WARRANT AGREEMENT between NITROSECURITY, INC. and AMERICAN STOCK TRANSFER & TRUST COMPANY Dated as of _________, 2007
Exhibit 4.4
between
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Dated as of _________, 2007
This Warrant Agreement (this “Agreement”), dated as of ___, 2007, is between
NitroSecurity, Inc., a Delaware corporation (the “Company”), and American Stock Transfer &
Trust Company, a New York corporation (the “Warrant Agent”).
The Company, at or about the time that it is entering into this Agreement, proposes to issue
and sell to public investors in an underwritten initial public offering (the “Offering”) up
to ___ units, including the units underlying the underwriters’ over-allotment option. The
Company also proposes to issue to the underwriters of the Offering warrants to purchase up to
___ additional units identical to the units offered to
the public. The ___ units
offered to the public investors and the ___ units underlying the underwriters’ warrants are
collectively referred to as the “Units.”
Each Unit consists of one share of common stock, $0.01 par value, of the Company (the
“Common Stock”) and one redeemable warrant (each, a “Warrant,” and collectively,
the “Warrants”). Each Warrant is exercisable to purchase one share of Common Stock upon
the terms and conditions and subject to adjustment in certain circumstances, all as set forth in
this Agreement.
The Company wishes to retain the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing so to act, in connection with the issuance, transfer, exchange and
replacement of the certificates evidencing the Warrants to be issued under this Agreement (the
“Warrant Certificates”) and the exercise of the Warrants.
The Company and the Warrant Agent wish to enter into this Agreement to set forth the terms and
conditions of the Warrants and the rights of the holders thereof (“Warrantholders”) and to
set forth the respective rights and obligations of the Company and the Warrant Agent. Each
Warrantholder is an intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company appoints the Warrant Agent to act as
agent for the Company in accordance with the instructions in this Agreement, and the Warrant Agent
accepts such appointment.
2. Date, Denomination and Execution of Warrant Certificates.
(a) The Warrant Certificates (and the Form of Election to Purchase and the Form of Assignment
to be printed on the reverse thereof) shall be in registered form only and shall be substantially
of the tenor and purport recited in Exhibit A hereto and may have such letters, numbers or
other marks of identification or designation and such legends, summaries or endorsements printed,
lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any law, or with any
rule or regulation made pursuant thereto, or with any rule or regulation of any stock exchange on
which the Common Stock or the Warrants may be listed or
any automated quotation system, or to conform to usage. Each Warrant Certificate shall
entitle the registered holder thereof, subject to the provisions of this Agreement and of the
Warrant Certificate, to purchase, on or after ___, 2007 and on or before 5:00 p.m., Eastern
time, on ___, 2012 (the “Expiration Date”), one fully paid and non-assessable share
of Common Stock for each Warrant evidenced by such Warrant Certificate for $___ per share. The
exercise price of the Warrants (the “Exercise Price”) is subject to adjustments as provided
in Section 6 hereof. Each Warrant Certificate issued at the initial closing of the Offering as a
part of a Unit shall be dated ___, 2007; each other Warrant Certificate shall be dated the
date on which the Warrant Agent receives valid issuance instructions from the Company or a
transferring holder of a Warrant Certificate or, if such instructions specify another date, such
other date.
(b) For purposes of this Agreement, the term “close of business” on any given date
shall mean 5:00 p.m., Eastern time, on such date; provided, however, that if such date is not a
business day, it shall mean 5:00 p.m., Eastern time, on the next succeeding business day. For
purposes of this Agreement, the term “business day” shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in New York, New York, or in the State in
which the Warrant Agent maintains the principal office in which it conducts business related to the
Warrants are authorized or obligated by law to be closed.
(c) Each Warrant Certificate shall be executed on behalf of the Company by the Chairman or
co-Chairman of the Board, its Chief Executive Officer, its President or a Vice President, either
manually or by facsimile signature printed thereon, and have affixed thereto the Company’s seal or
a facsimile thereof which shall be attested to by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. Each Warrant Certificate shall be
countersigned by the Warrant Agent, either manually or by facsimile signature printed thereon, and
shall not be valid for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof by the Company, such Warrant
Certificate, nevertheless, may be countersigned by the Warrant Agent, issued and delivered with the
same force and effect as though the person who signed such Warrant Certificate had not ceased to be
such officer of the Company.
3. Subsequent Issue of Warrant Certificates. Subsequent to their original issuance,
no Warrant Certificates shall be reissued except (i) Warrant Certificates issued upon transfer
thereof in accordance with Section 4 hereof, (ii) Warrant Certificates issued in replacement of
mutilated, destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof, (iii)
Warrant Certificates issued upon any combination, split-up or exchange of Warrant Certificates
pursuant to Section 6 hereof, (iv) Warrant Certificates issued upon the partial exercise of Warrant
Certificates pursuant to Section 7 hereof and (v) Warrant Certificates issued to reflect any
adjustment or change in the Exercise Price or the number or kind of shares purchasable thereunder
pursuant to Section 22 hereof. The Warrant Agent is hereby irrevocably authorized to countersign
and deliver, in accordance with the provisions of said Sections 4, 5, 6, 7 and 22, the new Warrant
Certificates required for purposes thereof, and the Company, whenever required by the Warrant
Agent, will supply the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purposes.
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4. Transfers and Exchanges of Warrant Certificates.
(a) The Warrant Agent will keep or cause to be kept books for registration of ownership and
transfer of the Warrant Certificates issued hereunder. Such registers shall show the names and
addresses of the respective holders of the Warrant Certificates and the number of Warrants
evidenced by each such Warrant Certificate.
(b) The Warrant Agent shall, from time to time, register the transfer of any outstanding
Warrants upon the books to be maintained by the Warrant Agent for that purpose, upon surrender of
the Warrant Certificate evidencing such Warrants, with the Form of Assignment duly filled in and
executed with such signature guaranteed by a banking institution or NASD member and such supporting
documentation as the Warrant Agent or the Company may reasonably require, to the Warrant Agent at
its stock transfer office in New York, New York, at any time on or before the Expiration Date of
such Warrant, and upon payment to the Warrant Agent for the account of the Company of an amount
equal to any applicable transfer tax. Payment of the amount of such tax may be made in cash, or by
certified or official bank check, payable in lawful money of the United States of America to the
order of the Company.
(c) Upon receipt of a Warrant Certificate, with the Form of Assignment duly filled in and
executed, accompanied by payment of an amount equal to any applicable transfer tax, the Warrant
Agent shall promptly cancel the surrendered Warrant Certificate and countersign and deliver to the
transferee a new Warrant Certificate for the number of full Warrants transferred to such
transferee; provided, however, that in case the registered holder of any Warrant Certificate shall
elect to transfer fewer than all of the Warrants evidenced by such Warrant Certificate, the Warrant
Agent in addition shall promptly countersign and deliver to such registered holder a new Warrant
Certificate or Certificates for the number of full Warrants not so transferred.
(d) Any Warrant Certificate or Certificates may be exchanged at the option of the holder
thereof for another Warrant Certificate or Certificates of different denominations, of like tenor
and representing in the aggregate the same number of Warrants, upon surrender of such Warrant
Certificate or Certificates, with the Form of Assignment duly filled in and executed, to the
Warrant Agent, at any time or from time to time after the close of business on the date hereof and
prior to the close of business on the Expiration Date relating to such Warrant. The Warrant Agent
shall promptly cancel the surrendered Warrant Certificate and deliver the new Warrant Certificate
pursuant to the provisions of this Section.
5. Mutilated, Destroyed, Lost or Stolen Warrant Certificates. Upon receipt by the
Company and the Warrant Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of any Warrant Certificate, and in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to them of
all reasonable expenses incidental thereto, and, in the case of mutilation, upon surrender and
cancellation of the Warrant Certificate, the Warrant Agent shall countersign and deliver a new
Warrant Certificate of like tenor for the same number of Warrants.
6. Adjustments of Number and Kind of Shares Purchasable and Exercise Price. The
number and kind of securities or other property purchasable upon exercise of a Warrant shall be
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subject to adjustment from time to time upon the occurrence, after the date hereof, of any of
the following events:
(a) In case the Company shall (1) pay a dividend in, or make a distribution of, shares of
capital stock on its outstanding Common Stock, (2) subdivide its outstanding shares of Common Stock
into a greater number of such shares or (3) combine its outstanding shares of Common Stock into a
smaller number of such shares, the total number of shares of Common Stock purchasable upon the
exercise of each Warrant outstanding immediately prior thereto shall be adjusted so that the holder
of any Warrant Certificate thereafter surrendered for exercise shall be entitled to receive at the
same aggregate Exercise Price the number of shares of capital stock (of one or more classes) which
such holder would have owned or have been entitled to receive immediately following the happening
of any of the events described above had such Warrant been exercised in full immediately prior to
the record date with respect to such event. Any adjustment made pursuant to this Subsection shall,
in the case of a stock dividend or distribution, become effective as of the record date therefor
and, in the case of a subdivision or combination, be made as of the effective date thereof. If, as
a result of an adjustment made pursuant to this Subsection, the holder of any Warrant Certificate
thereafter surrendered for exercise shall become entitled to receive shares of two or more classes
of capital stock of the Company, the Board of Directors of the Company (whose determination shall
be conclusive and shall be evidenced by a Board resolution filed with the Warrant Agent) shall
determine the allocation of the adjusted Exercise Price between or among shares of such classes of
capital stock.
(b) In the event of a capital reorganization or a reclassification of the Common Stock (except
as provided in Subsection (a) above or Subsection (d) below), any Warrantholder, upon exercise of
Warrants, shall be entitled to receive, in substitution for the Common Stock to which he would have
become entitled upon exercise immediately prior to such reorganization or reclassification, the
shares (of any class or classes) or other securities or property of the Company (or cash) that he
would have been entitled to receive at the same aggregate Exercise Price upon such reorganization
or reclassification if such Warrants had been exercised immediately prior to the record date with
respect to such event; and in any such case, appropriate provision (as determined by the Board of
Directors of the Company, whose determination shall be conclusive and shall be evidenced by a
certified Board resolution filed with the Warrant Agent) shall be made for the application of this
Section 6 with respect to the rights and interests thereafter of the Warrantholders (including but
not limited to the allocation of the Exercise Price between or among shares of classes of capital
stock), to the end that this Section 6 (including the adjustments of the number of shares of Common
Stock or other securities purchasable and the Exercise Price thereof) shall thereafter be
reflected, as nearly as reasonably practicable, in all subsequent exercises of the Warrants for any
shares or securities or other property (or cash) thereafter deliverable upon the exercise of the
Warrants.
(c) Whenever the number of shares of Common Stock or other securities purchasable upon
exercise of a Warrant is adjusted as provided in this Section 6, the Company will promptly file
with the Warrant Agent a certificate signed by the Chairman or co-Chairman of the Board, the Chief
Executive Officer, the President or a Vice President of the Company and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Company setting forth the
number and kind of securities or other property purchasable upon exercise of a Warrant, as so
adjusted, stating that such adjustments in the number or kind of
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shares or other securities or property conform to the requirements of this Section 6, and
setting forth a brief statement of the facts accounting for such adjustments. Promptly after
receipt of such certificate, the Company, or the Warrant Agent at the Company’s request, will
deliver, by first-class, postage prepaid mail, a brief summary thereof (to be supplied by the
Company) to the registered holders of the outstanding Warrant Certificates; provided, however, that
failure to file or to give any notice required under this Subsection, or any defect therein, shall
not affect the legality or validity of any such adjustments under this Section 6; and provided
further, however, that, where appropriate, such notice may be given in advance and included as part
of the notice required to be given pursuant to Section 12 hereof.
(d) In case of any consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an entirety, the
corporation formed by such consolidation or merger or the corporation which shall have acquired
such assets, as the case may be, shall execute and deliver to the Warrant Agent a supplemental
warrant agreement providing that the holder of each Warrant then outstanding shall have the right
thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, solely
the kind and amount of shares of stock and other securities and property (or cash) receivable upon
such consolidation, merger, sale or transfer by a holder of the number of shares of Common Stock of
the Company for which such Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided
in this Section. The above provision of this Subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
The Warrant Agent shall not be under any responsibility to determine the correctness of any
provision contained in any such supplemental warrant agreement relating to either the kind or
amount of shares of stock or securities or property (or cash) purchasable by holders of Warrant
Certificates upon the exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, but subject to the provisions of
Section 20 hereof, may accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, a certificate of a firm of independent certified public
accountants (who may be the accountants regularly employed by the Company) with respect thereto.
(e) Irrespective of any adjustments in the number or kind of shares issuable upon exercise of
Warrants, Warrant Certificates theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the similar Warrant Certificates initially
issuable pursuant to this Warrant Agreement.
(f) The Company may retain a firm of independent public accountants of recognized standing,
which may be the firm regularly retained by the Company, selected by the Board of Directors of the
Company, and not disapproved by the Warrant Agent, to make any computation required under this
Section, and a certificate signed by such firm shall, in the absence of fraud or gross negligence,
be conclusive evidence of the correctness of any computation made under this Section.
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(g) For the purpose of this Section, the term “Common Stock” shall mean (i) the Common
Stock or (ii) any other class of stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time as a result of an adjustment made
pursuant to this Section, the holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive any shares of capital stock of the Company other than shares of Common
Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall
be subject to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in this Section, and all
other provisions of this Agreement, with respect to the Common Stock, shall apply on like terms to
any such other shares.
(h) The Company may, from time to time and to the extent permitted by law, reduce the Exercise
Price of the Warrants by any amount for a period of not less than 20 days. If the Company so
reduces the Exercise Price of such Warrants, it will give not less than 15 days’ notice of such
decrease, which notice may be in the form of a press release, and shall take such other steps as
may be required under applicable law in connection with any offers or sales of securities at the
reduced price.
7. Exercise of Warrants; Redemption of Warrants. Except with respect to Warrants that
have been redeemed as provided in this Section 7, the registered holder of any Warrant Certificate
may exercise the Warrants evidenced thereby, in whole at any time or in part from time to time at
or prior to the close of business on the Expiration Date, subject to the provisions of Section 9,
at which time the Warrant Certificates shall become wholly void and of no value. Warrants may be
exercised by their holders or redeemed by the Company as follows:
(a) Exercise of Warrants shall be accomplished upon surrender of the Warrant Certificate
evidencing such Warrants, with the Form of Election to Purchase on the reverse side thereof duly
filled in and executed, to the Warrant Agent at its stock transfer office in New York, New York,
together with payment to the Company of the Exercise Price (as of the date of such surrender) of
the Warrants then being exercised and an amount equal to any applicable transfer tax and, if
requested by the Company, any other taxes or governmental charges which the Company may be required
by law to collect in respect of such exercise. Payment of the Exercise Price and other amounts may
be made by wire transfer of good funds, or by certified or bank cashier’s check, payable in lawful
money of the United States of America to the order of the Company. No adjustment shall be made for
any cash dividends, whether paid or declared, on any securities issuable upon exercise of a
Warrant.
(b) Upon receipt of a Warrant Certificate, with the Form of Election to Purchase duly filled
in and executed, accompanied by payment of the Exercise Price of the Warrants being exercised (and
of an amount equal to any applicable taxes or government charges as aforesaid), the Warrant Agent
shall promptly request from the Transfer Agent with respect to the securities to be issued and
deliver to or upon the order of the registered holder of such Warrant Certificate, in such name or
names as such registered holder may designate, a certificate or certificates for the number of full
shares of the securities to be purchased, together with cash made available by the Company pursuant
to Section 8 hereof in respect of any fraction of a share of such securities otherwise issuable
upon such exercise. If the Warrant is then exercisable to
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purchase property other than securities, the Warrant Agent shall take appropriate steps to
cause such property to be delivered to or upon the order of the registered holder of such Warrant
Certificate. In addition, if it is required by law and upon instruction by the Company, the
Warrant Agent will deliver to each Warrantholder a prospectus that complies with the provisions of
Section 9 of the Securities Act of 1933 and the Company agrees to supply Warrant Agent with
sufficient number of prospectuses to effectuate that purpose.
(c) In case the registered holder of any Warrant Certificate shall exercise fewer than all of
the Warrants evidenced by such Warrant Certificate, the Warrant Agent shall promptly countersign
and deliver to the registered holder of such Warrant Certificate, or to his duly authorized
assigns, a new Warrant Certificate or Certificates evidencing the number of Warrants that were not
so exercised.
(d) Each person in whose name any certificate for securities is issued upon the exercise of
Warrants shall for all purposes be deemed to have become the holder of record of the securities
represented thereby as of, and such certificate shall be dated, the date upon which the Warrant
Certificate was duly surrendered in proper form and payment of the Exercise Price (and of any
applicable taxes or other governmental charges) was made; provided, however, that if the date of
such surrender and payment is a date on which the stock transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares as of, and the
certificate for such shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the Expiration Date relating to
such Warrant) and the Warrant Agent shall be under no duty to deliver the certificate for such
shares until such date. The Company covenants and agrees that it shall not cause its stock
transfer books to be closed for a period of more than 20 consecutive business days except upon
consolidation, merger, sale of all or substantially all of its assets, dissolution or liquidation
or as otherwise provided by law.
(e) The Warrants outstanding at the time of a redemption may be redeemed at the option of the
Company at any time beginning on ___, 2008, in whole or in part on a pro-rata basis, by
giving not less than 30 days’ prior notice as provided in Section 7(f) below, which notice may not
be given before, but may be given at any time after, the closing price of the Common Stock on the
principal exchange or trading facility on which it is then traded has equaled or exceeded $___
on each of 5 consecutive trading days. The price at which the Warrants may be redeemed (the
“Redemption Price”) is $0.25 per Warrant. On and after the date on which the Warrants will
be redeemed by the Company (the “Redemption Date”), the holders of record of redeemed
Warrants shall be entitled to payment of the Redemption Price upon surrender of such redeemed
Warrants to the Company at the office of the Warrant Agent designated for that purpose.
(f) Notice of redemption of Warrants shall be given at least 30 days prior to the Redemption
Date by mailing, by first class mail, a copy of such notice to the Warrant Agent and to all of the
holders of record of Warrants at their respective addresses appearing on the books or transfer
records of the Company or such other address designated in writing by the holder of record to the
Warrant Agent not less than 40 days prior to the Redemption Date.
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(g) From and after the Redemption Date, all rights of the Warrantholders with respect to the
redeemed Warrants (except the right to receive the Redemption Price) shall terminate, but only if
(i) no later than one day prior to the Redemption Date the Company shall have irrevocably deposited
with the Warrant Agent as paying agent a sufficient amount to pay on the Redemption Date the
Redemption Price for all Warrants called for redemption and (ii) the notice of redemption shall
have stated the name and address of the Warrant Agent and the intention of the Company to deposit
such amount with the Warrant Agent no later than one day prior to the Redemption Date.
(h) On the Redemption Date, the Warrant Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Warrant Agent for the redemption of Warrants to which the
holders of record of such redeemed Warrants who shall have surrendered their Warrants are entitled.
The Warrant Agent shall have no obligation to pay for the redemption of Warrants except to the
extent that funds for such payment have been provided to it by the Company.
(i) Any amounts deposited with the Warrant Agent that are not required for redemption of
Warrants may be withdrawn by the Company. Any amounts deposited with the Warrant Agent that shall
be unclaimed after six months after the Redemption Date shall be redelivered back to the Company,
and thereafter the holders of the Warrants called for redemption for which such funds were
deposited shall look solely to the Company for payment. The Company shall be entitled to the
interest, if any, on funds deposited with the Warrant Agent and the holders of redeemed Warrants
shall have no right to any such interest. At the instruction of the Company, the Warrant Agent
shall deposit or invest any and all funds deposited with it by the Company in connection with any
redemption in federally insured, interest bearing accounts with a financial institution or
institutions designated by the Company but shall have no liability with respect to the performance
of any such investments other than, in the case of funds deposited in accounts maintained by the
Warrant Agent, the liability of the Warrant Agent to its depositors in such accounts, generally.
(j) If the Company fails to make a sufficient deposit with the Warrant Agent as provided
above, the holder of any Warrants called for redemption may at the option of the holder (i) by
notice to the Company declare the notice of redemption a nullity as to such holder, or (ii)
maintain an action against the Company for the Redemption Price. If the holder brings such an
action, the Company will pay reasonable attorneys’ fees of the holder. If the holder fails to
bring an action against the Company for the Redemption Price within 60 days after the Redemption
Date, the holder shall be deemed to have elected to declare the notice of redemption to be a
nullity as to such holder and such notice shall be without any force or effect as to such holder.
Except as otherwise specifically provided in this Paragraph 7(j), a notice of redemption, once
mailed by the Company as provided in Paragraph 7(f) shall be irrevocable.
(k) Notwithstanding anything to the contrary in this Section 7, the Company may not provide
notice of any redemption pursuant to this Section 7 at any time at which the Warrants are not
currently exercisable as a result of the application of Section 9. If, during the period between
notice of redemption and the Redemption Date, the Warrants become not currently exercisable as a
result of the application of Section 9, the Redemption Date shall be extended to be the tenth
business day after such restriction on exercise lapses.
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8. Fractional Interests. The Company shall not issue any Warrant Certificate
evidencing a fraction of a Warrant or issue fractions of shares of securities on the exercise of
the Warrants. If any fraction (calculated to the nearest one-hundredth) of a Warrant or a share of
securities would, except for the provisions of this Section, be issuable on the exercise of any
Warrant, the Company shall purchase such fraction for an amount in cash equal to the current value
of such fraction computed on the basis of the closing market price of a Warrant (as quoted on the
principal exchange or trading facility on which the Warrants are traded) on the trading day
immediately preceding the day upon which such Warrant Certificate was surrendered for exercise in
accordance with Section 7 hereof. By accepting a Warrant Certificate, the holder thereof expressly
waives any right to receive a Warrant Certificate evidencing any fraction of a Warrant or to
receive any fractional share of securities upon exercise of a Warrant.
9. Reservation of Equity Securities. The Company covenants that it will at all times
reserve and keep available, free from any pre-emptive rights, out of its authorized and unissued
equity securities, solely for the purpose of issue upon exercise of the Warrants, such number of
shares of equity securities of the Company as shall then be issuable upon the exercise of all
outstanding Warrants (“Equity Securities”). The Company covenants that all Equity
Securities which shall be so issuable shall, upon such issue, be duly authorized, validly issued,
fully paid and non-assessable.
The Company covenants that if any equity securities, required to be reserved for the purpose
of issue upon exercise of the Warrants hereunder, require registration with or approval of any
governmental authority under any federal or state law before such shares may be issued upon
exercise of Warrants, the Company will use all commercially reasonable efforts to cause such
securities to be duly registered, or approved, as the case may be, and, to the extent practicable,
take all such action in anticipation of and prior to the exercise of the Warrants, including,
without limitation, filing any and all post-effective amendments to the Company’s Registration
Statement on Form SB-2 (Registration No. 333-145304) necessary to permit a public offering of the
securities underlying the Warrants at any and all times during the term of this Agreement;
provided, however, that in no event shall such securities be issued, and the Company is authorized
to refuse to honor the exercise of any Warrant, if such exercise would result in, in the opinion of
the Company’s Board of Directors, upon advice of counsel, the violation of any law; and provided
further, however, that, in the case of a Warrant exercisable solely for securities listed on a
securities exchange or for which there are at least three independent market makers, in lieu of
obtaining such registration or approval, the Company may elect to redeem Warrants submitted to the
Warrant Agent for exercise for a price equal to the difference between the closing price of the
securities for which such Warrant is exercisable on the date of such submission and the Exercise
Price of such Warrants; in the event of such redemption, the Company will pay to the holder of such
Warrants the above-described redemption price in cash within 10 business days after receipt of
notice from the Warrant Agent that such Warrants have been submitted for exercise. If, at the
Expiration Date, the Warrants are not currently exercisable as a result of the provisions of this
paragraph, the Expiration Date shall be extended to a date that is 30 calendar days following
notice to the Warrantholders that the Warrants are again exercisable and references to the
Expiration Date herein shall thereafter refer to such extended Expiration Date.
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10. Reduction of Conversion Price Below Par Value. Before taking any action that
would cause an adjustment pursuant to Section 6 hereof reducing the portion of the Exercise Price
required to purchase one share of capital stock below the then-current par value (if any) of a
share of such capital stock, the Company will use commercially reasonable efforts to take any
corporate action which, in the opinion of its counsel, may be necessary in order that the Company
may validly and legally issue fully paid and non-assessable shares of such capital stock.
11. Payment of Taxes. The Company covenants and agrees that it will pay when due and
payable any and all federal and state documentary stamp and other original issue taxes which may be
payable in respect of the original issuance of the Warrant Certificates, or any shares of Common
Stock or other securities upon the exercise of Warrants. The Company shall not, however, be
required (a) to pay any tax which may be payable in respect of any transfer involved in the
transfer and delivery of Warrant Certificates or the issuance or delivery of certificates for
Common Stock or other securities in a name other than that of the registered holder of the Warrant
Certificate surrendered for purchase or (b) to issue or deliver any certificate for shares of
Common Stock or other securities upon the exercise of any Warrant Certificate until any such tax
shall have been paid, all such tax being payable by the holder of such Warrant Certificate at the
time of surrender.
12. Notice of Certain Corporate Action. In case the Company after the date hereof
shall propose (a) to offer to the holders of Common Stock, generally, rights to subscribe to or
purchase any additional shares of any class of its capital stock, any evidences of its indebtedness
or assets, or any other rights or options or (b) to effect any reclassification of Common Stock
(other than a reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock) or any capital reorganization, or any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the Company is required, or any
sale, transfer or other disposition of its property and assets substantially as an entirety, or the
liquidation, voluntary or involuntary dissolution or winding-up of the Company, then, in each such
case, the Company shall file with the Warrant Agent and the Company, or the Warrant Agent on its
behalf, shall mail (by first-class, postage prepaid mail) to all registered holders of the Warrant
Certificates notice of such proposed action, which notice shall specify the date on which the books
of the Company shall close or a record be taken for such offer of rights or options, or the date on
which such reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, voluntary or involuntary dissolution or winding-up shall take place or
commence, as the case may be, and which shall also specify any record date for determination of
holders of Common Stock entitled to vote thereon or participate therein and shall set forth such
facts with respect thereto as shall be reasonably necessary to indicate any adjustments in the
Exercise Price and the number or kind of shares or other securities purchasable upon exercise of
Warrants which will be required as a result of such action. Such notice shall be filed and mailed
in the case of any action covered by clause (a) above, at least 10 days prior to the record date
for determining holders of the Common Stock for purposes of such action or, if a record is not to
be taken, the date as of which the holders of shares of Common Stock of record are to be entitled
to such offering; and, in the case of any action covered by clause (b) above, at least 20 days
prior to the earlier of the date on which such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary dissolution or
winding-up is expected to become effective and the date on which it is
10
expected that holders of shares of Common Stock of record on such date shall be entitled to
exchange their shares for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, voluntary or
involuntary dissolution or winding-up.
Failure to give any such notice or any defect therein shall not affect the legality or
validity of any transaction listed in this Section 12.
13. Disposition of Proceeds on Exercise of Warrant Certificates, etc. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay
to the Company all monies received by the Warrant Agent for the purchase of securities or other
property through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available for inspection by
Warrantholders during normal business hours at its stock transfer office. Copies of this Agreement
may be obtained upon written request addressed to the Warrant Agent at its stock transfer office in
New York, New York.
14. Warrantholder Not Deemed a Stockholder. No Warrantholder, as such, shall be
entitled to vote, receive dividends or be deemed the holder of Common Stock or any other securities
of the Company which may at any time be issuable upon the exercise of the Warrants represented
thereby for any purpose whatsoever, nor shall anything contained herein or in any Warrant
Certificate be construed to confer upon any Warrantholder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate
action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance or otherwise), or
to receive notice of meetings or other actions affecting stockholders (except as provided in
Section 12 hereof), or to receive dividends or subscription rights, or otherwise, until such
Warrant Certificate shall have been exercised in accordance with the provisions hereof and the
receipt of the Exercise Price and any other amounts payable upon such exercise by the Warrant
Agent.
15. Right of Action. All rights of action in respect to this Agreement are vested in
the respective registered holders of the Warrant Certificates; and any registered holder of any
Warrant Certificate, without the consent of the Warrant Agent or of any other holder of a Warrant
Certificate, may, in his own behalf for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of,
his right to exercise the Warrants evidenced by such Warrant Certificate, for the purchase of
shares of the Common Stock in the manner provided in the Warrant Certificate and in this Agreement.
16. Agreement of Holders of Warrant Certificates. Every holder of a Warrant
Certificate, by accepting the same, consents and agrees with the Company, the Warrant Agent and
with every other holder of a Warrant Certificate that:
11
(a) the Warrant Certificates are transferable on the registry books of the Warrant Agent only
upon the terms and conditions set forth in this Agreement; and
(b) the Company and the Warrant Agent may deem and treat the person in whose name the Warrant
Certificate is registered as the absolute owner of the Warrant (notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) for
all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
17. Cancellation of Warrant Certificates. In the event that the Company shall
purchase or otherwise acquire any Warrant Certificate or Certificates after the issuance thereof,
such Warrant Certificate or Certificates shall thereupon be delivered to the Warrant Agent and be
canceled by it and retired. The Warrant Agent shall also cancel any Warrant Certificate delivered
to it for exercise, in whole or in part, or delivered to it for transfer, split-up, combination or
exchange. Warrant Certificates so canceled shall be delivered by the Warrant Agent to the Company
from time to time, or disposed of in accordance with the instructions of the Company.
18. Concerning the Warrant Agent. The Company agrees to indemnify the Warrant Agent
for, and to hold it harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Warrant Agent, arising out of or in
connection with the acceptance and administration of this Agreement. This Section shall survive
any termination of this Agreement.
19. Merger or Consolidation or Change of Name of Warrant Agent. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent, shall be the successor
to the Warrant Agent hereunder without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor warrant agent under the provisions of Section 21 hereof. In case at the
time such successor to the Warrant Agent shall succeed to the agency created by this Agreement, any
of the Warrant Certificates shall have been countersigned but not delivered, any such successor to
the Warrant Agent may adopt the countersignature of the original Warrant Agent and deliver such
Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates
shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name of the successor
Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided
in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at such time any of the
Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt
the countersignature under its prior name and deliver Warrant Certificates so countersigned; and in
case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in its changed name;
and in all such cases such Warrant Certificates shall have the full force provided in the Warrant
Certificates and in this Agreement.
12
20. Duties of Warrant Agent. The Warrant Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of which the Company and
the holders of Warrant Certificates, by their acceptance thereof, shall be bound:
(a) The Warrant Agent may consult with counsel reasonably satisfactory to it (who may be
counsel for the Company), and the opinion of such counsel shall be full and complete authorization
and protection to the Warrant Agent as to any action taken, suffered or omitted by it in good faith
and in accordance with such opinion; provided, however, that the Warrant Agent shall have exercised
reasonable care in the selection of such counsel. Reasonable fees and expenses of such counsel
shall be paid by the Company.
(b) Whenever in the performance of its duties under this Agreement, the Warrant Agent shall
deem it necessary or desirable that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman or co-Chairman of the Board, the Chief
Executive Officer, the President or a Vice President or the Secretary of the Company and delivered
to the Warrant Agent; and such certificate shall be full authorization to the Warrant Agent for any
action taken in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Warrant Agent shall be liable hereunder only for its own gross negligence, bad faith
or willful misconduct.
(d) The Warrant Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Warrant Certificates (except its countersignature on
the Warrant Certificates and such statements or recitals as describe the Warrant Agent or action
taken or to be taken by it) or be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Warrant Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Warrant
Agent) or in respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant Certificate; nor shall it be
responsible for the making of any change in the number of shares of Common Stock for which a
Warrant is exercisable required under the provisions of Section 6 or responsible for the manner,
method or amount of any such change or the ascertaining of the existence of facts that would
require any such adjustment or change (except with respect to the exercise of Warrant Certificates
after actual notice of any adjustment of the Exercise Price); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Agreement or any Warrant Certificate or as to whether
any shares of Common Stock will, when issued, be validly issued, fully paid and non-assessable.
13
(f) The Warrant Agent shall be under no obligation to institute any action, suit or legal
proceeding or take any other action likely to involve expense unless the Company or one or more
registered holders of Warrant Certificates shall furnish the Warrant Agent with reasonable security
and indemnity for any costs and expenses which may be incurred. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrants or the production thereof at any trial or other proceeding relative thereto,
and any such action, suit or proceeding instituted by the Warrant Agent shall be brought in its
name as Warrant Agent, and any recovery of judgment shall be for the ratable benefit of the
registered holders of the Warrant Certificates, as their respective rights or interests may appear.
(g) The Warrant Agent and any shareholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be interested, or contract with
or lend money to or otherwise act as fully and freely as though it were not Warrant Agent under
this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity
for the Company or for any other legal entity.
(h) The Warrant Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman or co-Chairman of the Board or Chief
Executive Officer or President or a Vice President or the Secretary or the Controller of the
Company, and to apply to such officers for advice or instructions in connection with the Warrant
Agent’s duties, and it shall not be liable for any action taken or suffered or omitted by it in
good faith in accordance with instructions of any such officer.
(i) The Warrant Agent will not be responsible for any failure of the Company to comply with
any of the covenants contained in this Agreement or in the Warrant Certificates to be complied with
by the Company.
(j) The Warrant Agent will not incur any liability or responsibility to the Company or to any
holder of any Warrant Certificate for any action taken, or any failure to take action, in reliance
on any notice, resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by the Warrant Agent to be genuine and to have been signed, sent or
presented by the proper party or parties.
(k) The Warrant Agent will act hereunder solely as agent of the Company in a ministerial
capacity, and its duties will be determined solely by the provisions hereof. The Warrant Agent
will not be liable for anything which it may do or refrain from doing in connection with this
Agreement except for its own gross negligence, bad faith or willful conduct.
21. Change of Warrant Agent. The Warrant Agent may resign and be discharged from its
duties under this Agreement upon 30 days’ prior notice in writing mailed, by registered or
certified mail, to the Company. The Company may remove the Warrant Agent or any successor warrant
agent upon 30 days’ prior notice in writing, mailed to the Warrant Agent or successor warrant
agent, as the case may be, by registered or certified mail. If the Warrant Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
14
appoint a successor to the Warrant Agent and shall, within 15 days following such appointment,
give notice thereof in writing to each registered holder of the Warrant Certificates. If the
Company shall fail to make such appointment within a period of 15 days after giving notice of such
removal or after it has been notified in writing of such resignation or incapacity by the resigning
or incapacitated Warrant Agent, then the Company agrees to perform the duties of the Warrant Agent
hereunder until a successor warrant agent is appointed. After appointment and execution of a copy
of this Agreement in effect at that time, the successor warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent
without further act or deed; but the Warrant Agent shall deliver and transfer to the successor
warrant agent, within a reasonable time, any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for the purpose. Failure to
give any notice provided for in this Section, however, or any defect therein shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or the appointment of the
successor warrant agent, as the case may be.
22. Issuance of New Warrant Certificates. Notwithstanding any of the provisions of
this Agreement or the several Warrant Certificates to the contrary, the Company may, at its option,
issue new Warrant Certificates in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Exercise Price or the number or kind of shares purchasable under
the several Warrant Certificates made in accordance with the provisions of this Agreement.
23. Notices. Notice or demand pursuant to this Agreement to be given or made on the
Company by the Warrant Agent or by the registered holder of any Warrant Certificate shall be
sufficiently given or made if sent by first-class or registered mail, postage prepaid, addressed
(until another address is filed in writing by the Company with the Warrant Agent) as follows:
NitroSecurity, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice pursuant to this Agreement to be given or
made by the Company or by the holder of any Warrant Certificate to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class or registered mail, postage prepaid, addressed
(until another address is filed in writing by the Warrant Agent with the Company) as follows:
American Stock Transfer & Trust Company
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
A copy of any notice or demand pursuant to this Agreement given by or made to the Company, by
or to the Warrant Agent, or given to or made by the registered holder of any Warrant Certificate
shall be sent by first-class or registered mail, postage prepaid, addressed
15
(until another address is filed in writing by ▇▇▇▇▇▇▇ Investment Company, Inc. with the
Company and the Warrant Agent) as follows:
▇▇▇▇▇▇▇ Investment Company, Inc.
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Any notice or demand authorized to be given or made to the registered holder of any Warrant
Certificate under this Agreement shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, to the last address of such holder as it shall appear on the
registers maintained by the Warrant Agent.
24. Modification of Agreement. The Warrant Agent may, without the consent or
concurrence of the Warrantholders, by supplemental agreement or otherwise, concur with the Company
in making any changes or corrections in this Agreement that the Warrant Agent shall have been
advised by counsel (who may be counsel for the Company) are necessary or desirable to cure any
ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained, or to make any other provisions in regard to matters or questions
arising hereunder and which shall not be inconsistent with the provisions of the Warrant
Certificates and which shall not adversely affect the interests of the Warrantholders. As of the
date hereof, this Agreement contains the entire and only agreement, understanding, representation,
condition, warranty or covenant between the parties hereto with respect to the matters herein,
supersedes any and all other agreements between the parties hereto relating to such matters, and
may be modified or amended only by a written agreement signed by both parties hereto pursuant to
the authority granted by the first sentence of this Section.
25. Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
26. Governing Law. This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the laws of said State.
27. Termination. This Agreement shall terminate as of the close of business on the
Expiration Date, or such earlier date upon which all Warrants shall have been exercised or
redeemed, except that the Warrant Agent shall account to the Company as to all Warrants outstanding
and all cash held by it as of the close of business on the Expiration Date.
28. Benefits of this Agreement. Nothing in this Agreement or in the Warrant
Certificates shall be construed to give to any person or corporation other than the Company, the
Warrant Agent, and their respective successors and assigns hereunder and the registered holders of
the Warrant Certificates any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant
16
Agent, their respective successors and assigns hereunder and the registered holders of the
Warrant Certificates.
29. Descriptive Headings. The descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
30. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but such counterparts shall together constitute one and the same
instrument.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as
of the day and year first above written.
| NITROSECURITY, INC. |
||||
| By: | ||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| President and Chief Executive Officer | ||||
| AMERICAN STOCK TRANSFER & TRUST COMPANY |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
18
Exhibit A
VOID AFTER 5 P.M., EASTERN TIME, ON , 2012
WARRANTS TO PURCHASE COMMON STOCK
| Certificate number W- | Warrants |
CUSIP 65480X 117
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Warrants (“Warrants”) set
forth above. Each Warrant, unless and until redeemed by the Company as provided in the Warrant
Agreement, hereinafter more fully described (the “Warrant Agreement”), entitles the holder
thereof to purchase from NitroSecurity, Inc., a corporation incorporated under the laws of the
State of Delaware (the “Company”), subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement, at any time on or after
___ ___, 2007 and before
5 p.m., Eastern time, on ___ ___, 2012 (“Expiration Date”), one fully paid and
non-assessable share of the common stock, $0.01 par value, of the Company (“Common Stock”)
upon presentation and surrender of this Warrant Certificate, with the instructions for the
registration and delivery of Common Stock filled in, at the stock transfer office in New York, New
York, of American Stock Transfer & Trust Company, the warrant agent for the Company (the
“Warrant Agent”), or of its successor warrant agent or, if there be no successor warrant
agent, at the corporate offices of the Company, and upon payment of the Exercise Price (as defined
in the Warrant Agreement) and any applicable taxes paid either in cash, or by certified or official
bank check, payable in lawful money of the United States of America to the order of the Company.
Each Warrant initially entitles the holder to purchase one share of Common Stock for $___. The
number and kind of securities or other property for which the Warrants are exercisable are subject
to adjustment in certain events, such as mergers, stock dividends, splits and the like, to prevent
dilution. The Company may redeem any or all outstanding and unexercised Warrants by giving not
less than 30 days prior notice at any time after the later of
(i) ___ ___, 2008 and (ii) the date
on which the closing price of the Common Stock on the principal exchange or trading facility on
which it is traded has equaled or exceeded $___ per share on each of five consecutive trading
days. The Redemption Price is $0.25 per Warrant. All Warrants not theretofore exercised will
expire on the Expiration Date.
1
This Warrant Certificate is subject to all of the terms, provisions and conditions of the
Warrant Agreement, dated as of ___ ___, 2007, between the Company and the Warrant Agent, to all
of which terms, provisions and conditions the registered holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is incorporated herein by reference and made
a part hereof and reference is made to the Warrant Agreement for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Warrant Agent, the Company and the
holders of the Warrant Certificates. Copies of the Warrant Agreement are available for inspection
at the stock transfer office of the Warrant Agent or may be obtained upon written request addressed
to the Company at NitroSecurity, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Chief Executive Officer.
Upon exercise of the Warrants evidenced by this Warrant Certificate, the Company shall not
issue fractions of Warrants, Common Stock or other securities, but shall make adjustment therefor
in cash on the basis of the current market value of any fractional interest as provided for in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon exercise of Warrants may violate
the securities laws of the United States, certain states thereof or other jurisdictions. The
Company has agreed to use all commercially reasonable efforts to cause a registration statement to
continue to be effective during the term of the Warrants with respect to such sales under the
Securities Act of 1933, as amended, and to take such action under the laws of various states as may
be required to cause the sale of securities upon exercise to be lawful. However, the Company will
not be required to honor the exercise of Warrants if, in the opinion of the Company’s Board of
Directors, upon advice of counsel, the sale of securities upon such exercise would be unlawful. In
certain cases, the Company may, but is not required to, purchase Warrants submitted for exercise
for a cash price equal to the difference between the market price of the securities obtainable upon
such exercise and the exercise price of such Warrants. If the Warrants would otherwise expire
while not exercisable as a result of any such determination by the Board of Directors, their
Expiration Date will be extended to a date 30 days after the date on which the Company provides
notice to the holders of the Warrants that the Warrants are once again exercisable.
This Warrant Certificate, with or without other Certificates, upon surrender to the Warrant
Agent, any successor warrant agent or, in the absence of any successor warrant agent, at the
corporate offices of the Company, may be exchanged for another Warrant Certificate or Certificates
evidencing in the aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be exercised in part,
the holder hereof shall be entitled to receive upon surrender hereof another Warrant Certificate or
Certificates evidencing the number of Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to vote, receive dividends
or be deemed the holder of Common Stock or any other securities of the Company which may at any
time be issuable upon the exercise hereof for any purpose whatsoever, nor shall anything contained
in the Warrant Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any meeting
2
thereof, or to give or withhold consent to any corporate action (whether upon any matter
submitted to stockholders at any meeting thereof, or give or withhold consent to any merger,
recapitalization, issuance of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, conveyance or otherwise) or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Warrant Agreement) or to receive
dividends or subscription rights, or otherwise, until the Warrants evidenced by this Warrant
Certificate shall have been exercised and the Common Stock purchasable upon the exercise thereof
shall have become deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within any period during which
the transfer books for the Company’s Common Stock or other class of stock purchasable upon the
exercise of the Warrants evidenced by this Warrant Certificate are closed for any purpose, the
Company shall not be required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate, by accepting the same, consents and agrees with the
Company, the Warrant Agent and with every other holder of a Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of the Warrant Agent only
upon the terms and conditions set forth in the Warrant Agreement; and
(b) the Company and the Warrant Agent may deem and treat the person in whose name this
Warrant Certificate is registered as the absolute owner hereof (notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) for
all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary. The Company shall not be required to issue or deliver any certificate for
shares of Common Stock or other securities upon the exercise of Warrants evidenced by this Warrant
Certificate until any tax which may be payable in respect thereof by the holder of this Warrant
Certificate pursuant to the Warrant Agreement shall have been paid, such tax being payable by the
holder of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Warrant Agent.
Dated:
Countersigned:
|
NitroSecurity, Inc. | |||||
AMERICAN STOCK TRANSFER
|
STATE OF DELAWARE | President | ||||
& TRUST COMPANY
|
CORPORATE | |||||
| SEAL | ||||||
As Warrant Agent
|
2005 | |||||
Authorized Officer
|
Secretary | |||||
3