WARRANT AGREEMENT
This Warrant Agreement (this "Agreement") made as of _________ __, 2005,
by and between Argyle Security Acquisition Corporation, a Delaware corporation
with offices at 200 Concord Plaza, Suite 700, San Antonio, Texas 78216
("Company"), and American Stock Transfer & Trust Company, a New York corporation
with offices at 59 Maiden Lane, New York, New York 10038 ("Warrant Agent").
WHEREAS, the Company is engaged in a public offering ("Public Offering")
of Units ("Units") and, in connection therewith, has determined to issue and
deliver up to 4,168,750 Warrants ("Public Warrants") to the public investors,
and (ii) 187,500 Warrants to Rodman & Renshaw, LLC. ("Rodman") or its designees
("Underwriter's Warrants"), each of such Public Warrants evidencing the right of
the holder thereof to purchase one share of common stock, par value $.0001 per
share, of the Company's Common Stock ("Common Stock") for $5.50, subject to
adjustment as described herein; and
WHEREAS, the Company has filed with the Securities and Exchange Commission
(the "SEC") a Registration Statement, No. 333-126569 on Form S-1 ("Registration
Statement") for the registration under the Securities Act of 1933, as amended
("Act") of, among other securities, the Public Warrants and the Underwriter's
Warrants and the Common Stock issuable upon exercise of the Public Warrants and
the Underwriter's Warrants; and
WHEREAS, the Company is issuing 125,000 warrants in a private placement
immediately prior to the Public Offering, which warrants (the "Private
Warrants") will be identical to the Public Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange, redemption and exercise of the
Public Warrants, the Underwriter's Warrants and the Private Warrants
(collectively, The "Warrants") Warrants; and
WHEREAS, the Company desires to provide for the form and provisions of the
Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the
Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things have been done and performed which are
necessary to make the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent, as provided herein, the
valid, binding and legal obligations of the Company, and to authorize the
execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent
to act as agent for the Company for the Warrants, and the Warrant Agent hereby
accepts such appointment and agrees to perform the same in accordance with the
terms and conditions set forth in this Agreement.
2. Warrants.
2.1 Form of Warrant. Each Warrant shall be issued in registered form only,
shall be in substantially the form of Exhibit A hereto, the provisions of which
are incorporated herein, and shall be signed by, or bear the facsimile signature
of, the Chairman of the Board, Vice Chairman or Co-Chief Executive Officer and
Treasurer, Secretary or Assistant Secretary of the Company and shall bear a
facsimile of the Company's seal. In the event the person whose facsimile
signature has been placed upon any Warrant shall have ceased to serve in the
capacity in which such person signed the Warrant before such Warrant is issued,
it may be issued with the same effect as if he or she had not ceased to be such
at the date of issuance.
2.2 Effect of Countersignature. Unless and until countersigned by the
Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no
effect and may not be exercised by the holder thereof.
2.3 Registration.
2.3.1 Warrant Register. The Warrant Agent shall maintain books
("Warrant Register") for the registration of original issuance and the
registration of transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company.
2.3.2 Registered Holder. Prior to due presentment for registration
of transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the person in whose name such Warrant shall be registered upon the Warrant
Register ("registered holder"), as the absolute owner of such Warrant and of
each Warrant represented thereby (notwithstanding any notation of ownership or
other writing on the Warrant Certificate made by anyone other than the Company
or the Warrant Agent), for the purpose of any exercise thereof, and for all
other purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary.
2.4 Detachability of Warrants. The securities comprising the Units will
not be separately transferable until 20 trading days after the earlier to occur
of the expiration of Rodman's over-allotment option or its exercise in full
unless Rodman informs the Company of its decision to allow earlier separate
trading, but in no event will Rodman allow separate trading of the securities
comprising the Units until the Company files a Current Report on Form 8-K, which
includes an audited balance sheet reflecting the receipt by the Company of the
gross proceeds of the Public Offering including the proceeds received by the
Company from the exercise of the underwriters' over-allotment option, if the
over-allotment option is exercised prior to the filing of the Form 8-K.
