cent.
(a) Subdivision
or Combination of Common Stock.
If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the shares
of
Common Stock acquirable hereunder into a greater number of shares, then, after
the date of record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date
of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionately increased.
(b) Adjustment
in Number of Shares.
Upon
each adjustment of the Exercise Price pursuant to the provisions of this
Paragraph 4, the number of shares of Common Stock issuable upon exercise of
this
Warrant shall be adjusted by multiplying a number equal to the Exercise Price
in
effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(c) Consolidation,
Merger or Sale.
In case
of any consolidation of the Company with, or merger of the Company into any
other corporation, or in case of any sale or conveyance of all or substantially
all of the assets of the Company other than in connection with a plan of
complete liquidation of the Company, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the holder
of this Warrant will have the right to acquire and receive upon exercise of
this
Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
upon the exercise of this Warrant, such shares of stock, securities or assets
as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of this Warrant had such consolidation, merger or sale or conveyance taken
place
immediately after such exercise. The
Company will not effect any consolidation, merger or sale or conveyance unless
prior to the consummation thereof, the successor corporation (if other than
the
Company) assumes by written instrument the obligations under this Paragraph
4
and the obligations to deliver to the holder of this Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
the
holder may be entitled to acquire.
(d) Distribution
of Assets.
In case
the Company shall declare or make any distribution of its assets (including
cash) to holders of Common Stock as a partial liquidating dividend, by way
of
return of capital or otherwise, then, after the date of record for determining
shareholders entitled to such distribution, but prior to the date of
distribution, the holder of this Warrant shall be entitled upon exercise of
this
Warrant for the purchase of any or all of the shares of Common Stock subject
hereto, to receive the amount of such assets which would have been payable
to
the holder had such holder been the holder of such shares of Common Stock on
the
record date for the determination of shareholders entitled to such
distribution.
(e) Notice
of Adjustment.
Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the holder
of this Warrant, which notice shall state the Exercise Price resulting from
such
adjustment and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable detail
the
method of calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the Chief Financial Officer of the
Company.
(f) No
Fractional Shares.
No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but the Company shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal to the
same fraction of the Market Price of a share of Common Stock on the date of
such
exercise.
(g) Other
Notices.
In case
at any time:
(i) the
Company shall declare any dividend upon the Common Stock payable in shares of
stock of any class or make any other distribution (including dividends or
distributions payable in cash out of retained earnings) to the holders of the
Common Stock;
(ii) the
Company shall offer for subscription pro rata to the holders of the Common
Stock
any additional shares of stock of any class or other rights;
(iii) there
shall be any capital reorganiza-tion of the Company, or reclassification of
the
Common Stock, or consolidation or merger of the Company with or into, or sale
of
all or substan-tially all its assets to, another corporation or entity;
or
(iv) there
shall be a voluntary or involun-tary dissolution, liquidation or winding up
of
the Company;
then,
in
each such case, the Company shall give to the holder of this Warrant (a) notice
of the date on which the books of the Company shall close or a record shall
be
taken for determining the holders of Common Stock entitled to receive any such
divi-dend, distribution, or subscription rights or for determining the holders
of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice
of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the
date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for
stock
or other securities or property deliverable upon such reorganization,
re-classification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company’s books are closed in
respect thereto. Failure to give any such notice or any defect therein shall
not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
(h) Certain
Definitions.
5. Issue
Tax.
The
issuance of certificates for Warrant Shares upon the exercise of this Warrant
shall be made without charge to the holder of this Warrant or such shares for
any issuance tax or other costs in respect thereof, provided that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than the holder of this Warrant.
6. No
Rights or Liabilities as a Shareholder.
This
Warrant shall not entitle the holder hereof to any voting rights or other rights
as a shareholder of the Company. No provision of this Warrant, in the absence
of
affirmative action by the holder hereof to purchase Warrant Shares, and no
mere
enumeration herein of the rights or privileges of the holder hereof, shall
give
rise to any liability of such holder for the Exercise Price or as a shareholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
7. Transfer,
Exchange, and Replacement of Warrant.
