Exhibit 4.2
EXHIBIT C
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
To Purchase __________ Shares of Common Stock of
SECURED SERVICES, INC.
THIS COMMON STOCK PURCHASE WARRANT (the "WARRANT") certifies
that, for value received, _____________ (the "HOLDER"), is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date hereof (the "INITIAL EXERCISE DATE")
and on or prior to the close of business on the four year anniversary of the
Initial Exercise Date (the "TERMINATION DATE") but not thereafter, to subscribe
for and purchase from Secured Services, Inc., a Delaware corporation (the
"COMPANY"), up to ______ shares (the "WARRANT SHARES") of Common Stock, par
value $.0001 per share, of the Company (the "COMMON STOCK"). The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
SECTION 1. DEFINITIONS. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the "PURCHASE AGREEMENT"), dated February ___, 2006, among
the Company and the purchasers signatory thereto.
SECTION 2. EXERCISE.
a) EXERCISE OF WARRANT. Exercise of the
purchase rights represented by this Warrant may be made, in whole or
in part, at any time or times on or after the Initial Exercise Date
and on or before the Termination Date by delivery to the Company of
a duly executed facsimile copy of the Notice of Exercise Form
annexed hereto (or such other office or agency of the Company as it
may designate by notice in writing to the
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registered Holder at the address of such Holder appearing on the
books of the Company); and, within 3 Trading Days of the date said
Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer or cashier's check drawn on a
United States bank. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this
Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been
exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within 3 Trading Days of the
date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a
portion of the total number of Warrant Shares available hereunder
shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and
the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise Form within 1 Business Day of receipt of
such notice. In the event of any dispute or discrepancy, the records
of the Holder shall be controlling and determinative in the absence
of manifest error. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of
the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount
stated on the face hereof.
b) EXERCISE PRICE. The exercise price per share
of the Common Stock under this Warrant shall be $0.17, subject to
adjustment hereunder (the "EXERCISE PRICE").
c) CASHLESS EXERCISE. If at any time after one
year from the date of issuance of this Warrant there is no effective
Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder, then
this Warrant may also be exercised at such time by means of a
"cashless exercise" in which the Holder shall be entitled to receive
a certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding
the date of such election;
(B) = the Exercise Price of this Warrant, as adjusted;
and
(X) = the number of Warrant Shares issuable upon
exercise of this Warrant in accordance with the
terms of this Warrant by means of a cash exercise
rather than a cashless exercise.
Notwithstanding anything herein to the contrary, on the
Termination Date, this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c).
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d) EXERCISE LIMITATIONS.
i. The Company shall
not effect any exercise of this Warrant, and
a Holder shall not have the right to
exercise any portion of this Warrant,
pursuant to Section 2(c) or otherwise, to
the extent that after giving effect to such
issuance after exercise as set forth on the
applicable Notice of Exercise, such Holder
(together with such Holder's Affiliates, and
any other person or entity acting as a group
together with such Holder or any of such
Holder's Affiliates), as set forth on the
applicable Notice of Exercise, would
beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the
number of shares of Common Stock
beneficially owned by such Holder and its
Affiliates shall include the number of
shares of Common Stock issuable upon
exercise of this Warrant with respect to
which such determination is being made, but
shall exclude the number of shares of Common
Stock which would be issuable upon (A)
exercise of the remaining, nonexercised
portion of this Warrant beneficially owned
by such Holder or any of its Affiliates and
(B) exercise or conversion of the
unexercised or nonconverted portion of any
other securities of the Company (including,
without limitation, any other Debentures or
Warrants) subject to a limitation on
conversion or exercise analogous to the
limitation contained herein beneficially
