Exhibit 4.7
WARRANT SUBSCRIPTION AGREEMENT OF
SECURED SERVICES, INC.
Dated as of May 27, 2005
Common Stock Purchase Warrant
COMMON STOCK PURCHASE WARRANT
Void After 5:00 P.M. Eastern Time on May 27, 2009.
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH
THE SECURITIES COMMISSION OF ANY STATE UNDER ANY
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THOSE SECURITIES LAWS."
Warrant Number 11 for a certain number of Shares to be determined, vesting on
May 27, 2005.
THIS CERTIFIES THAT, for value received, MCF Corporation, the registered
holder of this Common Stock Purchase Warrant (the "WARRANT") or permitted
assigns (the "HOLDER"), subject to the terms and conditions of this Warrant, the
attached Schedule 1 (the "SUBSCRIPTION FORM") and the attached Schedule 2 (the
"WARRANT AGREEMENT"), is entitled to purchase from Secured Services, Inc., a
Delaware corporation (the "COMPANY"), at any time from May 27, 2005 (the
"VESTING DATE") until 5:00 p.m. Eastern Time on May 27, 2009 (the "EXPIRATION
DATE"), up to the Warrant Amount of shares of the common stock of the Company
with $0.001 par value (the "COMMON STOCK"), at the Exercise Price per share. The
WARRANT AMOUNT shall be the number determined by dividing $125,000 by the
"Closing Price" used in determining the Conversion Price of the convertible
debentures which the Company proposes to issue to Midsummer Capital or, if there
is no such closing within 30 days of the date hereof, the Closing or Conversion
Price, as the case may be, of any such alternative financing. The EXERCISE PRICE
of the Warrant shall be the same as the Closing Price determined in accordance
with the preceding sentence. The number of shares purchasable upon exercise of
this Warrant and the Exercise Price per share shall be subject to adjustment
from time to time as set forth in the Warrant Agreement.
This Warrant is issued in accordance with the Warrant Agreement and is
subject to the terms and provisions contained therein, all of which are
incorporated herein by reference. The Holder hereof acknowledges that he was
provided with a copy of the Warrant Agreement and agrees and accepts all terms,
conditions and limitations of this Warrant Agreement, specifically Section 20.
This Warrant may be exercised in whole or in part by presentation of this
Warrant with the Subscription Form, duly executed and simultaneous payment of
the Purchase Price (as defined in the Subscription Form) at the principal office
of the Company. Payment of such Purchase Price shall be made at the option of
the Holder hereof in cash or by certified or official bank check, or wire
transfer, or by tender of securities of the Company as set forth in the Warrant
Agreement. Terms relating to
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exercise of this Warrant are set forth more fully in the Warrant Agreement.
This Warrant may be exercised in whole or in part. Upon partial exercise,
a Warrant Certificate for the unexercised portion shall be delivered to the
Holder. No fractional shares will be issued upon the exercise of this Warrant
but the Company shall pay the cash value of any fraction upon the exercise of
the Warrant as set forth more fully in the Warrant Agreement. This Warrant is
transferable only in limited circumstances at the office of the Company, in the
manner and subject to the limitations set forth in the Warrant Agreement.
The Holder hereof may be treated by the Company and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented hereby, or to the
transfer hereof on the books of the Company. Any notice to the contrary
notwithstanding, and until such transfer on such books, the Company may treat
the Holder hereof as the owner for all purposes.
This Warrant does not entitle any Holder hereof to any of the rights of a
stockholder of the Company.
DATED: As of ___________, 2005
HOLDER SECURED SERVICES, INC.
By: _________________________ By: ____________________________
MCF Corporation King ▇. ▇▇▇▇▇
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SCHEDULE 1 - SUBSCRIPTION FORM
Date: _____________.
Secured Services, Inc.
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Attention: President
Ladies and Gentlemen;
The undersigned hereby elects to exercise Warrant number ____ issued to it
by Secured Services, Inc., pursuant to the Warrant Agreement, and to purchase
thereunder _________ shares of the Common Stock of the Company (the "WARRANT
SHARES") at a purchase price of _______ Dollars ($___ ) per share (the Exercise
Price as defined in the Warrant Agreement) for an aggregate purchase price of
___________ Dollars ($___ ) (the "PURCHASE PRICE") defined as the number of
shares being purchased multiplied by the price per share.