(a) Restriction
on Transfer.
This
Warrant and the rights granted to the holder hereof are transferable, in whole
or in part, upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of the Company
referred to in Paragraph 7(e) below, pro-vided, however, that any transfer
or assignment shall be subject to the conditions set forth in Paragraph 7(f)
hereof and to the applicable provisions of the Securities Purchase Agreement.
Until due presentment for registration of transfer on the books of the Company,
the Company may treat the registered holder hereof as the owner and holder
hereof for all purposes, and the Company shall not be affected by any notice
to
the con-trary.
(b) Warrant
Exchangeable for Different Denomina-tions.
This
Warrant is exchange-able, upon the surrender hereof by the holder hereof at
the
office or agency of the Company referred to in Paragraph 7(e) below, for new
Warrants of like tenor representing in the aggregate the right to purchase
the
number of shares of Common Stock which may be purchased hereunder, each of
such
new Warrants to represent the right to purchase such number of shares as shall
be designated by the holder hereof at the time of such surrender.
(c) Replacement
of Warrant.
Upon
receipt of evi-dence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any such loss,
theft, or destruc-tion, upon delivery of an indemnity agreement reason-ably
satisfactory in form and amount to the Company, or, in the case of any such
mutilation, upon surrender and cancellation of this Warrant, the Company, at
its
expense, will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
(d) Cancellation;
Payment of Expenses.
Upon the
surrender of this Warrant in connection with any trans-fer, exchange, or
replacement as provided in this Paragraph 7, this Warrant shall be promptly
canceled by the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any,
incurred by the holder or transferees) and charges payable in connection with
the preparation, execution, and delivery of Warrants pursuant to this Paragraph
7.
(e) Register.
The
Company shall maintain, at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof),
a
register for this Warrant, in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as
the
name and address of each transferee and each prior owner of this
Warrant.
(f) Exercise
or Transfer Without Registration.
If, at
the time of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or, in the case of any
exercise, the Warrant Shares issuable hereunder), shall not be registered under
the Securities Act of 1933, as amended (the “Securities Act”) and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such exercise, transfer, or exchange, (i) that the holder
or transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise, transfer, or exchange may be made
without registration under said Act and under applicable state securities or
blue sky laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the Company
and
(iii) that the transferee be an “accredited investor” as defined in Rule 501(a)
promulgated under the Securities Act; provided that no such opinion, letter
or
status as an “accredited investor” shall be required in connection with a
transfer pursuant to Rule 144 under the Securities Act. The first holder of
this
Warrant, by taking and holding the same, represents to the Company that such
holder is acquiring this Warrant not with a view to the distribution thereof.
8. Notices.
All
notices, requests, and other communications required or permitted to be given
or
delivered hereunder to the holder of this Warrant shall be in writing, and
shall
be personally delivered, or shall be sent by certified or registered mail or
by
recognized overnight mail courier, postage prepaid and addressed, to such holder
at the address shown for such holder on the books of the Company, or at such
other address as shall have been furnished to the Company by notice from such
holder. All notices, requests, and other communications required or permitted
to
be given or delivered hereunder to the Company shall be in writing, and shall
be
personally delivered, or shall be sent by certified or registered mail or by
recognized overnight mail courier, postage prepaid and addressed, to the office
of the Company at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Chief
Executive Officer, or at such other address as shall have been furnished to
the
holder of this Warrant by notice from the Company. Any such notice, request,
or
other communication may be sent by facsimile, but shall in such case be
subsequently confirmed by a writing personally delivered or sent by certified
or
registered mail or by recognized overnight mail courier as provided above.
All
notices, requests, and other communications shall be deemed to have been given
either at the time of the receipt thereof by the person entitled to re-ceive
such notice at the address of such person for purposes of this Paragraph 8,
or,
if mailed by registered or certified mail or with a recognized overnight mail
courier upon deposit with the United States Post Office or such overnight mail
courier, if postage is prepaid and the mailing is properly addressed, as the
case may be.