2.5 Public Warrants and Underwriter's Warrants. The Underwriter's Warrants
shall have the same terms and be in the same form as the Public Warrants except
with respect to the Warrant Price as set forth below in Section 3.1.
3. Terms and Exercise of Warrants.
3.1 Warrant Price. Each Public Warrant shall, when countersigned by
the Warrant Agent, entitle the registered holder thereof, subject to the
provisions of such Public Warrant and of this Warrant Agreement, to purchase
from the Company the number of shares of Common Stock stated therein, at the
price of $5.50 per whole share, subject to the adjustments provided in Section 4
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hereof and in the last sentence of this Section 3.1. Each Underwriter's
Warrant shall, when countersigned by the Warrant Agent, entitle the registered
holder thereof, subject to the provisions of such Underwriter's Warrant and
of this Warrant Agreement, to purchase from the Company the number of shares of
Common Stock stated therein, at the price of $5.50 per whole share, subject to
the adjustments provided in Section 4 hereof and in the last sentence of this
Section 3.1. The term "Warrant Price" as used in this Warrant Agreement refers
to the price per share at which Common Stock may be purchased at the time a
Warrant is exercised. The Company in its sole discretion may lower the Warrant
Price at any time prior to the Expiration Date.
3.2 Duration of Warrants. A Warrant may be exercised only during the
period ("Exercise Period") commencing on the later of the consummation by the
Company of a merger, capital stock exchange, asset acquisition or other similar
business combination (as described more fully in the Registration Statement,
"Business Combination") or __________, 2006 and terminating at 5:00 p.m., New
York City time on the earlier to occur of (i)__________, 2010 or (ii) the date
fixed for redemption of the Warrants as provided in Section 6 of this Agreement
("Expiration Date"). Except with respect to the right to receive the Redemption
Price (as set forth in Section 6 hereunder), each Warrant not exercised on or
before the Expiration Date shall become void, and all rights thereunder and all
rights in respect thereof under this Agreement shall cease at the close of
business on the Expiration Date. The Company in its sole discretion may extend
the duration of the Warrants by delaying the Expiration Date.
3.3 Exercise of Warrants.
3.3.1 Payment. Subject to the provisions of the Warrant and this
Warrant Agreement, a Warrant, when countersigned by the Warrant Agent, may be
exercised by the registered holder thereof by surrendering it, at the office of
the Warrant Agent, or at the office of its successor as Warrant Agent, in the
Borough of Manhattan, City and State of New York, with the subscription form, as
set forth in the Warrant, duly executed, and (i) by paying in full, in lawful
money of the United States, in cash, good certified check or good bank draft
payable to the order of the Company, the Warrant Price for each full share of
Common Stock as to which the Warrant is exercised and any and all applicable
taxes due in connection with the exercise of the Warrant, the exchange of the
Warrant for the Common Stock, and the issuance of the Common Stock or (ii) by
surrendering his or her Warrant for that number of shares of Common Stock equal
to the quotient obtained by dividing (x) the product of the number of shares of
Common Stock underlying the Warrant, multiplied by the difference between the
Warrant Price and the "Fair Market Value" (defined below) by (y) the Fair Market
Value. The "Fair Market Value" shall mean the average reported last sale price
of the Common Stock for the 10 trading days ending on the third business day
prior to the date on which notice of exercise is given to the Company, or in the
event that the Company has given a notice of redemption to the holder of such
Warrant, on the third business day prior to the date on which any notice of
redemption is sent to holders of the Warrant pursuant to Section 6 hereof.
3.3.2 Issuance of Certificates. As soon as practicable after the
exercise of any Warrant and the clearance of the funds in payment of the Warrant
Price, the Company shall issue to the registered holder of such Warrant a
certificate or certificates for the number of full shares of Common Stock to
which he, she or it is entitled, registered in such name or names as may be
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directed by him, her or it, and if such Warrant shall not have been exercised in
full, a new countersigned Warrant for the number of shares as to which such
Warrant shall not have been exercised. Notwithstanding the foregoing, the
Company shall not be obligated to deliver any securities pursuant to the
exercise of a Warrant unless (i) a registration statement under the Act with
respect to the Common Stock issuable upon such exercise is effective, or (ii) in
the opinion of counsel to the Company, the exercise of the Warrants 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. Warrants
may not be exercised by, or securities issued to, any registered holder in any
state in which such exercise or issuance would be unlawful.
