Exhibit 4.5
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR QUALIFIED OR REGISTERED UNDER STATE SECURITIES OR BLUE SKY LAWS, AND
MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED, HYOTHECATED OR
OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THE
SECURITIES ACT OR AN OPINION OF COUNSEL IS OBTAINED STATING THAT SUCH
DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
NO.: IW-___ BASE DATE: ______________________, 2006
ALPHA SECURITY GROUP CORPORATION
INCORPORATED UNDER THE LAWS OF THE DELAWARE
INCENTIVE WARRANT
FOR THE PURCHASE OF SHARES OF COMMON STOCK
EXPIRATION DATE: ______________________, 2011
FOR VALUE RECEIVED, Alpha Security Group Corporation, a Delaware
corporation (the "COMPANY"), hereby certifies that ___________________________,
or his permitted assigns (each a "HOLDER") is entitled, subject to the
provisions of this Warrant, to purchase from the Company at any time or from
time to time before the Expiration Date, ____________________________
(_______________) fully-paid and non-assessable shares (as adjusted from time to
time pursuant to the terms hereof, the "WARRANT SHARES") of common stock, par
value $.0001 per share, of the Company (the "COMMON STOCK"), at an exercise
price of $.01 per Warrant Share (the "EXERCISE Price").
Regardless of whether this Warrant is then exercisable pursuant to the
terms of the Section 2.1 hereof, this Warrant will expire, terminate and be of
no further force and effect as of 5:00 p.m., New York City time, on
__________________, 2011 (the "EXPIRATION DATE").
1. CERTAIN DEFINITIONS. As used in this Warrant, the following
capitalized terms used herein have the following meanings. Other capitalized
terms are defined elsewhere herein.
"BASE DATE" means the date first written above, the date of issuance of
this Warrant.
"BUSINESS COMBINATION" means an acquisition through a merger, capital
stock exchange, asset acquisition or other similar transaction by the Company
with one or more businesses in the homeland security or defense industries or a
combination thereof. A Business Combination does not include an acquisition by
the Company of a minority interest in a business, but may include a merger in
which the Company's public stockholders, as a result of the business
combination, hold a minority interest in the surviving entity.
"COMMISSION" means the United States Securities and Exchange
Commission, or any other federal agency then administering the Securities Act or
the Exchange Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"OTHER SECURITIES" means any other equity or debt securities that may
be issued by the Company in addition thereto or in substitution for the Warrant
Shares.
"PROSPECTUS" means, with respect to any Registration Statement, the
form of prospectus included in such Registration Statement.
"REGISTER," "REGISTERED" and "REGISTRATION" means a registration
effected by preparing and filing a registration statement or similar document in
compliance with the requirements of the Securities Act, and the applicable rules
and regulations promulgated thereunder, (other than a registration statement on
Form S-8 or their successors or any registration statement covering only
securities proposed to be issued in exchange for securities or assets of another
entity) and such registration statement becoming effective.
"REGISTRABLE SECURITIES" means the Warrant Shares issuable upon the
exercise of all of the Incentive Warrants granted by the Company and any
warrants, shares of capital stock or other securities of the Company issued as a
dividend or other distribution with respect to or in exchange for or in
replacement of such Warrant Shares. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when: (a) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
sold, transferred, disposed of or exchanged in accordance with such Registration
Statement; (b) such securities shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration under the Securities Act; (c) such securities
shall have ceased to be outstanding, or (d) the Registrable Securities are
saleable under Rule 144(k).
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission in compliance with the Securities Act and the rules
and regulations promulgated thereunder for a public offering and sale of Common
Stock (other than a registration statement on Form S-4 or Form S-8, or their
successors, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another entity).
"RELEASE DATE" means the date which is three (3) months after the
closing of the Company's initial Business Combination.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect at the time.
"UNDERWRITER" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
"WARRANT AGENT" means American Stock Transfer & Trust Company, as
provided in the Warrant Agreement.
"WARRANT AGREEMENT" means the Warrant Agreement, dated _______________,
2006 by and between the Company and American Stock Transfer & Trust Company.
2. EXERCISE OF WARRANT.
2.1. Timing of Exercise. __________________ of the Warrant Shares will
be exercisable beginning on the date that is six months following the
consummation of a Business Combination (the "INITIAL EXERCISE DATE").