The undersigned hereby elects under the provision set forth in Section 2.6
of the Warrant Agreement to convert ________________ percent (____%) of the
value of the Warrant into _____ shares of Common Stock. Pursuant to the terms of
the Warrant Agreement the undersigned has delivered the Purchase Price herewith
in full.
The certificate(s) or other instruments for such shares or units shall be
issued in the name of the undersigned or as otherwise indicated below.
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Signature
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Name for Registration
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Mailing Address
Very truly yours,
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By:
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Name:
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Title:
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SCHEDULE 2 - WARRANT AGREEMENT
This WARRANT AGREEMENT (the "Agreement") is Schedule 2 to the Warrant
between the Holder (as defined in the Warrant) and the Company (as defined in
the Warrant), dated as of the date of the Warrant, and forms an integral part of
the Warrant.
The Company and the Holder hereby agree as follows:
SECTION 1. ISSUANCE OF THE WARRANT, TRANSFERABILITY AND FORM OF THE WARRANT.
1.1 THE WARRANT. The Company hereby grants to the Holder a Warrant to
purchase up to the Warrant Amount of the Common Stock, at the Exercise Price (as
defined in Section 6.1.3 hereof). The shares of Common Stock issuable upon
exercise of the Warrant are defined in the Subscription Form and are referred to
herein as the "WARRANT SHARES".
1.2 TRANSFER RESTRICTIONS. Holder agrees not to sell, transfer or
otherwise dispose of the Warrant or Warrant Shares, unless a registration
statement under the Securities Act of 1933, as amended (the "SECURITIES ACT") is
in effect with regard thereto or unless such sale, transfer or other disposition
is made pursuant to a transaction exempt from such registration.
1.3 TRANSFER - GENERAL. Subject to the terms hereof, the Warrant shall
be transferable only on the books of the Company maintained at its principal
office upon delivery thereof, duly endorsed by the Holder or his duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In all cases of transfer, the original
power of attorney, duly approved, or a duly certified copy thereof, shall be
deposited and remain with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be required to be
deposited and to remain with the Company in its discretion. Upon any
registration of transfer, the person to whom such transfer is made shall receive
a new Common Stock Purchase Warrant for the portion of the Warrant transferred,
and the Holder of such Warrant shall be entitled to receive a new Common Stock
Purchase Warrant from the Company for the portion thereof retained.
1.4 FORM OF THE WARRANT. The form of the election to purchase Warrant
Shares is the Subscription Form attached as Schedule 1. The Warrant shall be
executed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer or President or any other officer of the Company authorized to
do so by the Board of Directors of the Company (the "BOARD").
The Warrant shall be dated as of the date of execution thereof by the
Company either upon initial issuance or upon transfer.
SECTION 2. TERM OF THE WARRANT; EXERCISE OF THE WARRANT; EXERCISE PRICE, ETC.
2.1 TERM OF THE WARRANT. Subject to the terms of this Warrant Agreement,
the Holder shall have the right, which right may be exercised in whole or in
part, from time to time, beginning on the Vesting Date (as noted in the Warrant)
and ending on the Expiration Date (as noted in the Warrant), to purchase from
the Company the number of fully paid and nonassessable Warrant Shares which the
Holder may at the time be entitled to purchase on exercise of such Warrant. If
the Expiration Date is not a day other than a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close (a "Business Day"), then the Warrant may be exercised
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on the next succeeding Business Day.
2.2 VESTING OF THE WARRANT. The Warrant is vested as of the Vesting Date
and may be exercised on or after the Vesting Date in accordance with the terms
of this Agreement and the Warrant.