3.3.3 Valid Issuance. All shares of Common Stock issued upon the
proper exercise of a Warrant in conformity with this Agreement shall be validly
issued, fully paid and nonassessable.
3.3.4 Date of Issuance. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
the Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
3.3.5 Warrant Solicitation and Warrant Solicitation Fee.
(a) The Company has engaged Rodman, on a non-exclusive basis,
as its agent for the solicitation of the exercise of the Warrants. The Company,
at its cost, will (i) assist Rodman with respect to such solicitation, if
requested by Rodman, and (ii) provide Rodman, and direct the Company's transfer
agent and the Warrant Agent to deliver to Rodman, lists of the record and, to
the extent known, beneficial owners of the Company's Warrants. The Company
hereby instructs the Warrant Agent to cooperate with Rodman in every respect in
connection with Rodman's solicitation activities, including, but not limited to,
providing to Rodman, at the Company's cost, a list of record and beneficial
holders of the Warrants and circulating a prospectus or offering circular
disclosing the compensation arrangements referenced in Section 3.3.5(b) below to
holders of the Warrants at the time of exercise of the Warrants. In addition to
the conditions set forth in Section 3.3.5(b), Rodman shall accept payment of the
warrant solicitation fee provided in Section 3.3.5(b) only if it has provided
bona fide services to the Company in connection with the exercise of the
Warrants and only to the extent that an investor who exercises his Warrants
specifically designates, in writing, that Rodman solicited his, her or its
exercise. In addition to soliciting, either orally or in writing, the exercise
of Warrants by a Warrant holder, such services may also include disseminating
information, either orally or in writing, to Warrant holders about the Company
or the market for the Company's securities, or assisting in the processing of
the exercise of Warrants.
(b) In each instance in which a Warrant is exercised, the
Warrant Agent shall promptly give written notice of such exercise to the Company
and Rodman ("Warrant Agent's Exercise Notice"). If, upon the exercise of any
Warrant more than one year from the effective date of the Registration
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Statement, (i) the market price of the Company's Common Stock is greater than
the Warrant Price, (ii) disclosure of compensation arrangements between the
Company and Rodman with respect to the solicitation of the exercise of the
Warrants was made both at the time of the Public Offering and at the time of
exercise (by delivery of the Prospectus or as otherwise required by applicable
law, rule or regulation), (iii) the holder of the Warrant confirms in writing
that the exercise of the Warrant was solicited by Rodman, (iv) the Warrant was
not held in a discretionary account, and (v) the solicitation of the exercise of
the Warrant was not in violation of Regulation M (as such rule or any successor
rule may be in effect as of such time of exercise) promulgated under the
Securities Exchange Act of 1934, as amended, then the Warrant Agent,
simultaneously with the distribution of the Common Stock underlying the Warrants
so exercised in accordance with the instructions from the Company following
receipt of the proceeds to the Company received upon exercise of such
Warrant(s), shall, on behalf of the Company, pay (A) in the case of a cash
exercise of the Warrant, a fee of 5% of the Warrant Price to Rodman; or (B) in
the case of exercise of the Warrant on a cashless basis, either a fee of .05
shares for each warrant exercised or 5% of the fair market value of each share
issued upon such exercise (the method of payment to be at the Company's option),
provided that Rodman delivers to the Warrant Agent within ten (10) business days
from the date on which Rodman has received the Warrant Agent's Exercise Notice,
a certificate that the conditions set forth in the preceding clauses (iii), (iv)
and (v) have been satisfied. Notwithstanding the foregoing, no fee will be paid
to Rodman with respect to the exercise by the Underwriters or their affiliates
or the Company's officers or directors of Warrants purchased by it or them and
still held by them for its or their own account. Rodman and the Company may at
any time during business hours, examine the records of the Warrant Agent,
including its ledger of original Warrant certificates returned to the Warrant
Agent upon exercise of Warrants.