_________________ of the Warrant Shares will be exercisable beginning on the
date that is nine months following the consummation of a Business Combination
(the "SECOND EXERCISE DATE"). The remaining __________________ of the Warrant
Shares will be exercisable beginning on the date that is twelve months following
the consummation of a Business Combination (collectively with the Second
Exercise Date, the "SUBSEQUENT EXERCISE DATES"). Notwithstanding anything herein
to the contrary, this Warrant will not be exercisable unless at the time of
exercise a registration statement relating to the Warrant Shares is effective
and current and a prospectus is available for use by the holders of the Company.
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2.2. Standard Exercise. From and after each of the Initial Exercise
Date and the Subsequent Exercise Dates (subject to the provisions of Section
2.1), this Warrant may be exercised by presentation and surrender of this
Warrant to the Warrant Agent, with the Warrant Exercise Form attached as Exhibit
A hereto duly executed and, if such exercise is a cash exercise, accompanied by
payment (either in cash or by certified or official bank check, payable to the
order of the Company) of the Exercise Price for the number of Warrant Shares
specified in such form and instruments of transfer, if appropriate, duly
executed by the Holder or his or her duly authorized attorney. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the shares purchasable
hereunder. Upon receipt by the Warrant Agent of this Warrant, together with the
Exercise Price for the number of Warrant Shares specified in the Warrant
Exercise Form, at its office, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the Warrant Shares, notwithstanding that
the stock transfer books of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then be actually
delivered to the Holder. The Company will from time to time promptly pay all
transfer taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of the Warrant Shares.
2.3. Cashless Exercise. In lieu of exercising this Warrant in the
manner set forth in Section 2.2 hereof, the Holder may elect to exercise this
Warrant or a portion hereof and to pay for the Warrant Shares by way of cashless
exercise by surrendering this Warrant to the Warrant Agent, together with the
Notice of Exercise attached as Exhibit A duly executed, in which event the
Company shall issue to the Holder that number of shares of Common Stock of the
Company computed using the following formula:
X = Y (A - B)
-------------
A
Where X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares purchasable under
this Warrant or, if only a portion of the Warrant
is being exercised, the portion of the Warrant
being cancelled (at the date of such calculation).
A = the Closing Price of one share of Common Stock on the
date prior to such exercise
B = the Exercise Price (as adjusted to the date of such
calculation).
If the above calculation results in a negative number, then no Warrant
Shares shall be issued or issuable upon conversion of this Warrant.
2.4. No Rights as Stockholder. The Holder shall not, by virtue hereof,
be entitled to any voting or other rights of a stockholder of the Company,
either at law or equity, and the rights of the Holder are limited to those
expressed in this Warrant.
3. RESERVATION OF SHARES; FRACTIONAL SHARES. The Company will at all
times reserve for issuance and delivery upon exercise of this Warrant all shares
of Common Stock or other shares of capital stock of the Company (and Other
Securities) sufficient to permit the exercise of this Warrant. All such shares
(and Other Securities) shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and non-assessable. No fractional
shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant, any such fractional share or scrip representing such fractional
shares shall be rounded up to the next whole share, with no consideration to be
paid by the Holder for such share.
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4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
4.1 Exchange, Transfer and Assignment. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Warrant Agent, if any, for other Warrants of different
denominations, entitling the Holder or Holders thereof to purchase in the
aggregate the same number of Warrant Shares purchasable hereunder to the extent
not previously exercised. The Holder of this Warrant, by the Holder's acceptance
hereof, agrees that the Holder will not sell, transfer, assign, pledge or
hypothecate this Warrant, or any portion thereof or any rights thereto, except
that: (i) if the Holder is an entity, such Holder may transfer this Warrant to
such Holder's affiliates, as defined under the Securities Act of 1933, as
amended, and the rules thereunder, (ii) if the Holder is an individual, such
Holder may transfer this Warrant to such Holder's children and/or spouse and to
charitable trusts controlled by such Holder, in each case solely for estate or
tax planning purposes and (iii) nothing contained in this Section 4 shall be
deemed to effect transfers of this Warrant by the Holder by the operation of
law. Transfers of this Warrant shall not be effective unless the transferee
agrees in writing to abide to the conditions contained in this Warrant and the
Warrant Agreement and delivers such agreement to the Company.
4.2 Loss. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute a contractual obligation on the part of the Company.
4.3 Warrant Agreement. The terms of the Warrant Agreement shall
supplement the terms and conditions set forth in this Section 4, except for any
terms and conditions contained in the Warrant Agreement which are inconsistent
with the terms and conditions contained in this Warrant. Pursuant to the Warrant
Agreement, the Warrant Agent shall act as the warrant agent for this Warrant and
perform its duties and obligations as agreed upon therein as applicable to this
Warrant.