2.3 EXERCISE OF THE WARRANT. The Warrant may be exercised by
surrendering the Warrant and the completed and signed Subscription Form, to the
Company, at its principal office, and upon payment to the Company of the
Purchase Price for the number of Warrant Shares in respect of which such Warrant
is then being exercised (such surrender of Warrant, delivery of the Subscription
Form and payment of the Exercise Price is hereinafter called the "EXERCISE OF
THE WARRANT"). Upon partial exercise, the Company shall deliver a new Common
Stock Purchase Warrant for the unexercised portion to the Holder within 10
Business Days. Payment of the Purchase Price shall be by delivery of cash, or a
certified or official bank check.
Subject to Section 3 hereof, upon such surrender of a Warrant and payment
of the Exercise Price as aforesaid, the Company shall issue and deliver within
ten (10) Business Days in the name of the Holder, or upon the written order of
the Holder thereof, in such name or names as the Holder may designate, a
certificate or certificates for the number of Warrant Shares so purchased upon
the Exercise of the Warrant, together with cash, as provided in Section 6.4
hereof, in lieu of any fractional Warrant Shares otherwise issuable upon such
surrender. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such Warrant Shares as of the date applicable of the
Exercise of the Warrant and payment of the Exercise Price, as aforesaid.
2.4 COMPLIANCE WITH GOVERNMENT REGULATIONS. Holder acknowledges that
none of the Warrant or Warrant Shares has been registered under the Securities
Act, and therefore may be sold or disposed of in the absence of such
registration only pursuant to an exemption from such registration and in
accordance with this Agreement. The Warrant and the Warrant Shares will bear a
legend to the following effect:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH
THE SECURITIES COMMISSION OF ANY STATE UNDER ANY
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THOSE SECURITIES LAWS."
SECTION 3 PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes, if any, attributable to
the initial issuance of the Warrant and Warrant Shares upon the exercise of
Warrant. The Company shall not be required to pay any income tax or taxes
resulting from the issuance of the Warrant or any other tax or taxes other than
as set forth above which may be payable in respect of any transfer involved in
the issue or delivery of the Warrant or certificates for Warrant Shares.
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SECTION 4 MUTILATED OR MISSING WARRANT.
In case any Warrant certificate shall be mutilated, lost, stolen or
destroyed, the Company shall issue and deliver in exchange and substitution for
and upon cancellation of the mutilated Warrant, or in lieu of and substitution
for the Warrant lost, stolen or destroyed, a new Warrant certificate of like
tenor and representing an equivalent right or interest; but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant certificate (an Affidavit of Loss executed and
delivered by the Holder to be deemed satisfactory) and agreement to indemnify
the Company, if requested, also reasonably satisfactory to them.
SECTION 5 RESERVATION OF WARRANT SHARES.
5.1 RESERVATION OF WARRANT SHARES. There have been reserved, and the
Company shall at all times keep reserved, out of its authorized and unissued
shares of Common Stock, that number of shares of Common Stock sufficient to
provide for the full exercise of the outstanding Warrant. The transfer agent for
the Common Stock any every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the Warrant (the
"TRANSFER AGENT") will be and are hereby irrevocably authorized and directed at
all times until 5:00 p.m. Eastern Time on the Expiration Date to reserve such
number of authorized shares as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with the Transfer Agent for any
shares of the Company's capital stock issuable upon the exercise of the Warrant.
The Company covenants that the issuance, sale and delivery of the Warrant in
accordance with this Agreement, and the issuance, sale and delivery of the
Warrant Shares upon conversion of the Warrant have been duly authorized by all
necessary corporate action on the part of the Company. Sufficient authorized but
unissued shares of Common Stock have been reserved by corporate action in
connection with the prospective exercise of the Warrant. The Company covenants
that all Warrant Shares which may be issued upon exercise of the Warrant will,
upon payment in accordance with this Agreement be duly authorized, validly
issued, fully paid, nonassessable, and free of and from all preemptive or stock
purchase rights, taxes, liens, charges, pledges, mortgages, security interests,
and other encumbrances or claims of any kind with respect thereto except as
created by such Holder. The Company will supply the Transfer Agent with duly
executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be payable as provided in Section
6.4 of this Agreement. The Company will furnish to such Transfer Agent a copy of
all notices of adjustments, and certificates related thereto, transmitted to
each Holder. Any Warrant surrendered in the exercise of the rights thereby
evidenced shall be canceled by the Company, subject to the issuance of a
replacement Warrant for the unexercised portion if only partially exercised
pursuant to Section 2.3.
5.2 CANCELLATION OF WARRANT. In the event the Company shall purchase or
otherwise acquire any Warrant, the same shall be canceled and retired.
SECTION 6 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
The number and kind of securities purchasable upon the exercise of the
Warrant and the Exercise Price of such securities shall be subject to adjustment
from time to time upon the happening of certain events, as hereinafter defined.
6.1 MECHANICAL ADJUSTMENTS. The number of Warrant Shares purchasable
upon the exercise of the Warrant and the Exercise Price of such Warrant Shares
shall be subject to adjustment as follows:
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6.1.1 SUBDIVISION OR COMBINATION OF SHARES. In case the Company shall at
any time subdivide (including, without limitation through a stock split or stock
dividend) its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionally reduced and the number of Warrant Shares purchasable hereunder
shall be proportionately increased. In case the outstanding shares of the Common
Stock of the Company shall be combined (including, without limitation through a
reverse stock split) into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased,
and the number of Warrant Shares purchasable hereunder shall be proportionately
reduced.
6.1.2 ADJUSTMENT NOTICES TO HOLDER. Upon any increase or decrease in the
number of Warrant Shares purchasable upon the exercise of the Warrant, or upon
any adjustment in the Exercise Price, then, and in each such case, the Company
shall promptly deliver written notice thereof to each Holder, which notice shall
state the increased or decreased number of Warrant Shares purchasable upon the
exercise of the Warrant and the old and new Exercise Prices, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based.
6.1.3 EXERCISE PRICE DEFINED. As used in this Warrant Agreement, the term
"EXERCISE PRICE" shall mean the purchase price per share specified in the
Warrant until the occurrence of an event specified in this Section 6 and
thereafter shall mean said price, as adjusted from time to time, in accordance
with the provisions of this Section 6. No such adjustment shall be made unless
such adjustment would change the Exercise Price at the time by $0.01 or more;
provided, however, that all adjustments not so made shall be deferred and made
when the aggregate thereof would change the Exercise Price at the time by $0.01
or more.
6.2 NOTICE OF CONSOLIDATION OR MERGER. If the Company shall at any time
consolidate or merge into any other corporation or transfer all or substantially
all of its assets, then the Company shall deliver written notice to the Holder
of such merger, consolidation or sale of assets at least twenty (20) days prior
to the closing of such merger, consolidation or sale of assets and the Warrant
shall terminate and expire immediately prior to the closing of such merger,
consolidation or sale of assets. Notwithstanding the above, this section 6.2
does not apply to the reorganization transaction between the Company and
Southern Software Group scheduled to be completed in June 2003.
6.3 FRACTIONAL INTERESTS. Upon Exercise of the Warrant, no fractional
shares shall be issuable and the Holder hereof may purchase only a whole number
of shares of Common Stock. The Company shall make a payment in cash in respect
of any fractional shares which might otherwise be issueable upon Exercise of the
Warrant, calculated by multiplying the fractional share amount by the Value of a
Common Share (as hereinafter defined) minus the Exercise Price; provided that
multiple Exercise of Warrants shall be aggregated so that a cash payment in
respect of fractional shares pursuant to this Section 6.4 shall not be made for
a total number greater than one share for all exercises of Warrants. Value of a
Common Share is defined as the closing sales price of the Company's Common Stock
on the date of exercise as reported by the NASDAQ or such other principal
exchange or trading market upon which the Common Stock is then traded or if the
Common Stock is not publicly traded, then fair value as determined by the Board
6.4 STATEMENT ON THE WARRANT. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrant, the Warrant theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in
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the Warrant initially issuable pursuant to this Agreement.
SECTION 7 REGISTRATION RIGHTS.
7.1 PIGGYBACK REGISTRATIONS. Each time that the Company shall propose a
registration under the Securities Act of any shares of Common Stock of the
Company, notice of such proposed registration stating the total number of shares
proposed to be the subject of such registration shall be given to the record
owners of the Warrants. The Company will automatically include in any
registration statement filed with the Securities and Exchange Commission with
regard to such proposed registration the number of Registrable Securities
requested to be included therein by the record owners of the Warrants, subject
to any underwriters' cutbacks. For purposes hereof the term "REGISTRABLE
SECURITIES" means the shares of Common Stock issuable upon exercise of the
Warrant, as well as any other shares of Common Stock then beneficially owned by
the Holder of the Warrant, none of which shares can be publicly resold without
limitation by the Holder without registration under the Securities Act.
SECTION 8 NO RIGHTS AS STOCKHOLDER.
Nothing contained in this Agreement or in the Warrant shall be construed
as conferring upon the Holder or its permitted transferees the right to vote or
to receive dividends or to consent to or receive notice as a stockholder in
respect of any meeting of stockholders for the election of directors of the
Company or any other matter, or any rights whatsoever as a stockholder of the
Company; provided that this provision shall not limit the required notice as set
forth in Section 6 hereof.
SECTION 9 INSPECTION OF WARRANT AGREEMENT.
The Company shall keep copies of this Agreement and any and all notices
given or received hereunder available for inspection by the Holder during normal
business hours at its principal office.
SECTION 10 IDENTITY OF TRANSFER AGENT.
Forthwith upon the appointment of any subsequent transfer agent for the
Common Stock or any other shares of the Company's capital stock issuable upon
the exercise of the Warrant the Company will notify the Holder of the name and
address of such subsequent transfer agent.
SECTION 11 NOTICES.
Any notices, requests and demands by the Holder to the Company pursuant to
this Agreement shall be in writing (including by facsimile), and, unless
otherwise expressly provided herein, shall be deemed to have been given when
delivered by hand, or three (3) Business Days after being deposited in the mail,
postage prepaid, or, in the case of a facsimile notice, when received, or, in
the case of delivery by a nationally recognized overnight courier, when
received, addressed to the Company at:
Secured Services Inc.
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
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Any notices, requests and demands by the Company to the Holder pursuant to
this Agreement shall be in writing (including by facsimile), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or three (3) Business Days after being deposited in
the mail, postage prepaid, or, in the case of a facsimile notice, when received,
or, in the case of delivery by a nationally recognized overnight courier, when
received, addressed to the Holder at its addresses on the signature page hereto.
Each party hereto may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in writing to the other
party.
SECTION 12 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to principles of conflict
of laws thereof. The parties hereto agree to submit to the jurisdiction of the
Courts of the State of Delaware in any action or proceeding arising out of or
relating to this Agreement. Venue for any such actions shall be in the state or
federal courts for the Stare of Delaware to be held in Wilmington, Delaware. In
the event of litigation, the prevailing party shall be entitled to reasonable
attorneys fees and costs.
SECTION 13 SUPPLEMENTS AND AMENDMENTS.
The Company and the Holder may from time to time supplement or amend this
Agreement in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Holder may deem necessary
or desirable and which shall not be inconsistent with the provisions of the
Warrant and which shall not adversely affect the interests of the Holder. Any
such supplement or amendment shall be effective only if signed by both the
Company and the Holder.
SECTION 14 SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit
of the Company shall bind and inure to the benefit of its successors and assigns
hereunder.
SECTION 15 BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to confer upon any person
other than the Company and the Holder (and their respective successors and
assigns) any legal or equitable right, remedy or claim under this Agreement and
this Agreement shall be for the sole and exclusive benefit of the Company and
the Holder, and their assignees.
SECTION 16 CAPTIONS.
The captions of the Sections of this Agreement have been inserted for
convenience only and shall have no substantive effect.
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SECTION 17 COUNTERPARTS.
This Agreement may be executed in any number of counterparts each of which
when so executed shall be deemed to be an original; but such counterparts
together shall constitute but one and the same instrument.
SECTION 19 WAIVER AND COURSE OF DEALING.
No course of dealing or any delay or failure to exercise any right
hereunder on the part of any party thereto shall operate as a waiver of such
right or otherwise prejudice the rights, powers or remedies of such party,
SECTION 20.
THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED
TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY
OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY
AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY
AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR
ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
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