(c) The provisions of this Section 3.3.5. may not be modified,
amended or deleted without the prior written consent of Rodman.
4. Adjustments.
4.1 Stock Dividends Split Ups. If after the date hereof, and subject to
the provisions of Section 4.6 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 of such stock dividend, split up or similar event, the number of
shares of Common Stock issuable on exercise of each Warrant shall be increased
in proportion to such increase in outstanding shares of Common Stock.
4.2 Aggregation of Shares. If after the date hereof, and subject to the
provisions of Section 4.6, the number of outstanding shares of Common Stock is
decreased by a consolidation, combination, reverse stock split or
reclassification of shares of Common Stock or other similar event, then, on the
effective date of such consolidation, combination, reverse stock split,
reclassification or similar event, the number of shares of Common Stock issuable
on exercise of each Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.
4.3 Adjustments in Exercise Price. Whenever the number of shares of Common
Stock purchasable upon the exercise of the Warrants is adjusted, as provided in
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Section 4.1 and 4.2 above, the Warrant Price shall be adjusted (to the nearest
cent) by multiplying such Warrant Price immediately prior to such adjustment by
a fraction (x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise of the Warrants immediately prior to such
adjustment, and (y) the denominator of which shall be the number of shares of
Common Stock so purchasable immediately thereafter.
4.4 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 4.1 or 4.2 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 assets or other property of the Company as
an entirety or substantially as an entirety in connection with which the Company
is dissolved, the Warrant holders shall thereafter have the right to purchase
and receive, upon the basis and upon the terms and conditions specified in the
Warrants and in lieu of the shares of Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented thereby, 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, that the Warrant holder would have received if such
Warrant holder had exercised his, her or its Warrant(s) immediately prior to
such event; and if any reclassification also results in a change in shares of
Common Stock covered by Section 4.1 or 4.2, then such adjustment shall be made
pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions of this
Section 4.4 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other transfers.
4.5 Notices of Changes in Warrant. Upon every adjustment of the Warrant
Price or the number of shares issuable on exercise of a Warrant, the Company
shall give written notice thereof to the Warrant Agent, which notice shall state
the Warrant Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares purchasable at such price upon the exercise of a
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Upon the occurrence of any event
specified in Sections 4.1, 4.2, 4.3 or 4.4, then, in any such event, the Company
shall give written notice to the Warrant holder, at the last address set forth
for such holder in the Warrant Register, of the record date or the effective
date of the event. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of such event.
4.6 No Fractional Shares. Notwithstanding any provision contained in this
Warrant Agreement to the contrary, the Company shall not issue fractional shares
upon exercise of Warrants. If, by reason of any adjustment made pursuant to this
Section 4, the holder of any Warrant would be entitled, upon the exercise of
such Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, round up to the nearest whole number the number of the
shares of Common Stock to be issued to the Warrant holder.
4.7 Form of Warrant. The form of Warrant need not be changed because of
any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares as is
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stated in the Warrants initially issued pursuant to this Agreement. However, the
Company may at any time in its sole discretion make any change in the form of
Warrant that the Company may deem appropriate and that does not affect the
substance thereof, and any Warrant thereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or otherwise, may be in
the form as so changed.
5. Transfer and Exchange of Warrants.
5.1 Registration of Transfer. The Warrant Agent shall register the
transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant representing an equal aggregate
number of Warrants shall be issued and the old Warrant shall be cancelled by the
Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant Agent
to the Company from time to time upon request.