owned by such Holder or any of its
affiliates. Except as set forth in the
preceding sentence, for purposes of this
Section 2(d)(i), beneficial ownership shall
be calculated in accordance with Section
13(d) of the Exchange Act and the rules and
regulations promulgated thereunder, it being
acknowledged by a Holder that the Company is
not representing to such Holder that such
calculation is in compliance with Section
13(d) of the Exchange Act and such Holder is
solely responsible for any schedules
required to be filed in accordance
therewith. To the extent that the limitation
contained in this Section 2(d) applies, the
determination of whether this Warrant is
exercisable (in relation to other securities
owned by such Holder together with any
Affiliates) and of which a portion of this
Warrant is exercisable shall be in the sole
discretion of a Holder, and the submission
of a Notice of Exercise shall be deemed to
be each Holder's determination of whether
this Warrant is exercisable (in relation to
other securities owned by such Holder
together with any Affiliates) and of which
portion of this Warrant is exercisable, in
each case subject to such aggregate
percentage limitation, and the Company shall
have no obligation to verify or confirm the
accuracy of such determination. In addition,
a determination as to any group status as
contemplated above shall be determined in
accordance with Section 13(d) of the
Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this
Section 2(d), in determining the number of
outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares
of Common Stock as reflected in (x) the
Company's most recent Form 10-QSB or Form
10-KSB, as the case may be, (y) a more
recent public announcement by the Company or
(z) any other notice by the Company or the
Company's Transfer Agent setting
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forth the number of shares of Common Stock
outstanding. Upon the written or oral
request of a Holder, the Company shall
within two Trading Days confirm orally and
in writing to such Holder the number of
shares of Common Stock then outstanding. In
any case, the number of outstanding shares
of Common Stock shall be determined after
giving effect to the conversion or exercise
of securities of the Company, including this
Warrant, by such Holder or its Affiliates
since the date as of which such number of
outstanding shares of Common Stock was
reported. The "Beneficial Ownership
Limitation" shall be 4.99% of the number of
shares of the Common Stock outstanding
immediately after giving effect to the
issuance of shares of Common Stock issuable
upon exercise of this Warrant. The
Beneficial Ownership Limitation provisions
of this Section 2(d)(i) may be waived by
such ▇▇▇▇▇▇, at the election of such Holder,
upon not less than 61 days' prior notice to
the Company to change the Beneficial
Ownership Limitation to 9.99% of the number
of shares of the Common Stock outstanding
immediately after giving effect to the
issuance of shares of Common Stock upon
exercise of this Warrant, and the provisions
of this Section 2(d) shall continue to
apply. Upon such a change by a Holder of the
Beneficial Ownership Limitation from such
4.99% limitation to such 9.99% limitation,
the Beneficial Ownership Limitation may not
be further waived by such Holder. The
provisions of this paragraph shall be
construed and implemented in a manner
otherwise than in strict conformity with the
terms of this Section 2(d)(i) to correct
this paragraph (or any portion hereof) which
may be defective or inconsistent with the
intended Beneficial Ownership Limitation
herein contained or to make changes or
supplements necessary or desirable to
properly give effect to such limitation. The
limitations contained in this paragraph
shall apply to a successor holder of this
Warrant.
ii. Unless the Company
has obtained Authorized Share Approval, the
Company may not issue upon exercise of this
Warrant a number of shares of Common Stock
which, when aggregated with any shares of
Common Stock issued (A) upon prior
conversion of any Debentures issued pursuant
to the Purchase Agreement and (B) upon prior
exercise of any Warrants issued pursuant to
the Purchase Agreement would exceed
1,000,000 shares of Common Stock ("ISSUABLE
MAXIMUM"). If on any attempted exercise of
this Warrant, the issuance of Warrant Shares
would exceed the Issuable Maximum and the
Company's shareholders have not previously
voted in favor of Authorized Share Approval,
then the Company shall issue to the Holder
request a Warrant exercise such number of
Warrant Shares as may be issued below the
Issuable Maximum and, with respect to the
remainder of the aggregate number of Warrant
Shares, this Warrant shall not be
exercisable until and unless Authorized
Share Approval has been obtained.