5. REGISTRATION RIGHTS.
5.1 Demand Registration.
5.1.1. Request for Registration. The Company, upon written demand (a
"DEMAND NOTICE") given at any time and from time to time after the Initial
Exercise Date, of the holders of 75% of the Registrable Securities, agrees to
register under the Securities Act (a "DEMAND REGISTRATION") all or any portion
of the Registrable Securities. The Demand Notice shall specify the Registrable
Securities proposed to be sold and the intended method(s) of distribution
thereof. The Company will notify all holders of Registrable Securities of its
receipt of the Demand Notice, and each holder of Registrable Securities who
wishes to include all or a portion of such holder's Registrable Securities in
the Demand Registration (each such holder that decides to include shares of
Registrable Securities in such registration, a "DEMANDING HOLDER") shall so
notify the Company within fifteen (15) days after the receipt by the holder of
the notice from the Company. Upon any such request, the Demanding Holders shall
be entitled to have their Registrable Securities included in the Demand
Registration, subject to the provisions hereof. The Company shall not be
required to comply with a Demand Notice if the Company has filed a registration
statement with respect to which the Holder is entitled to piggyback registration
rights pursuant to Section 5.2 hereof and either: (i) the Holder has elected to
participate in the offering covered by such registration statement or (ii) if
such registration statement relates to an underwritten primary offering of the
securities of the Company, until the offering covered by such registration
statement has been withdrawn or until thirty (30) days after such offering is
consummated. The Company shall not be obligated to effect more than an aggregate
of one (1) Demand Registration under this Section 5.1.1 in respect of
Registrable Securities.
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5.1.2. Effective Registration. A registration will not count as a
Demand Registration until the Registration Statement filed with the Commission
with respect to such Demand Registration has been declared effective and the
Company has complied with all of its obligations under this Warrant with respect
thereto; provided, however, that if, after such Registration Statement has been
declared effective, the offering of Registrable Securities pursuant to a Demand
Registration is interfered with by any stop order or injunction of the
Commission or any other governmental agency or court, the Registration Statement
with respect to such Demand Registration will be deemed not to have been
declared effective, unless and until: (i) such stop order or injunction is
removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of
the Demanding Holders thereafter elect to continue the offering; and, provided
further, that the Company shall not be obligated to file a second Registration
Statement until a Registration Statement that has been filed is counted as a
Demand Registration or is terminated.
5.1.3. Underwritten Offering. If the Holders of 75% of the Registrable
Securities so elect and such Holders so advise the Company as part of their
written demand for a Demand Registration, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Demanding Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the Underwriter or Underwriters selected for such underwriting by a
majority-in-interest of the Holders of Registrable Securities.
5.2 Piggy-Back Registration.
5.2.1. Piggy-Back Registration Rights. If at any time after the Initial
Exercise Date when there is not an effective registration statement covering all
of the Registrable Securities, the Company proposes to file a registration
statement under the Securities Act with respect to an offering of equity
securities, or securities or other obligations exercisable or exchangeable for,
or convertible into, equity securities, by the Company for its own account or
for the account of stockholders of the Company (or by the Company and by
stockholders of the Company pursuant to Section 5.1), other than a registration
statement: (i) on Form S-8 or S-4, (ii) offering of securities solely to the
Company's existing stockholders, (iii) for an offering of debt that is
convertible into equity securities of the Company or (iv) for a dividend
reinvestment plan, then the Company shall: (x) give written notice of such
proposed filing to the Holders of Registrable Securities as soon as practicable
but in no event less than ten (10) days before the anticipated filing date,
which notice shall describe the amount and type of securities to be included in
such offering, the intended method(s) of distribution, and the name of the
proposed managing Underwriter or Underwriters, if any, of the offering, and (y)
offer to the Holders of Registrable Securities in such notice the opportunity to
register the sale of such number of Registrable Securities as such Holders may
request in writing within five (5) days following receipt of such notice (a
"PIGGY-BACK REGISTRATION"). The Company shall cause such Registrable Securities
to be included in such registration and shall use its commercially reasonable
efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration on the same terms and conditions as any
similar securities of the Company and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method(s) of
distribution thereof. All holders of Registrable Securities proposing to
distribute their securities through a Piggy-Back Registration that involves an
Underwriter or Underwriters shall enter into an underwriting agreement in
customary form with the Underwriter or Underwriters selected for such Piggy-Back
Registration.