5.2 Procedure for Surrender of Warrants. Warrants may be surrendered to
the Warrant Agent, together with a written request for exchange or transfer, and
thereupon the Warrant Agent shall issue in exchange therefor one or more new
Warrants as requested by the registered holder of the Warrants so surrendered,
representing an equal aggregate number of Warrants; provided, however, that in
the event that a Warrant surrendered for transfer bears a restrictive legend,
the Warrant Agent shall not cancel such Warrant and issue new Warrants in
exchange therefor until the Warrant Agent has received an opinion of counsel for
the Company stating that such transfer may be made and indicating whether the
new Warrants must also bear a restrictive legend.
5.3 Fractional Warrants. The Warrant Agent shall not be required to effect
any registration of transfer or exchange which will result in the issuance of a
warrant certificate for a fraction of a warrant.
5.4 Service Charges. No service charge shall be made for any exchange or
registration of transfer of Warrants.
5.5 Warrant Execution and Countersignature. The Warrant Agent is hereby
authorized to countersign and to deliver, in accordance with the terms of this
Agreement, the Warrants required to be issued pursuant to the provisions of this
Section 5, and the Company, whenever required by the Warrant Agent, will supply
the Warrant Agent with Warrants duly executed on behalf of the Company for such
purpose.
6. Redemption.
6.1 Redemption. Subject to Section 6.4 hereof, not less than all of the
outstanding Warrants may be redeemed, at the option of the Company, at any time
after they become exercisable and prior to their expiration, at the office of
the Warrant Agent, upon the notice referred to in Section 6.2, at the price of
$.01 per Warrant ("Redemption Price"), provided that the last sales price of the
Common Stock has been equal to or greater than $11.50 per share, on each of
twenty (20) trading days within any thirty (30) trading day period ending on the
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third business day prior to the date on which notice of redemption is given. The
provisions of this Section 6.1 may not be modified, amended or deleted without
the prior written consent of Rodman.
6.2 Date Fixed for, and Notice of, Redemption. In the event the Company
shall elect to redeem all of the Warrants, the Company shall fix a date for the
redemption. Notice of redemption shall be mailed by first class mail, postage
prepaid, by the Company not less than 30 days prior to the date fixed for
redemption to the registered holders of the Warrants to be redeemed at their
last addresses as they shall appear on the Warrant Register. Any notice mailed
in the manner herein provided shall be conclusively presumed to have been duly
given whether or not the registered holder received such notice.
6.3 Exercise After Notice of Redemption. The Warrants may be exercised in
accordance with Section 3 of this Warrant Agreement at any time after notice of
redemption shall have been given by the Company pursuant to Section 6.2 hereof
and prior to the time and date fixed for redemption. On and after the redemption
date, the record holder of the Warrants shall have no further rights except to
receive, upon surrender of the Warrants, the Redemption Price.
6.4 Outstanding Warrants Only. The Company understands that the redemption
rights provided for by this Section 6 apply only to outstanding Warrants. To the
extent a person holds rights to purchase Warrants, such purchase rights shall
not be extinguished by redemption. However, once such purchase rights are
exercised, the Company may redeem the Warrants issued upon such exercise
provided that the criteria for redemption is met, including the opportunity of
the Warrant holder to exercise prior to redemption pursuant to Section 6.3. The
provisions of this Section 6.4 may not be modified, amended or deleted without
the prior written consent of Rodman.
7. Other Provisions Relating to Rights of Holders of Warrants.
7.1 No Rights as Stockholder. A Warrant does not entitle the registered
holder thereof to any of the rights of a stockholder of the Company, including,
without limitation, the right to receive dividends, or other distributions,
exercise any preemptive rights to vote or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter.
7.2 Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is
lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on
such terms as to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination, tenor, and date as the
Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall
constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time
enforceable by anyone.
7.3 Reservation of Common Stock. The Company shall at all times reserve
and keep available a number of its authorized but unissued shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding
Warrants issued pursuant to this Warrant Agreement.