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e) MECHANICS OF EXERCISE.
i. AUTHORIZATION OF
WARRANT SHARES. The Company covenants that
all Warrant Shares which may be issued upon
the exercise of the purchase rights
represented by this Warrant will, upon
exercise of the purchase rights represented
by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and
free from all taxes, liens and charges
created by the Company in respect of the
issue thereof (other than taxes in respect
of any transfer occurring contemporaneously
with such issue).
ii. DELIVERY OF
CERTIFICATES UPON EXERCISE. Certificates for
shares purchased hereunder shall be
transmitted by the transfer agent of the
Company to the Holder by crediting the
account of the Holder's prime broker with
the Depository Trust Company through its
Deposit Withdrawal Agent Commission ("DWAC")
system if the Company is a participant in
such system, and otherwise by physical
delivery to the address specified by the
Holder in the Notice of Exercise within 3
Trading Days from the delivery to the
Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and
payment of the aggregate Exercise Price as
set forth above ("WARRANT SHARE DELIVERY
DATE"). This Warrant shall be deemed to have
been exercised on the date the Exercise
Price is received by the Company. The
Warrant Shares shall be deemed to have been
issued, and Holder or any other person so
designated to be named therein shall be
deemed to have become a holder of record of
such shares for all purposes, as of the date
the Warrant has been exercised by payment to
the Company of the Exercise Price (or by
cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if
any, pursuant to Section 2(e)(vii) prior to
the issuance of such shares, have been paid.
iii. DELIVERY OF NEW
WARRANTS UPON EXERCISE. If this Warrant
shall have been exercised in part, the
Company shall, at the request of a Holder
and upon surrender of this Warrant
certificate, at the time of delivery of the
certificate or certificates representing
Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to
purchase the unpurchased Warrant Shares
called for by this Warrant, which new
Warrant shall in all other respects be
identical with this Warrant.
iv. RESCISSION RIGHTS.
If the Company fails to cause its transfer
agent to transmit to the Holder a
certificate or certificates representing the
Warrant Shares pursuant to this Section
2(e)(iv) by the Warrant Share Delivery Date,
then the Holder will have the right to
rescind such exercise.
v. COMPENSATION FOR
BUY-IN ON FAILURE TO TIMELY DELIVER
CERTIFICATES UPON EXERCISE. In addition to
any other rights available to the Holder, if
the Company fails to cause its transfer
agent to transmit to the Holder a
certificate or certificates representing the
Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and
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if after such date the Holder is required by
its broker to purchase (in an open market
transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such
exercise (a "BUY-IN"), then the Company
shall (1) pay in cash to the Holder the
amount by which (x) the Holder's total
purchase price (including brokerage
commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the
amount obtained by multiplying (A) the
number of Warrant Shares that the Company
was required to deliver to the Holder in
connection with the exercise at issue times
(B) the price at which the sell order giving
rise to such purchase obligation was
executed, and (2) at the option of the
Holder, either reinstate the portion of the
Warrant and equivalent number of Warrant
Shares for which such exercise was not
honored or deliver to the Holder the number
of shares of Common Stock that would have
been issued had the Company timely complied
with its exercise and delivery obligations
hereunder. For example, if the Holder
purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In
with respect to an attempted exercise of
shares of Common Stock with an aggregate
sale price giving rise to such purchase
obligation of $10,000, under clause (1) of
the immediately preceding sentence the
Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company
written notice indicating the amounts
payable to the Holder in respect of the
Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing
herein shall limit a Holder's right to
pursue any other remedies available to it
hereunder, at law or in equity including,
without limitation, a decree of specific
performance and/or injunctive relief with
respect to the Company's failure to timely
deliver certificates representing shares of
Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
vi. NO FRACTIONAL SHARES
OR SCRIP. No fractional shares or scrip
representing fractional shares shall be
issued upon the exercise of this Warrant. As
to any fraction of a share which Holder
would otherwise be entitled to purchase upon
such exercise, the Company shall at its
election, either pay a cash adjustment in
respect of such final fraction in an amount
equal to such fraction multiplied by the
Exercise Price or round up to the next whole
share.
vii. CHARGES, TAXES AND
EXPENSES. Issuance of certificates for
Warrant Shares shall be made without charge
to the Holder for any issue or transfer tax
or other incidental expense in respect of
the issuance of such certificate, all of
which taxes and expenses shall be paid by
the Company, and such certificates shall be
issued in the name of the Holder or in such
name or names as may be directed by the
Holder; PROVIDED, HOWEVER, that in the event
certificates for Warrant Shares are to be
issued in a name other than the name of the
Holder, this Warrant when surrendered for
exercise shall be accompanied by the
Assignment Form
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attached hereto duly executed by the Holder;
and the Company may require, as a condition
thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental
thereto.
viii. CLOSING OF BOOKS.
The Company will not close its stockholder
books or records in any manner which
prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
SECTION 3. CERTAIN ADJUSTMENTS.
a) STOCK DIVIDENDS AND SPLITS. If the Company,
at any time while this Warrant is outstanding: (A) pays a stock
dividend or otherwise make a distribution or distributions on shares
of its Common Stock or any other equity or equity equivalent
securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (B) subdivides outstanding
shares of Common Stock into a larger number of shares, (C) combines
(including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding treasury shares, if any)
outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares
issuable upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
b) SUBSEQUENT EQUITY SALES. If the Company or
any Subsidiary thereof, as applicable, at any time while this
Warrant is outstanding, shall sell or grant any option to purchase
or sell or grant any right to reprice its securities, or otherwise
dispose of or issue (or announce any offer, sale, grant or any
option to purchase or other disposition) any Common Stock or Common
Stock Equivalents entitling any Person to acquire shares of Common
Stock, at an effective price per share less than the then Exercise
Price (such lower price, the "BASE SHARE PRICE" and such issuances
collectively, a "DILUTIVE ISSUANCE") (if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time,
whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which are
issued in connection with such issuance, be entitled to receive
shares of Common Stock at an effective price per share which is less
than the Exercise Price, such issuance shall be deemed to have
occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then the Exercise Price shall be reduced and
only reduced to equal the Base Share Price and the number of Warrant
Shares issuable hereunder shall be increased such that the aggregate
Exercise Price payable hereunder, after taking into account the
decrease in the Exercise Price, shall be equal to the aggregate
Exercise Price prior to such adjustment. Such adjustment shall be
made
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whenever such Common Stock or Common Stock Equivalents are issued.
Notwithstanding the foregoing, no adjustments shall be made, paid or
issued under this Section 3(b) in respect of an Exempt Issuance. The
Company shall notify the Holder in writing, no later than the
Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this section, indicating therein the
applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice the
"DILUTIVE ISSUANCE NOTICE"). For purposes of clarification, whether
or not the Company provides a Dilutive Issuance Notice pursuant to
this Section 3(b), upon the occurrence of any Dilutive Issuance,
after the date of such Dilutive Issuance the Holder is entitled to
receive a number of Warrant Shares based upon the Base Share Price
regardless of whether the Holder accurately refers to the Base Share
Price in the Notice of Exercise.
c) SUBSEQUENT RIGHTS OFFERINGS. If the Company,
at any time while the Warrant is outstanding, shall issue rights,
options or warrants to all holders of Common Stock (and not to
Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the VWAP at the record
date mentioned below, then the Exercise Price shall be multiplied by
a fraction, of which the denominator shall be the number of shares
of the Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase, and of which the
numerator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus
the number of shares which the aggregate offering price of the total
number of shares so offered (assuming receipt by the Company in full
of all consideration payable upon exercise of such rights, options
or warrants) would purchase at such VWAP. Such adjustment shall be
made whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights, options or warrants.
d) PRO RATA DISTRIBUTIONS. If the Company, at
any time prior to the Termination Date, shall distribute to all
holders of Common Stock (and not to Holders of the Warrants)
evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock (which shall be subject to
Section 3(b)), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on
such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of
the Common Stock as determined by the Board of Directors in good
faith. In either case the adjustments shall be described in a
statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be
made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.
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e) FUNDAMENTAL TRANSACTION. If, at any time
while this Warrant is outstanding, (A) the Company effects any
merger or consolidation of the Company with or into another Person,
(B) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (C) any tender
offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted
to tender or exchange their shares for other securities, cash or
property, or (D) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "FUNDAMENTAL
TRANSACTION"), then, upon any subsequent exercise of this Warrant,
the Holder shall have the right to receive, for each Warrant Share
that would have been issuable upon such exercise immediately prior
to the occurrence of such Fundamental Transaction, at the option of
the Holder, (a) upon exercise of this Warrant, the number of shares
of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional
consideration (the "ALTERNATE CONSIDERATION") receivable upon or as
a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the number of
shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in
an all cash transaction, cash equal to the value of this Warrant as
determined in accordance with the Black-Scholes option pricing
formula. For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in
such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given
any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. To
the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with
the foregoing provisions and evidencing the Holder's right to
exercise such warrant into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity
to comply with the provisions of this Section 3(d) and insuring that
this Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
f) CALCULATIONS. All calculations under this
Section 3 shall be made to the nearest cent or the nearest 1/100th
of a share, as the case may be. For purposes of this Section 3, the
number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and
outstanding.
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g) VOLUNTARY ADJUSTMENT BY COMPANY. The Company
may at any time during the term of this Warrant reduce the then
current Exercise Price to any amount and for any period of time
deemed appropriate by the Board of Directors of the Company.
h) NOTICE TO HOLDERS.
i. ADJUSTMENT TO
EXERCISE PRICE. Whenever the Exercise Price
is adjusted pursuant to any provision of
this Section 3, the Company shall promptly
mail to each Holder a notice setting forth
the Exercise Price after such adjustment and
setting forth a brief statement of the facts
requiring such adjustment. If the Company
issues a variable rate security, despite the
prohibition thereon in the Purchase
Agreement, the Company shall be deemed to
have issued Common Stock or Common Stock
Equivalents at the lowest possible
conversion or exercise price at which such
securities may be converted or exercised in
the case of a Variable Rate Transaction (as
defined in the Purchase Agreement).
ii. NOTICE TO ALLOW
EXERCISE BY HOLDER. If (A) the Company shall
declare a dividend (or any other
distribution in whatever form) on the Common
Stock; (B) the Company shall declare a
special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) the
Company shall authorize the granting to all
holders of the Common Stock rights or
warrants to subscribe for or purchase any
shares of capital stock of any class or of
any rights; (D) the approval of any
stockholders of the Company shall be
required in connection with any
reclassification of the Common Stock, any
consolidation or merger to which the Company
is a party, any sale or transfer of all or
substantially all of the assets of the
Company, of any compulsory share exchange
whereby the Common Stock is converted into
other securities, cash or property; (E) the
Company shall authorize the voluntary or
involuntary dissolution, liquidation or
winding up of the affairs of the Company;
then, in each case, the Company shall cause
to be mailed to the Holder at its last
address as it shall appear upon the Warrant
Register of the Company, at least 20
calendar days prior to the applicable record
or effective date hereinafter specified, a
notice stating (x) the date on which a
record is to be taken for the purpose of
such dividend, distribution, redemption,
rights or warrants, or if a record is not to
be taken, the date as of which the holders
of the Common Stock of record to be entitled
to such dividend, distributions, redemption,
rights or warrants are to be determined or
(y) the date on which such reclassification,
consolidation, merger, sale, transfer or
share exchange is expected to become
effective or close, and the date as of which
it is expected that holders of the Common
Stock of record shall be entitled to
exchange their shares of the Common Stock
for securities, cash or other property
deliverable upon such reclassification,
consolidation, merger, sale, transfer or
share exchange; provided that the failure to
mail such notice or any defect therein or in
the mailing thereof shall not affect the
validity of the corporate action required to
be specified in such notice.
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The Holder is entitled to exercise this
Warrant during the 20-day period commencing
on the date of such notice to the effective
date of the event triggering such notice.
SECTION 4. TRANSFER OF WARRANT.
a) TRANSFERABILITY. Subject to compliance with
any applicable securities laws and the conditions set forth in
Section 4(d) hereof and to the provisions of Section 4.1 of the
Purchase Agreement, this Warrant and all rights hereunder
(including, without limitation, any registration rights) are
transferable, in whole or in part, upon surrender of this Warrant at
the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in
the form attached hereto duly executed by the Holder or its agent or
attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing
the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.
b) NEW WARRANTS. This Warrant may be divided or
combined with other Warrants upon presentation hereof at the
aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to
be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be
involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
c) WARRANT REGISTER. The Company shall register
this Warrant, upon records to be maintained by the Company for that
purpose (the "WARRANT REGISTER"), in the name of the record Holder
hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for
the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.
d) TRANSFER RESTRICTIONS. If, at the time of
the surrender of this Warrant in connection with any transfer of
this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (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
shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer
may be made without registration under the Securities 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
11
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a "qualified institutional
buyer" as defined in Rule 144A(a) under the Securities Act.