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5.2.2. Reduction of Offering. If the managing Underwriter or
Underwriters for a Piggy-Back Registration that is to be an underwritten
offering advises the Company and the holders of Registrable Securities in
writing that the dollar amount or number of shares of Common Stock which the
Company desires to sell, taken together with shares of Common Stock, if any, as
to which registration has been demanded pursuant to written contractual
arrangements with persons other than the holders of Registrable Securities
hereunder, the Registrable Securities as to which registration has been
requested under this Section 5.2, and the shares of Common Stock, if any, as to
which registration has been requested pursuant to the written contractual
piggy-back registration rights of other stockholders of the Company, exceeds the
exceeds the maximum dollar amount or maximum number of shares that can be sold
in such offering without adversely affecting the proposed offering price, the
timing, the distribution method, or the probability of success of such offering
(such dollar amount or number of shares, the "MAXIMUM NUMBER OF SHARES"), then
the Company shall include in any such registration:
(i) If the registration is undertaken for the Company's
account: (A) first, the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number of
Shares; (B) second, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clause (A), the shares of Common Stock, if any,
including the Registrable Securities, as to which registration has been
requested pursuant to written contractual piggy-back registration rights of
security holders (pro rata in accordance with the number of shares of Common
Stock which each such person has actually requested to be included in such
registration, regardless of the number of shares of Common Stock with respect to
which such persons have the right to request such inclusion) that can be sold
without exceeding the Maximum Number of Shares; and
(ii) If the registration is a "demand" registration undertaken
at the demand of persons other than the holders of Registrable Securities
pursuant to written contractual arrangements with such persons: (A) first, the
shares of Common Stock for the account of the demanding persons that can be sold
without exceeding the Maximum Number of Shares; (B) second, to the extent that
the Maximum Number of Shares has not been reached under the foregoing clause
(A), the shares of Common Stock or other securities that the Company desires to
sell that can be sold without exceeding the Maximum Number of Shares; and (C)
third, to the extent that the Maximum Number of Shares has not been reached
under the foregoing clauses (A) and (B), the Registrable Securities as to which
registration has been requested under this Section 5.2 (pro rata in accordance
with the number of shares of Registrable Securities held by each such holder);
and (D) fourth, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clauses (A), (B) and (C), the shares of Common
Stock, if any, as to which registration has been requested pursuant to written
contractual piggy-back registration rights which other stockholders desire to
sell that can be sold without exceeding the Maximum Number of Shares.
5.2.3. Withdrawal. Any Holder of Registrable Securities may elect to
withdraw such Holder's request for inclusion of Registrable Securities in any
Piggy-Back Registration by giving written notice to the Company of such request
to withdraw prior to the effectiveness of the Registration Statement. The
Company may also elect to withdraw a registration statement at any time prior to
the effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all registration expenses to the extent
provided for in Section 5.5.
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5.3 Registration Procedures.
5.3.1 Filings; Information. Whenever the Company is required to effect
the registration of any Registrable Securities pursuant to this Section 5, the
Company shall use its commercially reasonable efforts to effect the registration
and sale of such Registrable Securities in accordance with the intended
method(s) of distribution thereof as expeditiously as practicable, and in
connection with any such request.
5.3.2 Filing Registration Statement. The Company shall, as
expeditiously as possible and in any event within sixty (60) days after receipt
of a request for a Demand Registration, prepare and file with the Commission a
Registration Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of all Registrable Securities to be registered thereunder in
accordance with the intended method(s) of distribution thereof, and shall use
its best efforts to cause such Registration Statement to become and remain
effective for the period required hereunder; provided, however, that the Company
shall have the right to defer any Demand Registration for up to one hundred
twenty (120) days, and any Piggy-Back Registration for such period as may be
applicable to deferment of any demand registration to which such Piggy-Back
Registration relates, and in the event of a Piggy Back Registration, the Company
has the right to terminate the registration at its choosing, in each case if the
Company shall furnish to the holders a certificate signed by the Chief Executive
Officer of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would not be in the best interests of the Company
and its stockholders for such Registration Statement to be effected at such
time; provided further, however, that the Company shall not have the right to
exercise the right set forth in the immediately preceding proviso more than once
in any 365-day period in respect of a Demand Registration hereunder; and
provided further that the holders shall provide at least fifteen (15) business
days' notice of the date on which they wish the Company to prepare and file a
Registration Statement with the Commission.