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7.4 Registration of Common Stock. The Company agrees that prior to the
commencement of the Exercise Period, it shall file with the SEC a post-effective
amendment to the Registration Statement, or a new registration statement, for
the registration, under the Act, of, and it shall take such action as is
necessary to qualify for sale, in those states in which the Warrants were
initially offered by the Company, the Common Stock issuable upon exercise of the
Warrants. In either case, the Company will use its best efforts to cause the
same to become effective on or prior to the commencement of the Exercise Period
and to maintain the effectiveness of such registration statement until the
expiration of the Warrants in accordance with the provisions of this Warrant
Agreement. The provisions of this Section 7.4 may not be modified, amended or
deleted without the prior written consent of Rodman.
8. Concerning the Warrant Agent and Other Matters.
8.1 Payment of Taxes. The Company will from time to time promptly pay all
taxes and charges that may be imposed upon the Company or the Warrant Agent in
respect of the issuance or delivery of shares of Common Stock upon the exercise
of Warrants, but the Company shall not be obligated to pay any transfer taxes in
respect of the Warrants or such shares.
8.2 Resignation, Consolidation, or Merger of Warrant Agent.
8.2.1 Appointment of Successor Warrant Agent. The Warrant Agent, or
any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days'
notice in writing to the Company. If the office of the Warrant Agent becomes
vacant by resignation or incapacity to act or otherwise, the Company shall
appoint in writing a successor Warrant Agent in place of the Warrant Agent. If
the Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such resignation or incapacity by the Warrant
Agent or by the holder of the Warrant (who shall, with such notice, submit his
Warrant for inspection by the Company), then the holder of any Warrant may apply
to the Supreme Court of the State of New York for the County of New York for the
appointment of a successor Warrant Agent. Any successor Warrant Agent, whether
appointed by the Company or by such court, shall be a corporation organized and
existing under the laws of the State of New York, in good standing and having
its principal office in the Borough of Manhattan, City and State of New York,
and authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authority. After appointment, any
successor Warrant Agent shall be vested with all the authority, powers, rights,
immunities, duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without any further
act or deed; but if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers, and rights of such predecessor Warrant Agent hereunder; and
upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties, and obligations.
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8.2.2 Notice of Successor Warrant Agent. In the event a successor
Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.
8.2.3 Merger or Consolidation of Warrant Agent. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated or
any corporation resulting from any merger or consolidation to which the Warrant
Agent shall be a party shall be the successor Warrant Agent under this Warrant
Agreement without any further act.
8.3 Fees and Expenses of Warrant Agent.
8.3.1 Remuneration. The Company agrees to pay the Warrant Agent
reasonable remuneration for its services as such Warrant Agent hereunder as set
forth on Exhibit A hereto, and will reimburse the Warrant Agent upon demand for
all expenditures that the Warrant Agent may reasonably incur in the execution of
its duties hereunder.
8.3.2 Further Assurances. The Company agrees to perform, execute,
acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Warrant Agreement.
8.4 Liability of Warrant Agent.
8.4.1 Reliance on Company Statement. Whenever in the performance of
its duties under this Warrant Agreement, the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a statement signed by the
Co-Chief Executive Officer, Chairman of the Board or Vice Chairman of the
Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such
statement for any action taken or suffered in good faith by it pursuant to the
provisions of this Warrant Agreement.
8.4.2 Indemnity. The Warrant Agent shall be liable hereunder only
for its own negligence, willful misconduct or bad faith. The Company agrees to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and reasonable counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Warrant
Agreement except as a result of the Warrant Agent's negligence, willful
misconduct, or bad faith.
8.4.3 Exclusions. The Warrant Agent shall have no responsibility
with respect to the validity of this Warrant Agreement or with respect to the
validity or execution of any Warrant (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Warrant Agreement or in any Warrant; nor shall it be
10
responsible to make any adjustments required under the provisions of Section 4
hereof or responsible for the manner, method, or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Warrant Agreement or any Warrant
or as to whether any shares of Common Stock will when issued be valid and fully
paid and nonassessable.
8.5 Acceptance of Agency. The Warrant Agent hereby accepts the agency
established by this Warrant Agreement and agrees to perform the same upon the
terms and conditions herein set forth and among other things, shall account
promptly to the Company with respect to Warrants exercised and concurrently
account for, and pay to the Company, all moneys received by the Warrant Agent
for the purchase of shares of the Company's Common Stock through the exercise of
Warrants.