9. Governing
Law.
THIS
WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS
OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF
LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO
ANY
DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS
UPON
A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH
SUIT
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
BY
SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR
ALL
FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY
IN CONNECTION WITH SUCH DISPUTE.
10. Miscellaneous.
(a) Amendments.
This
Warrant and any provision hereof may only be amended by an instrument in writing
signed by the Company and the holder hereof.
(b) Descriptive
Headings.
The
descriptive headings of the several paragraphs of this Warrant are in-serted
for
purposes of reference only, and shall not affect the meaning or construction
of
any of the provisions hereof.
(c) Cashless
Exercise.
Notwithstanding anything to the contrary contained in this Warrant, if the
resale of the Warrant Shares by the holder is not then registered pursuant
to an
effective registration statement under the Securities Act, this Warrant may
be
exercised by presentation and surrender of this Warrant to the Company at its
principal executive offices with a written notice of the holder’s intention to
effect a cashless exercise, including a calculation of the number of shares
of
Common Stock to be issued upon such exercise in accordance with the terms hereof
(a “Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of Warrant
Shares to which it would otherwise be entitled by a fraction, the numerator
of
which shall be the difference between the then current Market Price per share
of
the Common Stock and the Exercise Price, and the denominator of which shall
be
the then current Market Price per share of Common Stock. For example, if the
holder is exercising 100,000 Warrants with a per Warrant exercise price of
$0.75
per share through a cashless exercise when the Common Stock’s current Market
Price per share is $2.00 per share, then upon such Cashless Exercise the holder
will receive 62,500 shares of Common Stock.
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed by its duly authorized
officer.
By:
_______________________________
Xxxxxx
Xxxxxxx
Chief
Executive Officer
Dated
as
of May 21, 2007
FORM
OF EXERCISE AGREEMENT
Dated:
________ __, 200_
To: ______________________
The
undersigned, pursuant to the provisions set forth in the within Warrant, hereby
agrees to purchase ________ shares of Common Stock covered by such Warrant,
and
makes pay-ment herewith in full therefor at the price per share provided by
such
Warrant in cash or by certified or official bank check in the amount of, or,
if
the resale of such Common Stock by the undersigned is not currently registered
pursuant to an effective registration statement under the Securities Act of
1933, as amended, by surrender of securities issued by the Company (including
a
portion of the Warrant) having a market value (in the case of a portion of
this
Warrant, determined in accordance with Section 10(c) of the Warrant) equal
to
$_________. Please issue a certificate or certifi-xxxxx for such shares of
Common Stock in the name of and pay any cash for any fractional share
to:
| Name:
______________________________
Signature:
Address:____________________________
____________________________
Note: The
above signature should correspond exactly with the name on the face
of the
within Warrant, if applicable.
|
and,
if
said number of shares of Common Stock shall not be all the shares purchasable
under the within Warrant, a new Warrant is to be issued in the name of said
undersigned covering the balance of the shares purchasable thereunder less
any
frac-tion of a share paid in cash.
FORM
OF ASSIGNMENT
FOR
VALUE RECEIVED,
the
undersigned hereby sells, assigns, and transfers all the rights of the
undersigned under the within Warrant, with respect to the number of shares
of
Common Stock covered thereby set forth hereinbelow, to:
| Name of Assignee | Address | No of Shares |
,
and
hereby irrevocably constitutes and appoints ___________________________________
as agent and attorney-in-fact to trans-fer said Warrant on the books of the
within-named corporation, with full power of substitution in the
premises.
Dated: ________
__, 200_
| In the presence of: | ______________________________
Name:______________________________
Signature:_________________________
Title
of Signing Officer or Agent (if any):
______________________________
Address:
______________________________
______________________________
Note:
The
above signature should correspond exactly with the name on the face
of the
within Warrant, if
applicable.
|