5.3.3 Copies. Prior to filing a Registration Statement or Prospectus,
or any amendment or supplement thereto, the Company should furnish without
charge to the holders of Registrable Securities included in such registration,
and such holders' legal counsel, copies of such Registration Statement as
proposed to be filed, each amendment and supplement to such Registration
Statement (in each case including all exhibits thereto and documents
incorporated by reference therein), the Prospectus (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities
included in such registration or legal counsel for any such holders may request
in order to facilitate the disposition of the Registrable Securities owned by
such holders.
5.3.4 Amendments and Supplements. The Company shall prepare and file
with the Commission such amendments, including post-effective amendments, and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
in compliance with the provisions of the Securities Act until all Registrable
Securities and other securities covered by such Registration Statement have been
disposed of in accordance with the intended method(s) of distribution set forth
in such Registration Statement (which period shall not exceed the sum of one
hundred eighty (180) days plus any period during which any such disposition is
interfered with by any stop order or injunction of the Commission or any
governmental agency or court) or such securities have been withdrawn.
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5.3.5 Notification. After the filing of a Registration Statement, the
Company shall promptly, and in no event more than five (5) business days after
such filing, notify the holders of Registrable Securities included in such
Registration Statement of such filing, and shall further notify such holders
promptly and confirm such advice in writing in all events within five (5)
business days of the occurrence of any of the following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective amendment
to such Registration Statement becomes effective; (iii) the issuance or
threatened issuance by the Commission of any stop order (and the Company shall
take all actions required to prevent the entry of such stop order or to remove
it if entered); and (iv) any request by the Commission for any amendment or
supplement to such Registration Statement or any Prospectus relating thereto or
for additional information or of the occurrence of an event requiring the
preparation of a supplement or amendment to such Prospectus so that, as
thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such Prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and promptly make
available to the holders of Registrable Securities included in such Registration
Statement any such supplement or amendment; except that before filing with the
Commission a Registration Statement or Prospectus or any amendment or supplement
thereto, including documents incorporated by reference, the Company shall
furnish to the holders of Registrable Securities included in such Registration
Statement and to the legal counsel for any such holders, copies of all such
documents proposed to be filed sufficiently in advance of filing to provide such
holders and legal counsel with a reasonable opportunity to review such documents
and comment thereon, and the Company shall not file any Registration Statement
or Prospectus or amendment or supplement thereto, including documents
incorporated by reference, to which such holders or their legal counsel shall
reasonably object.
5.3.6 State Securities Laws Compliance. The Company shall use its
commercially reasonable efforts to: (i) register or qualify the Registrable
Securities covered by the Registration Statement under the securities or "blue
sky" laws of such jurisdictions in the United States in which such registration
or qualification is required and which the holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such
Registrable Securities covered by the Registration Statement to be registered
with or qualified under the laws of such other Governmental Authorities as may
be necessary by virtue of the business and operations of the Company and do any
and all other acts and things that may be necessary or advisable to enable the
holders of Registrable Securities included in such Registration Statement to
consummate the disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not for this purpose be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph 5.3.6 or subject itself
to taxation in any such jurisdiction.
5.3.7 Agreements for Disposition. The Company shall enter into such
customary agreements (including, if applicable, an underwriting agreement in
customary form) and as may be required by applicable law, take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; provided, however, that the holders
of the Registrable Securities may not require the Company to accept the terms,
conditions or provisions in any such agreement which the Company determines are
adverse to the Company's best interests. The representations, warranties and
covenants of the Company in any underwriting agreement which are made to or for
the benefit of any Underwriters, to the extent applicable, shall cover only
those matters customarily covered in offerings of similar size and with respect
to companies in the same business, and shall also be made to and for the benefit
of the holders of Registrable Securities included in such registration
statement. No holder of Registrable Securities included in such registration
statement shall be required to make any representations or warranties in the
underwriting agreement except, if applicable, with respect to such holder's
organization, good standing, authority, title to Registrable Securities, lack of
conflict of such sale with such holder's material agreements and organizational
documents, and with respect to written information relating to such holder that
such holder has furnished in writing expressly for inclusion in such
Registration Statement. The holders of Registrable Securities shall agree to
such covenants and indemnification and contribution obligations for selling
stockholders as are customarily contained in the agreements of that type.
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5.3.8 Cooperation. The principal executive officer of the Company, the
principal financial officer of the Company, the principal accounting officer of
the Company and all other officers and members of the management of the Company
shall cooperate fully in any offering of Registrable Securities hereunder, which
cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential investors. The holders of
Registrable Securities shall cooperate fully in the preparation of the
registration statement and other documents relating to any offering in which
they include securities. Each holder shall also furnish to the Company such
information regarding itself, the Registrable Securities held by such holder,
and the intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities.
5.3.9 Records. The Company shall make available for inspection by the
holders of Registrable Securities included in such Registration Statement, any
Underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
holder of Registrable Securities included in such Registration Statement, all
financial and other records, pertinent corporate documents and properties of the
Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any of them in connection with
their discharge of their due diligence responsibility with such Registration
Statement.
5.3.10 Listing. The Company shall use its commercially reasonable
efforts to cause all Registrable Securities included in any registration to be
listed on such exchanges or otherwise designated for trading in the same manner
as similar securities issued by the Company are then listed or designated or, if
no such similar securities are then listed or designated, in a manner
satisfactory to the holders of a majority of the Registrable Securities included
in such registration.
5.4 Obligation to Suspend Distribution. Upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
5.3.5, or upon any suspension by the Company, pursuant to a written ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ compliance program adopted by the Company's Board of Directors, of the
ability of all "insiders" covered by such program to transact in the Company's
securities because of the existence of material non-public information, each
holder of Registrable Securities included in any registration shall immediately
discontinue disposition of such Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such holder
receives the supplemented or amended Prospectus contemplated by Section 5.3.5 or
the restriction on the ability of "insiders" to transact in the Company's
securities is removed, as applicable, and, if so directed by the Company, each
such holder will deliver to the Company all copies, other than permanent file
copies then in such holder's possession, of the most recent Prospectus covering
such Registrable Securities at the time of receipt of such notice.
5.5 Registration Expenses. The Company shall bear all costs and
expenses incurred in connection with any Demand Registration pursuant to Section
5.1 and any Piggy-Back Registration pursuant to Section 5.2 and all expenses
incurred in performing or complying with its other obligations under this
Warrant, whether or not the Registration Statement becomes effective, including,
without limitation: (i) all registration and filing fees; (ii) fees and expenses
of compliance with securities or "blue sky" laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) printing expenses; (iv) the Company's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees); (v) the fees and expenses incurred in connection with
the listing of the Registrable Securities as required by Section 5.3.10; (vi)
National Association of Securities Dealers, Inc. fees (including COBRADesk
filing fees); (vii) fees and disbursements of counsel for the Company and fees
and expenses for independent certified public accountants retained by the
Company; and (viii) the fees and expenses of any special experts retained by the
Company in connection with such registration. The Company shall have no
obligation to pay any underwriting discounts or selling commissions attributable
to the Registrable Securities being sold by the holders thereof, which
underwriting discounts or selling commissions shall be borne by such holders.
9
Additionally, in an underwritten offering, all selling stockholders and the
Company shall bear the expenses of the underwriter in proportion to the
respective amount of shares each is selling in such offering. The holders of the
Registrable Securities shall bear all costs and expenses incurred by them in
connection with any such registration except as specifically provided in this
Section 5.5.
5.6 Information. The holders of Registrable Securities shall provide
such information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect the
registration of any Registrable Securities under the Securities Act pursuant to
Section 5 and in connection with the Company's obligation to comply with federal
and applicable state securities laws.
5.7 Indemnification.
5.7.1 Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, the Holder, and, as
applicable, the officers, directors, counsel and each Persons who controls such
Holder (within the meaning of Section 15 of the Securities Act), and any agent
or investment adviser thereof, against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees and costs of investigation)
arising out of or based upon any untrue or alleged untrue statement of material
fact contained in any Registration Statement, any amendment or supplement
thereto, any Prospectus or preliminary Prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same arise out of or are based upon any such untrue statement or omission based
upon information with respect to such Holder furnished in writing to the Company
by or on behalf of such Holder expressly for use therein; provided that, in the
event that the Prospectus shall have been amended or supplemented and copies
thereof as so amended or supplemented, shall have been furnished to the Holder
prior to the confirmation of any sales of Registrable Securities, such indemnity
with respect to the Prospectus shall not inure to the benefit of the Holder if
the Person asserting such loss, claim, damage or liability and who purchased the
Registrable Securities from such Holder did not, at or prior to the confirmation
of the sale of the Registrable Securities to such Person, receive a copy of the
Prospectus as so amended or supplemented and the untrue statement or omission of
a material fact contained in the Prospectus was corrected in the Prospectus as
so amended or supplemented.
5.7.2 Indemnification by the Holders. The Holder agrees to indemnity,
to the full extent permitted by law, the Company, its directors, officers and
counsel and each Person who controls the Company (within the meaning of Section
15 of the Securities Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue statement of a material fact in the
Registration Statement or Prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue or alleged untrue statement
relates to any information with respect to such Holder, in its capacity as such,
so furnished in writing by such Holder specifically for inclusion in any
Prospectus or Registration Statement (including any omissions with respect
thereto); provided, however, that the Holder shall not be liable in any such
case to the extent that prior to the filing of any such Registration Statement
or Prospectus or amendment thereof or supplement thereto, the Holder has
furnished in writing to the Company information expressly for use in such
Registration Statement or Prospectus or any amendment thereof or supplement
thereto which corrected or made not misleading information previously furnished
to the Company. In no event shall the liability of the Holder hereunder be
greater in amount than the dollar amount of the proceeds received by the Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
10
5.7.3 Conduct of Indemnification Proceedings. Any person or entity
entitled to indemnification hereunder agrees to give prompt written notice to
the indemnifying party after the receipt by such Person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such person or entity will claim
indemnification or contribution pursuant to the provisions hereof and, unless in
the judgment of counsel of such indemnified party, a conflict of interest may
exist between such indemnified party and the indemnifying party with respect to
such claim, permit the indemnifying party to assume the defense of such claim.
Failure by the indemnified party to timely notify the indemnifying party shall
not relieve the indemnifying party from the obligations of Section 5.7, except
where such failure to notify materially prejudices indemnifying parties ability
to such action, suit, proceeding, investigation or threat. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its written consent
(but such consent will not be unreasonably withheld). No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation. If the indemnifying party is not entitled to, or elects not
to, assume the defense of a claim, it will not be obligated to pay the fees and
expenses of more than one counsel (plus such local counsel, if any, as may be
reasonably required in other jurisdictions) with respect to such claim, unless
in the judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the reasonable fees and expenses of such additional counsel or counsels.
For the purposes of this Section 5.7.3, the term "conflict of interest" shall
mean that there are one or more legal defenses available to the indemnified
party that are different from or additional to those available to the
indemnifying party or such other indemnified parties, as applicable, which
different or additional defenses make joint representation inappropriate.
5.7.4 Contribution. If the indemnification from the indemnifying party
provided for in this Section 5.7 is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative benefits
received by the indemnified party on the one hand and the relative fault of the
indemnifying party and indemnified parties in connection with the actions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the Indemnified Party failed to give the notice required above, then
each Indemnifying Party shall contribute to such amount paid or payable by such
Indemnified Party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Indemnified Parties and the
Indemnifying Parties in connection with the actions or omissions which resulted
in such loss, claim, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 5.7.3, any reasonable legal or
other fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
11
5.7.5 If indemnification is available under this Section 5, the
indemnifying parties shall indemnity each indemnified party to the fullest
extent provided for hereunder without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 5.7.
6. ADJUSTMENT PROVISIONS.
6.1 Stock Dividends and Split Ups. If after the date hereof, and
subject to the provisions of Section 6.5 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 this Warrant shall be
increased in proportion to such increase in outstanding shares of Common Stock.
6.2 Aggregation of Shares. If after the date hereof, and subject to the
provisions of Section 6.5 below, 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 this Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.
6.3 Adjustments in Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of the Warrants is adjusted, as
provided in Section 6.1 and 6.2 above, the Warrant Price, as defined herein,
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. The term "EXERCISE PRICE" as used in this Warrant refers to the
price per share at which Common Stock may be purchased pursuant to the Warrant
at the time a Warrant is exercised.
6.4 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 6.1 or 6.2 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 Holders shall thereafter have the right to purchase and
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of the shares of Common Stock 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 Holder would have received if the
Holder had exercised this Warrant immediately prior to such event; and if any
reclassification also results in a change in shares of Common Stock covered by
Section 6.1 or 6.2, then such adjustment shall be made pursuant to Sections 6.1,
6.2, 6.3 and this Section 6.4. The provisions of this Section 6.4 shall
similarly apply to successive reclassifications, reorganizations, mergers or
consolidations, sales or other transfers.
12
6.5 No Fractional Shares. Notwithstanding any provision contained in
this Warrant to the contrary, the Company shall not issue fractional shares upon
exercise hereof. If, by reason of any adjustment made pursuant to this Section
6, the holder of the Holder 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 Holder. There shall be no cash or other payment
for the issuance of one share of Common Stock in connection with such rounding
up.
7. RULE 144. The Company covenants that it shall file any reports
required to be filed by it under the Securities Act and the Exchange Act and
shall take such further action as the holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act, as such Rules may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission.
8. MISCELLANEOUS.
8.1 No Third Party Beneficiaries. Nothing in this Warrant shall be
construed to give to any person or entity other than the Company and the Holder
any legal or equitable right, remedy or cause of action under this Warrant. This
Warrant shall be for the sole and exclusive benefit of the Company and the
Holder.
8.2 Notices. All notices, demands, requests, consents, approvals or
other communications (collectively, "NOTICES") required or permitted to be given
hereunder or which are given with respect to this Warrant shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery or facsimile transmission,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by
facsimile; provided, that if such service or transmission is not on a business
day or is after normal business hours, then such notice shall be deemed given on
the next business day. Notice otherwise sent as provided herein shall be deemed
given on the next business day following timely delivery of such notice to a
reputable air courier service with an order for next-day delivery.
To the Company:
Alpha Security Group Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Fax No.:
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Kakoyiannis, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
To a Holder, to: [ ]
13
8.3 Severability. This Warrant 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 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 a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
8.4 Modifications and Amendments. No amendment, modification or
termination of this Warrant shall be binding upon any party unless executed in
writing by such party.
8.5 Titles and Headings. Titles and headings of sections of this
Warrant are for convenience only and shall not affect the construction of any
provision of this Warrant.
8.6 Governing Law. This Warrant shall be governed by, interpreted
under, and construed in accordance with the internal laws of the State of New
York applicable to agreements made and to be performed within the State of New
York, without giving effect to any choice-of-law provisions thereof that would
compel the application of the substantive laws of any other jurisdiction.
8.7 Waiver of Trial by Jury. Each party hereby irrevocably and
unconditionally waives the right to a trial by jury in any action, suit,
counterclaim or other proceeding (whether based on contract, tort or otherwise)
arising out of, connected with or relating to this Warrant, the transactions
contemplated hereby, or the actions of the Holder in the negotiation,
administration, performance or enforcement hereof.
8.8 Waiver of Net Cash Settlement. Notwithstanding anything to the
contrary in the Warrant and regardless of whether a registration statement is
current under the Securities Act with respect to the shares of Common Stock held
by the Holder, in no event will the Holder be entitled to receive a net-cash
settlement, stock or other consideration in lieu of unregistered Warrant Shares.
[Signature Page Follows]
14
IN WITNESS WHEREOF, the Company has caused this Incentive Warrant to be
signed on its behalf, in its corporate name, by its duly authorized officer, all
as of the Base Date.
ALPHA SECURITY GROUP CORPORATION
By: ______________________________
Name:
Title:
15
EXHIBIT A
FORM OF EXERCISE NOTICE
[To be executed only upon exercise of Warrant]
To: AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS WARRANT AGENT FOR ALPHA SECURITY GROUP CORPORATION:
(A) The undersigned registered holder of the within Warrant hereby
irrevocably exercises the Warrant pursuant to Section 2.2 of the Warrant with
respect to __________(1) shares of the Common Stock, at an exercise price per
share of Common Stock of $________, and requests that the certificates for the
shares be issued in the name of, and delivered to___________________, whose
address is:
OR
(B) The undersigned registered holder of the within Warrant hereby
irrevocably exercises the Warrant pursuant to Section 2.3 of the Warrant with
respect to __________(1) shares of the Common Stock, and hereby authorizes ALPHA
SECURITY GROUP CORPORATION to withhold _________ shares of Common Stock having a
total value of $__________, such value being determined in accordance with the
terms of this Warrant, from the Warrant Shares otherwise to be received, and
requests that the certificates for the shares be issued in the name of, and
delivered to ______________, whose address is:
Dated: _______________
----------------------------------------
Print or Type Name
----------------------------------------
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
-----------------------
(1) Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial exercise, the portion thereof as to which this Warrant
is being exercised), in either case without making any adjustment of shares of
Common Stock or any other stock or other securities or property or cash which,
pursuant to the adjustment provisions of this Warrant, may be delivered upon
exercise. In the case of a partial exercise, a new Warrant or Warrants will be
issued and delivered, representing the unconverted portion of the Warrant, to
the holder surrendering the Warrant.