SECTION 5. MISCELLANEOUS.
a) NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE.
This Warrant does not entitle the Holder to any voting rights or
other rights as a shareholder of the Company prior to the exercise
hereof as set forth in Section 2(e)(ii).
b) LOSS, THEFT, DESTRUCTION OR MUTILATION OF
WARRANT. The Company covenants that upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of
any bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and deliver a
new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
c) SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the
last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall not be a Business Day,
then such action may be taken or such right may be exercised on the
next succeeding Business Day.
d) AUTHORIZED SHARES.
The Company covenants that during the period
the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under
this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of
executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The
Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any
applicable law or regulation, or of any requirements of
the Trading Market upon which the Common Stock may be
listed.
Except and to the extent as waived or
consented to by the Holder, the Company shall not by any
action, including, without limitation, amending its
certificate of incorporation or through any
reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of
all such actions as may be necessary or
12
appropriate to protect the rights of Holder as set forth
in this Warrant against impairment. Without limiting the
generality of the foregoing, the Company will (a) not
increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately
prior to such increase in par value, (b) take all such
action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this
Warrant, and (c) use commercially reasonable efforts to
obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
Before taking any action which would result
in an adjustment in the number of Warrant Shares for
which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations
or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies
having jurisdiction thereof.
e) JURISDICTION. All questions concerning the
construction, validity, enforcement and interpretation of this
Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
f) RESTRICTIONS. The Holder acknowledges that
the Warrant Shares acquired upon the exercise of this Warrant, if
not registered, will have restrictions upon resale imposed by state
and federal securities laws.
g) NONWAIVER AND EXPENSES. No course of dealing
or any delay or failure to exercise any right hereunder on the part
of Holder shall operate as a waiver of such right or otherwise
prejudice ▇▇▇▇▇▇'s rights, powers or remedies, notwithstanding the
fact that all rights hereunder terminate on the Termination Date. If
the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to
the Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
h) NOTICES. Any notice, request or other
document required or permitted to be given or delivered to the
Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.
i) LIMITATION OF LIABILITY. No provision
hereof, in the absence of any affirmative action by Holder to
exercise this Warrant to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of Holder, shall give rise to any
liability of Holder for the purchase price of any Common Stock or as
a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
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j) REMEDIES. Holder, in addition to being
entitled to exercise all rights granted by law, including recovery
of damages, will be entitled to specific performance of its rights
under this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific
performance that a remedy at law would be adequate.
k) SUCCESSORS AND ASSIGNS. Subject to
applicable securities laws, this Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of
this Warrant and shall be enforceable by any such Holder or holder
of Warrant Shares.
l) AMENDMENT. This Warrant may be modified or
amended or the provisions hereof waived with the written consent of
the Company and the Holder.
m) SEVERABILITY. Wherever possible, each
provision of this Warrant shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of
this Warrant shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.
n) HEADINGS. The headings used in this Warrant
are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant.
********************
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: February __, 2006
SECURED SERVICES, INC.
By:_____________________________________
Name:
Title:
15
NOTICE OF EXERCISE
TO: SECURED SERVICES, INC.
(1) The undersigned hereby elects to purchase ________ Warrant
Shares of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] [if permitted] the cancellation of such number of
Warrant Shares as is necessary, in accordance with
the formula set forth in subsection 2(c), to exercise
this Warrant with respect to the maximum number of
Warrant Shares purchasable pursuant to the cashless
exercise procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
_________________________________________
The Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:
_________________________________________
_________________________________________
_________________________________________
(4) ACCREDITED INVESTOR. The undersigned is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE OF ▇▇▇▇▇▇]
---------
Name of Investing Entity: ______________________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the
foregoing Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________ whose address is
___________________________________________________________________.
___________________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.