9. Miscellaneous Provisions.
9.1 Successors. All the covenants and provisions of this Warrant Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns.
9.2 Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and either be delivered personally or by
private national courier service, or be mailed, certified or registered mail,
return receipt requested, postage prepaid, and shall be deemed given when so
delivered personally or, if sent by private national courier service, on the
next business day after delivery to the courier, or, if mailed, two business
days after the date of mailing, as follows:
Argyle Security Acquisition Corporation
200 Concord Plaza, Suite 700
San Antonio, Texas 78216
Attn: Bob Marbut
Any notice, statement or demand authorized by this Warrant Agreement to be given
or made by the holder of any Warrant or by the Company to or on the Warrant
Agent shall be sufficiently given when so delivered if by hand or overnight
delivery or if sent by certified mail or private courier service five days after
deposit of such notice, postage prepaid, addressed (until another address is
filed in writing by the Warrant Agent with the Company), as follows:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Attn: Compliance Department
with a copy in each case to:
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attn: Mitchell S. Nussbaum
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and
Rodman & Renshaw, LLC
330 Madison Avenue
New York, New York 10017
Attn: Edward Kovalik
and
Morse Zelnick Rose & Lander, LLP
405 Park Avenue, Suite 1401
New York, New York 10022
Attn: Kenneth S. Rose
9.3 Applicable law. The validity, interpretation, and performance of this
Warrant Agreement and of the Warrants 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 Warrant 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 at the address set
forth in Section 9.2 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any action, proceeding or claim.
9.4 Persons Having Rights under this Warrant Agreement. Nothing in this
Warrant Agreement expressed and nothing that may be implied from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the parties hereto and the registered
holders of the Warrants and, for the purposes of Sections 3.3.5 6.1, 6.4, 7.4,
9.2 and 9.8 hereof, Rodman, any right, remedy, or claim under or by reason of
this Warrant Agreement or of any covenant, condition, stipulation, promise, or
agreement hereof. Rodman shall be deemed to be a third-party beneficiary of this
Warrant Agreement with respect to Sections 3.3.5, 6.1, 6.4, 7.4, 9.2 and 9.8
hereof. All covenants, conditions, stipulations, promises, and agreements
contained in this Warrant Agreement shall be for the sole and exclusive benefit
of the parties hereto (and Rodman with respect to the Sections 3.3.5, 6.1, 6.4,
7.4, 9.2 and 9.8 hereof) and their successors and assigns and of the registered
holders of the Warrants.
9.5 Examination of the Warrant Agreement. A copy of this Warrant Agreement
shall be available at all reasonable times at the office of the Warrant Agent in
the Borough of Manhattan, City and State of New York, for inspection by the
registered holder of any Warrant. The Warrant Agent may require any such holder
to submit his Warrant for inspection by it.
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9.6 Counterparts. This Warrant Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
9.7 Effect of Headings. The Section headings herein are for convenience
only and are not part of this Warrant Agreement and shall not affect the
interpretation thereof.
9.8 Amendments. This Warrant Agreement may be amended by the parties
hereto without the consent of any registered holder for the purpose of curing
any ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Warrant Agreement as the parties may
deem necessary or desirable and that the parties deem shall not adversely affect
the interest of the registered holders. All other modifications or amendments,
including any amendment to increase the Warrant Price or shorten the Exercise
Period, shall require the written consent of each of Rodman and the registered
holders of a majority of the then outstanding Warrants. Notwithstanding the
foregoing, the Company may lower the Warrant Price or extend the duration of the
Exercise Period in accordance with Sections 3.1 and 3.2, respectively, without
such consent.
9.9 Severability. This Warrant 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 Warrant 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 Warrant 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, this Warrant Agreement has been duly executed by the
parties hereto as of the day and year first above written.
Attest: ARGYLE SECURITY ACQUISITION CORPORATION
By:
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Bob Marbut, Co-Chief Executive Officer
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Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
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Name:
Title: