Exhibit 10.13

 
To:           SUSPECT DETECTION SYSTEMS, INC.

SUSPECT DETECTION SYSTEMS, INC.
REGULATION S SUBSCRIPTION AGREEMENT AND INVESTMENT
REPRESENTATION

SECTION 1

1.1           Subscription.

(a)           The undersigned, intending to be legally bound, hereby irrevocably
subscribes for and agrees to purchase 500,000 Units (hereafter defined) to be
issued by SUSPECT DETECTION SYSTEMS, INC., a Delaware corporation (the
"Company") in an offshore transaction negotiated outside the U.S. and to be
consummated and closed outside the U.S.  The Company is directly offering for
sale 4 Units for the aggregate gross proceeds of $400,000. A “Unit” shall
consist of the following:

 
(1)
2,500,000 share of Common Stock (a “Purchased Share”) at the purchase price of
$0.04 per share;

 
(2)
833,333 warrants, as further described in the Class A Warrant Agreement attached
hereto as Exhibit A, entitling the undersigned to purchase one share of Common
Stock at an exercise price of $0.08 per share, expiring on one year from the
date of this Subscription Agreement (a “Class A Warrant”); and

 
(3)
833,333 Class B Warrant, as further described in the Class B Warrant Agreement
attached hereto as Exhibit B, entitling the undersigned to purchase one share of
Common Stock at an exercise price of $0.08 per share, expiring two years from
the date of this Subscription Agreement (a “Class B Warrant, and together with
the Class A Warrant, the “Warrants”).

(b)           For purposes of this Subscription Agreement:

 
(1)
“Common Stock” means the common stock of the Company, par value $0.0001 per
share.

 
(2)
“Securities” means the Purchased Shares, the Warrants and the Warrant Shares.

 
(3)
“Warrant Shares” means the shares of Common Stock issuable upon due exercise of
the Warrants.

1.2           Purchase of Units.

The undersigned understands and acknowledges that the purchase price to be
remitted to the Company in exchange for each Unit shall be one hundred thousand
dollars ($100,000).  Simultaneous with the execution and delivery of this
Agreement, including the Investor Questionnaire annexed hereto, the undersigned
shall deliver to the Company the aforementioned purchase price by wire transfer
of immediately available funds. Wire instructions are attached hereto as
Appendix A.
 
 
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1.3           Acceptance or Rejection.

(a)           The undersigned understands and agrees that the Company reserves
the right to reject this subscription for the Units if, in its reasonable
judgment, it deems such action in the best interest of the Company, at any time
prior to the Closing, notwithstanding prior receipt by the undersigned of notice
of acceptance of the undersigned's subscription.

(b)           The undersigned understands and agrees that its subscription for
each Unit is irrevocable.

(c)           In the event the sale of the Units subscribed for by the
undersigned is not consummated by the Company for any reason (in which event
this Subscription Agreement shall be deemed to be rejected), this Subscription
Agreement and any other agreement entered into between the undersigned and the
Company relating to this subscription shall thereafter have no force or effect
and the Company shall promptly return or cause to be returned to the undersigned
the purchase price remitted to the Company by the undersigned, without interest
thereon or deduction therefrom, in exchange for the Units.

SECTION 2

2.1           Closing

The closing (the "Closing") of the purchase and sale of the Units, shall occur
simultaneously with the acceptance by the Company of the undersigned's
subscription, as evidenced by the Company's execution of this Subscription
Agreement.
 
SECTION 3

3.1           Investor Representations and Warranties.

The undersigned hereby acknowledges, represents and warrants to, and agrees
with, the Company and its affiliates as follows:

(a)           The undersigned is acquiring the Securities for his own account as
principal, not as a nominee or agent, for investment purposes only, and not with
a view to, or for, resale, distribution or fractionalization thereof in whole or
in part and no other person has a direct or indirect beneficial interest in such
Securities or any portion thereof.  Further, the undersigned does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to the Securities for which the undersigned is subscribing or any part
of the Securities.

(b)           The undersigned has full power and authority to enter into this
Agreement, the execution and delivery of this Agreement has been duly
authorized, if applicable, and this Agreement constitutes a valid and legally
binding obligation of the undersigned.

(c)           The undersigned is not subscribing for the Securities as a result
of or subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by person previously not known to the undersigned in
connection with investment securities generally.

 
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(d)           The undersigned understands that the Company is under no
obligation to register the Securities under the Securities Act of 1933, as
amended (the “Securities Act”), or to assist the undersigned in complying with
the Securities Act or the securities laws of any state of the United States or
of any foreign jurisdiction.

(e)           The undersigned is (i) experienced in making investments of the
kind described in this Agreement and the related documents, (ii) able, by reason
of the business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iii) able to afford the entire loss of its
investment in the Securities.

(f)           The undersigned acknowledges his understanding that the offering
and sale of the Purchased Shares, Warrants and the issuance of the Warrant
Shares upon due exercise of the Warrants is intended to be exempt from
registration under the Securities Act.  In furtherance thereof, in addition to
the other representations and warranties of the undersigned made herein, the
undersigned further represents and warrants to and agrees with the Company and
its affiliates as follows:

 
(i)
The undersigned realizes that the basis for the exemption may not be present if,
notwithstanding such representations, the undersigned has in mind merely
acquiring the Securities for a fixed or determinable period in the future, or
for a market rise, or for sale if the market does not rise.  The undersigned
does not have any such intention;

 
(ii)
The undersigned has the financial ability to bear the economic risk of his
investment, has adequate means for providing for his current needs and personal
contingencies and has no need for liquidity with respect to his investment in
the Company;

 
(iii)
The undersigned has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of the prospective
investment in the Securities.  The undersigned also represents it has not been
organized for the purpose of acquiring the Securities;

 
(iv)
The undersigned has been provided an opportunity for a reasonable period of time
prior to the date hereof to obtain additional information concerning the
offering of the Securities, the Company and all other information to the extent
the Company possesses such information or can acquire it without unreasonable
effort or expense;  and

 
(v)
The undersigned has carefully reviewed all of the Company’s filings under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 
 
 
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(g)           The undersigned is not relying on the Company, or its affiliates
or agents with respect to economic considerations involved in this
investment.  The undersigned has relied solely on its own advisors.

(h)           No representations or warranties have been made to the undersigned
by the Company, or any officer, employee, agent, affiliate or subsidiary of the
Company, other than the representations of the Company contained herein, and in
subscribing for the Units the undersigned is not relying upon any
representations other than those contained herein.

(i) Any resale of the Securities during the ‘distribution compliance period’ as
defined in Rule 902(f) to Regulation S shall only be made in compliance with
exemptions from registration afforded by Regulation S.  Further, any such sale
of the Securities in any jurisdiction outside of the United States will be made
in compliance with the securities laws of such jurisdiction.  The Investor will
not offer to sell or sell the Securities in any jurisdiction unless the Investor
obtains all required consents, if any.

(j)           The undersigned understands that the Securities are being offered
and sold in reliance on an exemption from the registration requirements of
United States federal and state securities laws under Regulation S promulgated
under the Securities Act and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of the Investor set forth herein in order to determine the
applicability of such exemptions and the suitability of the Investor to acquire
the Securities.  In this regard, the undersigned represents, warrants and agrees
that:
 
1.  
The undersigned is a Non U.S. Person (as defined below) and is not an affiliate
(as defined in Rule 501(b) under the Securities Act) of the Company and is not
acquiring the Securities for the account or benefit of a U.S. Person.  A U.S.
Person means any one of the following:

 
·  
any natural person resident in the United States of America;

 
·  
any partnership or corporation organized or incorporated under the laws of the
United States of America;

 
·  
any estate of which any executor or administrator is a U.S. person;

 
·  
any trust of which any trustee is a U.S. person;

 
·  
any agency or branch of a foreign entity located in the United States of
America;

 
·  
any non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. person;

 
 
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·  
any discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated or (if an
individual) resident in the United States of America; and

 
·  
any partnership or corporation if:

 
 
(A) organized or incorporated under the laws of any foreign jurisdiction; and

 
(B) formed by a U.S. person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule 501(a)
under the Securities Act) who are not natural persons, estates or trusts.

2.  
At the time of the origination of contact concerning this Agreement and the date
of the execution and delivery of this Agreement, the undersigned was outside of
the United States.

3.  
The undersigned will not, during the period commencing on the date of issuance
of the Purchased Shares or Warrants and ending on the first anniversary of such
date, or such shorter period as may be permitted by Regulation S or other
applicable securities law (the “Restricted Period”), offer, sell, pledge or
otherwise transfer the Purchased Shares or the Warrants in the United States, or
to a U.S. Person for the account or for the benefit of a U.S. Person, or
otherwise in a manner that is not in compliance with Regulation S.

4.  
The undersigned will, after expiration of the Restricted Period, offer, sell,
pledge or otherwise transfer the Purchased Shares or Warrants only pursuant to
registration under the Securities Act or an available exemption therefrom and,
in accordance with all applicable state and foreign securities laws.

 
5.  
The undersigned was not in the United States, engaged in, and prior to the
expiration of the Restricted Period will not engage in, any short selling of or
any hedging transaction with respect to the Securities, including without
limitation, any put, call or other option transaction, option writing or equity
swap.

6.  
Neither the undersigned nor or any person acting on his behalf has engaged, nor
will engage, in any directed selling efforts to a U.S. Person with respect to
the Securities and the Investor and any person acting on his behalf have
complied and will comply with the “offering restrictions” requirements of
Regulation S under the Securities Act.

 
 
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7.  
The transactions contemplated by this Agreement have not been pre-arranged with
a buyer located in the United States or with a U.S. Person, and are not part of
a plan or scheme to evade the registration requirements of the Securities Act.

8.  
Neither the undersigned nor any person acting on his behalf has undertaken or
carried out any activity for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States,
its territories or possessions, for any of the Securities.  The undersigned
agrees not to cause any advertisement of the Securities to be published in any
newspaper or periodical or posted in any public place and not to issue any
circular relating to the Securities, except such advertisements that include the
statements required by Regulation S under the Securities Act, and only offshore
and not in the U.S. or its territories, and only in compliance with any local
applicable securities laws.

9.  
Each certificate representing the Securities shall be endorsed with the
following legends, in addition to any other legend required to be placed thereon
by applicable federal or state securities laws:

 
(A)           “THE SECURITIESARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S.
PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”
 
(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING
TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

10.  
The undersigned consents to the Company making a notation on its records or
giving instructions to any transfer agent of the Company in order to implement
the restrictions on transfer of the Securities set forth in this Section 2.

(k)           The undersigned is an “accredited investor” as that term is
defined in Rule 501 of the General Rules and Regulations under the Securities
Act by reason of Rule 501(a)(3).

(l)           The undersigned understands that an investment in the Securities
is a speculative investment which involves a high degree of risk and the
potential loss of his entire investment.

 
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(m)           The undersigned's overall commitment to investments which are not
readily marketable is not disproportionate to the undersigned's net worth, and
an investment in the Securities will not cause such overall commitment to become
excessive.

(n)           The undersigned has received all documents, records, books and
other information pertaining to the undersigned’s investment in the Company that
has been requested by the undersigned.  The undersigned has reviewed all reports
and other documents filed by the Company with the Securities and Exchange
Commission (the “SEC Documents”).

(o)           The undersigned represents and warrants to the Company that all
information that the undersigned has provided to the Company, including, without
limitation, the information in the Investor Questionnaire attached hereto or
previously provided to the Company (the “Investor Questionnaire”), is correct
and complete as of the date hereof.

(p)           Other than as set forth herein, the undersigned is not relying
upon any other information, representation or warranty by the Company or any
officer, director, stockholder, agent or representative of the Company in
determining to invest in the Securities.  The undersigned has consulted, to the
extent deemed appropriate by the undersigned, with the undersigned’s own
advisers as to the financial, tax, legal and related matters concerning an
investment in the Securities and on that basis believes that his or its
investment in the Securities is suitable and appropriate for the undersigned.

(q)           The undersigned is aware that no federal or state agency has (i)
made any finding or determination as to the fairness of this investment, (ii)
made any recommendation or endorsement of the Securities or the Company, or
(iii) guaranteed or insured any investment in the Securities or any investment
made by the Company.

(p)           The undersigned understands that the price of the Securities
offered hereby bear no relation to the assets, book value or net worth of the
Company and were determined arbitrarily by the Company.  The undersigned further
understands that there is a substantial risk of further dilution on his or its
investment in the Company.

 
SECTION 4

The Company represents and warrants to the undersigned as follows:

4.1           Organization of the Company.  The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware, and has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.

4.2           Authority.   (a)  The Company has the requisite corporate power
and authority to enter into and perform its obligations under this Agreement and
to issue the Securities; (b) the execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors is
required; and (c) this Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
such  enforceability  may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
 
 
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4.3           Capitalization.  As of the date hereof, the authorized capital
stock of the Company consists of ___________ shares of Common Stock, of which
_________ are issued and outstanding.  All the outstanding shares have been, or
upon issuance will be, validly issued and are fully paid and non-assessable.

4.4           SEC Documents.  To the best of Company's knowledge, the Company
has not provided to the undersigned any information that, according to
applicable law, rule or regulation, should have been disclosed publicly prior to
the date hereof by the Company, but which has not been so disclosed. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
other federal, state and local laws, rules and regulations applicable to such
SEC Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the Securities and Exchange Commission
(the “SEC”) or other applicable rules and regulations with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements or the
notes thereto or (b) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).

4.5           Exemption from Registration; Valid Issuances.  The sale and
issuance of the Securities, in accordance with the terms and on the bases of the
representations and warranties of the undersigned set forth herein, may and
shall be properly issued by the Company to the undersigned pursuant to Section
4(2), Regulation S and/or any applicable U.S state law. When issued and paid for
as herein provided, the Securities shall be duly and validly issued, fully paid,
and non-assessable. Neither the sales of the Securities pursuant to, nor the
Company's performance of its obligations under, this Agreement shall (a) result
in the creation or imposition of any liens, charges, claims or other
encumbrances upon the Securities or any of the assets of the Company, or (b)
entitle the other holders of the Common Stock of the Company to preemptive or
other rights to subscribe to or acquire the Common Stock or other securities of
the Company. The Securities shall not subject the undersigned to personal
liability by reason of the ownership thereof.

4.6           No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor any person acting
on its or their behalf (a) has conducted or will conduct any general
solicitation (as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to any of the Securities, or (b) made any offers or
sales of any security or solicited any offers to buy any security under any
circumstances that would require registration of the Common Stock under the
Securities Act.
 
 
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4.7           No Conflicts.                      The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, including without limitation the
issuance of the Securities, do not and will not (a) result in a violation of the
Certificate or By-Laws of the Company or (b) conflict with, or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture,
instrument or any "lock-up" or similar provision of any underwriting or similar
agreement to which the Company is a party, or (c) result in a violation of any
federal, state, local or foreign law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations)applicable
to the Company or by which any property or asset of the Company is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a material adverse effect on the business, operations,
properties, prospects or condition (financial or otherwise) of the Company) nor
is the Company otherwise in violation of, conflict with or in default under any
of the foregoing. The Company is not required under U.S. federal, state or local
law, rule or regulation to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Common Stock in accordance with  the terms
hereof (other than any SEC, NASD or state securities filings that may be
required to be made by the Company subsequent to the Closing); provided that,
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the undersigned herein.

4.8           No Undisclosed Liabilities. The Company has no liabilities or
obligations that are material, individually or in the aggregate, and that are
not disclosed in the SEC Documents or otherwise publicly announced, other than
those incurred in the ordinary course of the Company's businesses and which,
individually or in the aggregate, do not or would not have a material adverse
effect on the Company.

4.9           No Undisclosed Events or Circumstances.   No event or circumstance
has occurred or exists with respect to the Company or its businesses,
properties, prospects, operations or financial condition, that, under applicable
law, rule or regulation, requires public disclosure or announcement prior to the
date hereof by the Company but which has not been so publicly announced or
disclosed in the SEC Documents.

4.10           No Integrated Offering.   Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, other than pursuant to this Agreement.

4.11           No Misleading or Untrue Communication.   The Company, any person
representing the Company, and, to the knowledge of the Company, any other person
selling or offering to sell the Securities, if any, in connection with the
transactions contemplated by this Agreement, have not made, at any time, any
written or oral communication in connection with the offer or sale of the same
which contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

SECTION 5

5.1  Indemnity.  The undersigned agrees to indemnify and hold harmless the
Company, its officers and directors, employees and its affiliates and their
respective successors and assigns and each other person, if any, who controls
any thereof, against any loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the undersigned to
comply with any covenant or agreement made by the undersigned herein or in any
other document furnished by the undersigned to any of the foregoing in
connection with this transaction.
 
 
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5.2           Modification.  Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.

5.3           Notices.  Any notice, demand or other communication which any
party hereto may be required, or may elect, to give to anyone interested
hereunder shall be sufficiently given if (a) deposited, postage prepaid, in a
United States mail letter box, registered or certified mail, return receipt
requested, addressed to such address as may be given herein, or (b) delivered
personally at such address.

5.4           Counterparts.  This Agreement may be executed through the use of
separate signature pages or in any number of counterparts and by facsimile, and
each of such counterparts shall, for all purposes, constitute one agreement
binding on all parties, notwithstanding that all parties are not signatories to
the same counterpart. Signatures may be facsimiles.

5.5           Binding Effect.  Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
assigns.  If the undersigned is more than one person, the obligation of the
undersigned shall be joint and several and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and his heirs, executors, administrators
and successors.

5.6           Entire Agreement.  This Agreement and the documents referenced
herein contain the entire agreement of the parties and there are no
representations, covenants or other agreements except as stated or referred to
herein and therein.

5.7           Assignability.  This Agreement is not transferable or assignable
by the undersigned.

5.8           Applicable Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
conflicts of law principles.

5.9           Pronouns.  The use herein of the masculine pronouns "him" or "his"
or similar terms shall be deemed to include the feminine and neuter genders as
well and the use herein of the singular pronoun shall be deemed to include the
plural as well.

 
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IN WITNESS WHEREOF, the undersigned has executed this Agreement on the
_______day of November, 2010.

Amount of Investment:

$_______

INDIVIDUAL INVESTOR:
__________________
Name:

PARTNERSHIP, CORPORATION, TRUST,
CUSTODIAL ACCOUNT, OTHER INVESTOR

 (Print Name of Entity)

By:__________________
Name:
Title:
Address:

Taxpayer Identification Number:__________________

 
 
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ACCEPTANCE OF SUBSCRIPTION

(to be filed out only by the Company)

The Company hereby accepts the above application for subscription for Units on
behalf of the Company.

 
SUSPECT DETECTION SYSTEMS,
INC.                                                                                                Dated:
______ ___, 2010

By:_______________________
Name:
Title:

 
 
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Appendix A
 
Wiring Instructions
 
For Payment of Purchase Price
 
The following are the wire instructions for the account into which the payment
of the purchase price for _____ Units subscribed for should be wired.

Account #: 9429354769
Routing #: 026009593
Reference Sub-Account # 11645
Account Name: David Lubin & Associates Master Escrow Account

Bank of America
400 Central Avenue
Lawrence, New York 11559

In case the entity on behalf of which the transfer is taking place is different
from the transferor, please make sure that the wire includes in the comments the
name of the entity.

 
 
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SUSPECT DETECTION SYSTEMS, INC.

INVESTOR QUESTIONNAIRE

A.
General Information
     
1.
Print Full Name of Investor:
Individual:
   
____________________________________
   
First, Middle, Last
         
Partnership, Corporation, Trust, Custodial Account, Other:
         
Name of Entity
     
2.
Address for Notices:
Already registered as share holder
   
____________________________________
   
____________________________________
     
3.
Name of Primary Contact Person:
Title:
____________________________________
     
4.
Telephone Number:
____________________________________
     
5.
E-Mail Address:
____________________________________
     
6.
Facsimile Number:
Permanent Address:
 
____________________________________
7.
Permanent Address:
(if different from Address for Notices above)
____________________________________

 
 
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8.
Authorized Signatory:
Title:
____________________________________
____________________________________
 
Telephone Number:
____________________________________
 
Facsimile Number:
 
____________________________________
9.
 
 
U.S. Investors Only:
 
U.S. Taxpayer Identification or Social
Security Number:
 
 
 
 
____________________________________

 
B.           Accredited Investor Status

The Investor represents and warrants that the Investor is an “accredited
investor” within the meaning of Rule 501 of Regulation D under the Securities
Act of 1933, as amended (the “Securities Act”), and has checked the box or boxes
below which are next to the categories under which the Investor qualifies as an
accredited investor:
 
FOR INDIVIDUALS:
 
o
A natural person with individual net worth (or joint net worth with spouse) in
excess of $1 million. For purposes of this item, “net worth” means the excess of
total assets at fair market value, including home, home furnishings and
automobiles (and including property owned by a spouse), over total liabilities.
     
o
A natural person with individual income (without including any income of the
Investor’s spouse) in excess of $200,000, or joint income with spouse of
$300,000, in each of the two most recent years and who reasonably expects to
reach the same income level in the current year.
     
FOR ENTITIES:
     
o
A bank as defined in Section 3(a)(2) of the Securities Act or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act, whether acting in its individual or fiduciary capacity.
     
o
An insurance company as defined in Section 2(13) of the Securities Act.
     
o
A broker-dealer registered pursuant to Section 15 of the Securities Exchange Act
of 1934.
     
o
An investment company registered under the Investment Company Act of 1940, as
amended (the “Investment Company Act”). If an Investor has checked this box,
please contact _______ for additional information that will be required.

 
 
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o
A business development company as defined in Section 2(a)(48) of the Investment
Company Act.
     
o
A small business investment company licensed by the Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958.
     
o
A private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940. If an Investor has checked this box, please
contact ______ for additional information that will be required.
     
o
An organization described in Section 501(c)(3) of the Internal Revenue Code, a
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the Units, with total assets in excess of
$5 million.
     
o
A trust with total assets in excess of $5 million not formed for the specific
purpose of acquiring the Units, whose purchase is directed by a person with such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Company and the purchase
of the Units.
     
o
An employee benefit plan within the meaning of ERISA if the decision to invest
in the Units is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
which is either a bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit plan has total assets
in excess of $5 million or, if a self-directed plan, with investment decisions
made solely by persons that are accredited investors.
     
o
A plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if the plan has total assets in excess of $5 million.
     
o
An entity, including a grantor trust, in which all of the equity owners are
accredited investors as determined under any of the foregoing paragraphs (for
this purpose, a beneficiary of a trust is not an equity owner, but the grantor
of a grantor trust is an equity owner).

  
C.           Supplemental Data for Entities

1.           If the Investor is not a natural person, furnish the following
supplemental data (natural persons may skip this Section C of the Investor
Questionnaire):

Legal form of entity (trust, corporation, partnership, etc.): corporation
 

Jurisdiction of organization: Nevis Islands

2.           Was the Investor organized for the specific purpose of acquiring
the Units?

o  Yes
*  No

 
 
 
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If the answer to the above question is “Yes,” please contact _______, ________,
at _______ or ________ for additional information that will be required.

3.           Are shareholders, partners or other holders of equity or beneficial
interest in the Investor able to decide individually whether to participate, or
the extent of their participation, in the Investor’s investment in the Company
(i.e., can shareholders, partners or other holders of equity or beneficial
interest in the Investor determine whether their capital will form part of the
capital invested by the Investor in the Company)?

o  Yes
*  No

 
If the answer to the above question is “Yes,” please contact David Lubin &
Associates, PLLC (david@dlubinassociates.com or 516-887-8200) for additional
information that will be required.

4(a).           Please indicate whether or not the Investor is, or is acting on
behalf of, (i) an employee benefit plan within the meaning of Section 3(3) of
ERISA, whether or not such plan is subject to ERISA, or (ii) an entity which is
deemed to hold the assets of any such employee benefit plan pursuant to 29
C.F.R. § 2510.3-101. For example, a plan which is maintained by a foreign
corporation, governmental entity or church, a Keogh plan covering no common-law
employees and an individual retirement account are employee benefit plans within
the meaning of Section 3(3) of ERISA but generally are not subject to ERISA
(collectively, “Non-ERISA Plans”). In general, a foreign or US entity which is
not an operating company and which is not publicly traded or registered as an
investment company under the Investment Company Act of 1940, as amended, and in
which 25% or more of the value of any class of equity interest is held by
employee pension or welfare plans (including an entity which is deemed to hold
the assets of any such plan), would be deemed to hold the assets of one or more
employee benefit plans pursuant to 29 C.F.R. § 2510.3-101. However, if only
Non-ERISA Plans were invested in such an entity, the entity generally would not
be subject to ERISA. For purposes of determining whether this 25% threshold has
been met or exceeded, the value of any equity interest held by a person (other
than such a plan or entity) who has discretionary authority or control with
respect to the assets of the entity, or any person who provides investment
advice for a fee (direct or indirect) with respect to such assets, or any
affiliate of such a person, is disregarded.

o  Yes
*  No

4(b).           If the Investor is, or is acting on behalf of, such an employee
benefit plan, or is an entity deemed to hold the assets of any such plan or
plans, please indicate whether or not the Investor is subject to ERISA.

o  Yes
*  No

4(c.)           If the Investor answered “Yes” to question 4.(b) and the
Investor is investing the assets of an insurance company general account, please
indicate what percentage of the Investor’s assets the purchase of the Units is
subject to ERISA. ___________%.
 
 
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5.           Does the amount of the Investor’s subscription for the Units in the
Company exceed 40% of the total assets (on a consolidated basis with its
subsidiaries) of the Investor?

o   Yes
*   No

If the question above was answered “Yes,” please contact David Lubin &
Associates for additional information that will be required.

6(a).           Is the Investor a private investment company which is not
registered under the Investment Company Act, in reliance on Section 3(c)(1) or
Section 3(c)(7) thereof?

o  Yes
*  No

6(b).           If the question above was answered “Yes,” was the Investor
formed prior to April 30, 1996?

o  Yes
o  No

If the questions set forth in (a) and (b) above were both answered “Yes,” please
contact David Lubin & Associates for additional information that will be
required.

7(a).           Is the Investor a grantor trust, a partnership or an
S-Corporation for US federal income tax purposes?

o  Yes
*  No

7(b).           If the question above was answered “Yes,” please indicate
whether or not:

(i) more than 50 percent of the value of the ownership interest of any
beneficial owner in the Investor is (or may at any time during the term of the
Company be) attributable to the Investor’s (direct or indirect) interest in the
Company; or
 

o  Yes
o  No

(ii) it is a principal purpose of the Investor’s participation in the Company to
permit the Partnership to satisfy the 100 partner limitation contained in US
Treasury Regulation Section 1.7704-1(h)(3).
 

o  Yes
o  No

If either question above was answered “Yes,” please contact David Lubin &
Associates for additional information that will be required.

8.           If the Investor’s tax year ends on a date other than December 31,
please indicate such date below:

 
November 15 2010
 
(Date)

 

 
 
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D.            Related Parties

1. To the best of the Investor’s knowledge, does the Investor control, or is the
Investor controlled by or under common control with, any other investor in the
Company?

o  Yes
*  No

If the answer above was answered “Yes”, please identify such related investor(s)
below.

Name(s) of related investor(s): _______________________________-

2.                                                      Will any other person or
persons have a beneficial interest in the Units to be acquired hereunder (other
than as a shareholder, partner, or other beneficial owner of equity interest in
the Investor)?

o  Yes
*  No

If either question above was answered “Yes”, please contact David Lubin &
Associates for additional information that will be required.

The Investor understands that the foregoing information will be relied upon by
the Company for the purpose of determining the eligibility of the Investor to
purchase the Units. The Investor agrees to notify the Company immediately if any
representation or warranty contained in this Subscription Agreement, including
this Investor Questionnaire, becomes untrue at any time. The Investor agrees to
provide, if requested, any additional information that may reasonably be
required to substantiate the Investor’s status as an accredited investor or to
otherwise determine the eligibility of the Investor to purchase the Units. The
Investor agrees to indemnify and hold harmless the Company and each officer,
director, shareholder, agent and representative of the Company and their
respective affiliates and successors and assigns from and against any loss,
damage or liability due to or arising out of a breach of any representation,
warranty or agreement of the Investor contained herein.
 

 
INDIVIDUAL:
 
 
 
(Signature)
 
 
 
(Print Name)
     
PARTNERSHIP, CORPORATION, TRUST, CUSTODIAL ACCOUNT, OTHER:
     
(Name of Entity)
     
By:  ________________________________
 
(Signature)
     
(Print Name and Title)

 
 
 
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Annex 1
 
DEFINITION OF “INVESTMENTS”
 

The term “investments” means:

1)  
Securities, other than securities of an issuer that controls, is controlled by,
or is under common control with, the Investor that owns such securities, unless
the issuer of such securities is:

(i)  
An investment company or a company that would be an investment company but for
the exclusions or exemptions provided by the Investment Company Act, or a
commodity pool; or

(ii)  
a Public Company (as defined below);

(iii)  
A company with shareholders’ equity of not less than $50 million (determined in
accordance with generally accepted accounting principles) as reflected on the
company’s most recent financial statements, provided that such financial
statements present the information as of a date within 16 months preceding the
date on which the Investor acquires Units;

2)  
Real estate held for investment purposes;

3)  
Commodity Shares (as defined below) held for investment purposes;

4)  
Physical Commodities (as defined below) held for investment purposes;

5)  
To the extent not securities, Financial Contracts (as defined below) entered
into for investment purposes;

6)  
In the case of an Investor that is a company that would be an investment company
but for the exclusions provided by Section 3(c)(1) or 3(c)(7) of the Investment
Company Act, or a commodity pool, any amounts payable to such Investor pursuant
to a firm agreement or similar binding commitment pursuant to which a person has
agreed to acquire an interest in, or make capital contributions to, the Investor
upon the demand of the Investor; and

7)  
Cash and cash equivalents held for investment purposes.

Real Estate that is used by the owner or a Related Person (as defined below) of
the owner for personal purposes, or as a place of business, or in connection
with the conduct of the trade or business of such owner or a Related Person of
the owner, will NOT be considered Real Estate held for investment purposes,
provided that real estate owned by an Investor who is engaged primarily in the
business of investing, trading or developing real estate in connection with such
business may be deemed to be held for investment purposes. However, residential
real estate will not be deemed to be used for personal purposes if deductions
with respect to such real estate are not disallowed by section 280A of the
Internal Revenue Code of 1986, as amended.
 
 
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A Commodity Interest or Physical Commodity owned, or a Financial Contract
entered into, by the Investor who is engaged primarily in the business of
investing, reinvesting, or trading in Commodity Shares, Physical Commodities or
Financial Contracts in connection with such business may be deemed to be held
for investment purposes.

“Commodity Shares” means commodity futures contracts, options on commodity
futures contracts, and options on physical commodities traded on or subject to
the rules of:

(i)  
Any contract market designated for trading such transactions under the Commodity
Exchange Act and the rules thereunder; or

(ii)  
Any board of trade or exchange outside the United States, as contemplated in
Part 30 of the rules under the Commodity Exchange Act.

“Public Company” means a company that:

(i)  
files reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended; or

(ii)  
has a class of securities that are listed on a Designated Offshore Securities
Market, as defined by Regulation S of the Securities Act.

“Financial Contract” means any arrangement that:

(i)  
takes the form of an individually negotiated contract, agreement, or option to
buy, sell, lend, swap, or repurchase, or other similar individually negotiated
transaction commonly entered into by participants in the financial markets;

(ii)  
is in respect of securities, commodities, currencies, interest or other rates,
other measures of value, or any other financial or economic interest similar in
purpose or function to any of the foregoing; and

(iii)  
is entered into in response to a request from a counter party for a quotation,
or is otherwise entered into and structured to accommodate the objectives of the
counterparty to such arrangement.

“Physical Commodities” means any physical commodity with respect to which a
Commodity Interest is traded on a market specified in the definition of
Commodity Shares above.

“Related Person” means a person who is related to the Investor as a sibling,
spouse or former spouse, or is a direct lineal descendant or ancestor by birth
or adoption of the Investor, or is a spouse of such descendant or ancestor,
provided that, in the case of a Family Company, a Related Person includes any
owner of the Family Company and any person who is a Related Person of such an
owner. “Family Company” means a company that is owned directly or indirectly by
or for two or more natural persons who are related as siblings or spouse
(including former spouses), or direct lineal descendants by birth or adoption,
spouses of such persons, the estates of such persons, or foundations, charitable
organizations or trusts established for the benefit of such persons.

For purposes of determining the amount of investments owned by a company, there
may be included investments owned by majority-owned subsidiaries of the company
and investments owned by a company (“Parent Company”) of which the company is a
majority-owned subsidiary, or by a majority-owned subsidiary of the company and
other majority-owned subsidiaries of the Parent Company.

 
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In determining whether a natural person is a qualified purchaser, there may be
included in the amount of such person’s investments any investment held jointly
with such person’s spouse, or investments in which such person shares with such
person’s spouse a community property or similar shared ownership interest. In
determining whether spouses who are making a joint investment in the Partnership
are qualified purchasers, there may be included in the amount of each spouse’s
investments any investments owned by the other spouse (whether or not such
investments are held jointly). There shall be deducted from the amount of any
such investments any amounts specified by paragraph 2(a) of Annex 2 incurred by
such spouse.

In determining whether a natural person is a qualified purchaser, there may be
included in the amount of such person’s investments any investments held in an
individual retirement account or similar account the investments of which are
directed by and held for the benefit of such person.
 
 
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Annex 2
 
VALUATIONS OF INVESTMENTS
 
The general rule for determining the value of investments in order to ascertain
whether a person is a qualified purchaser is that the value of the aggregate
amount of investments owned and invested on a discretionary basis by such person
shall be their fair market value on the most recent practicable date or their
cost. This general rule is subject to the following provisos:
 

1)  
In the case of Commodity Shares, the amount of investments shall be the value of
the initial margin or option premium deposited in connection with such Commodity
Shares; and

2)  
In each case, there shall be deducted from the amount of investments owned by
such person the following amounts:

(i)  
The amount of any outstanding indebtedness incurred to acquire the investments
owned by such person.

(ii)  
A Family Company, in addition to the amounts specified in paragraph (a) above,
shall have deducted from the value of such Family Company’s investments any
outstanding indebtedness incurred by an owner of the Family Company to acquire
such investments.

 
 
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CLASS A WARRANT AGREEMENT
 
CLASS A WARRANT AGREEMENT (“Agreement”), dated as of November __, 2010, by and
between Suspect Detection Systems, Inc., a Delaware corporation (the “Company”),
and ____________________ (“Warrantholder”).  Certain capitalized terms used
herein are defined in Section 15 hereof.
 
In consideration of the mutual terms, conditions, representations, warranties
and agreements herein set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
 
Section 1.  
Issuance of Warrants.

 
The Company hereby issues and grants to Warrantholder ________ (_______) stock
purchase warrants, which are hereby designated and shall be known as “Class A
Warrants” (hereinafter referred to as “Warrants”).  Each Warrant shall grant to
the holder thereof the right to purchase one (1) share of common stock of the
Company (the “Common Stock”).  Commencing on _____________ (the “Warrant
Commencement Date”), and terminating one year from the date of such issuance
(the “Warrant Expiration Date”), the holder shall have the right, subject to the
satisfaction of the conditions to exercise set forth in Section 7 of this
Agreement, to purchase one (1) share of Common Stock per each Warrant (the
shares of Common Stock issuable upon exercise of the Warrants being collectively
referred to herein as the “Warrant Shares”) at an exercise price of $0.08 per
Warrant Share (the “Exercise Price”).  The number of Warrant Shares issuable on
exercise of each Warrant and the Exercise Price are all subject to adjustment
pursuant to Section 8 of this Agreement.
 
Section 2.  
Form of Warrant Certificates.

 
Promptly after the execution and delivery of this Agreement by the parties
hereto, the Company may, in its sole and absolute discretion, cause to be
executed and delivered to Warrantholder one or more certificates evidencing the
Warrants (the “Warrant Certificates”).  Each Warrant Certificate delivered
hereunder shall be substantially in the form set forth in Exhibit 1 – Warrant
Form attached hereto and may have such letters, numbers or other identification
marks and legends, summaries or endorsements printed thereon as the Company may
deem appropriate and that are not inconsistent with the terms of this Agreement
or as may be required by applicable law, rule or regulation.  Each Warrant
Certificate shall be dated the date of execution by the Company.
 
Section 3.  
Execution of Warrant Certificates.

 
Each Warrant Certificate delivered hereunder shall be signed on behalf of the
Company by at least one of the following: its Chief Executive Officer,
President, Vice President, Secretary or Assistant Secretary.  Each such
signature may be in the form of a facsimile thereof and may be imprinted or
otherwise reproduced on the Warrant Certificates.
 
If any officer of the Company who signed any Warrant Certificate ceases to be an
officer of the Company before the Warrant Certificate so signed shall have been
delivered by the Company, such Warrant Certificate nevertheless may be delivered
as though such person had not ceased to be such officer of the Company.
 
Section 4.  
Registration of Ownership and Transfer.

 
Warrant Certificates shall be issued in registered form only.  The Company will
keep or cause to be kept books for registration of ownership and transfer of
each Warrant Certificate issued pursuant to this Agreement.  Each Warrant
Certificate issued pursuant to this Agreement shall be numbered by the Company
and shall be registered by the Company in the name of the holder thereof
(initially the Warrantholder).  The Company may deem and treat the registered
holder of any Warrant Certificate as the absolute owner thereof (notwithstanding
any notation of ownership or other writing thereon made by anyone) for the
purpose of any exercise thereof and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
 
 
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Section 5.  
No Transfers.

 
No Warrant may be sold, pledged, hypothecated, assigned, conveyed, transferred
or otherwise disposed of without the agreement of the Company, which will not be
unreasonably withheld.
 
Section 6.  
Mutilated or Missing Warrant Certificates.

 
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the Company
shall issue, upon surrender and cancellation of any mutilated Warrant
Certificate, or in lieu of and substitution for any lost, stolen or destroyed
Warrant Certificate, a new Warrant Certificate of like tenor and representing an
equal number of Warrants.  In the case of a lost, stolen or destroyed Warrant
Certificate, a new Warrant Certificate shall be issued by the Company only upon
the Company’s receipt of reasonably satisfactory evidence of such loss, theft or
destruction and, if requested, an indemnity or bond reasonably satisfactory to
the Company.
 
Section 7.  
Exercise of Warrants.

 
       A.  Exercise.  Subject to the terms and conditions set forth in this
Section 7, Warrants may be exercised, in whole or in part (but not as to any
fractional part of a Warrant), at any time or from time to time on and after the
Warrant Commencement Date and on or prior to 5:00 p.m., Eastern time, on the
Warrant Expiration Date.
 
In order to exercise any Warrant, Warrantholder shall deliver to the Company at
its office referred to in Section 16 the following: (i) a written notice in the
form of the Election to Purchase appearing at the end of the form of Warrant
Certificate attached as Exhibit 2 – Form of Election to Purchase hereto of such
Warrantholder’s election to exercise the Warrants, which notice shall specify
the number of such Warrantholder’s Warrants being exercised; (ii) the Warrant
Certificate or Warrant Certificates, if any, evidencing the Warrants being
exercised; and (iii) payment of the aggregate Exercise Price.
 
All rights of Warrantholder with respect to any Warrant that has not been
exercised, on or prior to 5:00 p.m., Eastern time, on the Warrant Expiration
Date shall immediately cease and such Warrants shall be automatically cancelled
and void.
 
       B.           Payment of Exercise Price.  Payment of the Exercise Price
with respect to Warrants being exercised hereunder shall be made by the payment
to the Company, in cash, by check or wire transfer, of an amount equal to the
Exercise Price multiplied by the number of Warrants then being exercised.
 
C.           Payment of Taxes.  The Company shall be responsible for paying any
and all issue, documentary, stamp or other taxes that may be payable in respect
of any issuance or delivery of Warrant Shares on exercise of a Warrant.
Notwithstanding anything contained herein to the contrary, the Warrantholder
shall be responsible for all taxes that may be due and payable by the
Warrantholder as a result of the issuance of this Warrant to the Warrantholder
or as a result of the issuance of the Warrant Shares upon due exercise hereof.
 
D.           Delivery of Warrant Shares.  Upon receipt of the items referred to
in Section 7A, the Company shall, as promptly as practicable, execute and
deliver or cause to be executed and delivered, to or upon the written order of
Warrantholder, and in the name of Warrantholder or Warrantholder’s designee, a
stock certificate or stock certificates representing the number of Warrant
Shares to be issued on exercise of the Warrant(s).  If the Warrant Shares shall
in accordance with the terms thereof have become automatically convertible into
shares of the Company’s Common Stock prior to the time a Warrant is exercised,
the Company shall in lieu of issuing shares of Common Stock, issue to the
Warrantholder or its designee on exercise of such Warrant, a stock certificate
or stock certificates representing the number of shares of Common Stock into
which the Warrant Shares issuable on exercise of such Warrant are
convertible.  The certificates issued to Warrantholder or its designee shall
bear any restrictive legend required under applicable law, rule or
regulation.  The stock certificate or certificates so delivered shall be
registered in the name of Warrantholder or such other name as shall be
designated in said notice.  A Warrant shall be deemed to have been exercised and
such stock certificate or stock certificates shall be deemed to have been
issued, and such holder or any other Person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date that such notice, together with payment of the
aggregate Exercise Price and the Warrant Certificate or Warrant Certificates
evidencing the Warrants to be exercised, is received by the Company as
aforesaid.  If the Warrants evidenced by any Warrant Certificate are exercised
in part, the Company shall, at the time of delivery of the stock certificates,
deliver to the holder thereof a new Warrant Certificate evidencing the Warrants
that were not exercised or surrendered, which shall in all respects (other than
as to the number of Warrants evidenced thereby) be identical to the Warrant
Certificate being exercised.  Any Warrant Certificates surrendered upon exercise
of Warrants shall be canceled by the Company.
 
 
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Section 8.  
Adjustment of Number of Warrant Shares Issuable Upon Exercise of a Warrant and
Adjustment of Exercise Price.

 
       A.  Adjustment for Stock Splits, Stock Dividends, Recapitalizations.  The
number of Warrant Shares issuable upon exercise of each Warrant and the Exercise
Price shall each be proportionately adjusted to reflect any stock dividend,
stock split, reverse stock split, recapitalization or the like affecting the
number of outstanding shares of Common Stock that occurs after the date hereof.
 
       B.  Adjustments for Reorganization, Consolidation, Merger.  If after the
date hereof, the Company (or any other entity, the stock or other securities of
which are at the time receivable on the exercise of the Warrants), consolidates
with or merges into another entity or conveys all or substantially all of its
assets to another entity, then, in each such case, Warrantholder, upon any
permitted exercise of a Warrant (as provided in Section 7), at any time after
the consummation of such reorganization, consolidation, merger or conveyance,
shall be entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise of the Warrant prior to such consummation,
the stock or other securities or property to which such Warrantholder would have
been entitled upon the consummation of such reorganization, consolidation,
merger or conveyance if such Warrantholder had exercised the Warrant immediately
prior thereto, all subject to further adjustment as provided in this Section
8.  The successor or purchasing entity in any such reorganization,
consolidation, merger or conveyance (if other than the Company) shall duly
execute and deliver to Warrantholder a written acknowledgment of such entity’s
obligations under the Warrants and this Agreement.
 
       C.  Notice of Certain Events.  Upon the occurrence of any event resulting
in an adjustment in the number of Warrant Shares (or other stock or securities
or property) receivable upon the exercise of the Warrants or the Exercise Price,
the Company shall promptly thereafter (i) compute such adjustment in accordance
with the terms of the Warrants, (ii) prepare a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based,
and (iii) mail copies of such certificate to Warrantholder.
 
Section 9.  
Reservation of Shares.

 
The Company shall at all times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued Common Stock, or its
authorized and issued Common Stock held in its treasury, the aggregate number of
the Warrant Shares deliverable upon the exercise of all outstanding Warrants,
for the purpose of enabling it to satisfy any obligation to issue the Warrant
Shares upon the due and punctual exercise of the Warrants, through 5:00 p.m.,
Eastern time, on the Warrant Expiration Date.
 
Section 10.  
No Impairment.

 
The Company shall not, by amendment of its certificate of incorporation or
bylaws, or through reorganization, consolidation, merger, dissolution, issuance
or sale of securities, sale of assets or any other voluntary action, willfully
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants or this Agreement, and shall at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate in order to protect the rights of Warrantholder under
the Warrants and this Agreement against wrongful impairment.  Without limiting
the generality of the foregoing, the Company:  (i) shall not set or increase the
par value of any Warrant Shares above the amount payable therefor upon exercise,
and (ii) shall take all actions that are necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of the Warrants.
 
 
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Section 11.  
Representations and Warranties of Warrantholder.

 
Warrantholder represents and warrants to the Company that, on the date hereof
and on the date the Warrantholder exercises the Warrant pursuant to the terms of
this Agreement:
 
A.           Warrantholder understands that the Warrants and the Warrant Shares
have not been registered under the Securities Act and acknowledges that the
Warrants and the Warrant Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration becomes available.
 
B.           Warrantholder is acquiring the Warrants for Warrantholder’s own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof.
 
C.           Warrantholder understands that the Warrants and the Warrant Shares
are being offered and sold to him in reliance on an exemption from the
registration requirements of United States federal and state securities laws
under Regulation S promulgated under the Securities Act and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Warrantholder set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Warrantholder to acquire the Warrants and Warrant Shares.  In
this regard, Warrantholder represents, warrants and agrees that:

(1)           Warrantholder is not a U.S. Person (as defined below) and is not
an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company
and is not acquiring the Warrants and Warrant Shares for the account or benefit
of a U.S. Person.  A U.S. Person means any one of the following:

                                                                (A)          any
natural person resident in the United States of America;

(B)           any partnership or corporation organized or incorporated under the
laws of the United States of America;

                                                                (C)           any
estate of which any executor or administrator is a U.S. person;

                                                                (D)           any
trust of which any trustee is a U.S. person;

(E)           any agency or branch of a foreign entity located in the United
States of America;

(F)           any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the benefit or account
of a U.S. person;

(G)           any discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary organized, incorporated or (if an
individual) resident in the United States of America; and

                                                               
(H)           any partnership or corporation if:

 
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(i)     organized or incorporated under the laws of any foreign jurisdiction;
and

(ii)    formed by a U.S. person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule 501(a)
under the Securities Act) who are not natural persons, estates or trusts.

(2)           At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement,
Warrantholder was outside of the United States.

(3)           Warrantholder will not, during the period commencing on the date
of issuance of the Warrants and Warrant Shares and ending on the first
anniversary of such date, or such shorter period as may be permitted by
Regulation S or other applicable securities law (the “Restricted Period”),
offer, sell, pledge or otherwise transfer the Warrants and Warrant Shares in the
United States, or to a U.S. Person for the account or for the benefit of a U.S.
Person, or otherwise in a manner that is not in compliance with Regulation S.

(4)           Warrantholder will, after expiration of the Restricted Period,
offer, sell, pledge or otherwise transfer the Warrants and Warrant Shares only
pursuant to registration under the Securities Act or an available exemption
therefrom and, in accordance with all applicable state and foreign securities
laws and this Agreement.

(5)           Warrantholder was not in the United States, engaged in, and prior
to the expiration of the Restricted Period will not engage in, any short selling
of or any hedging transaction with respect to the Warrants and Warrant Shares,
including without limitation, any put, call or other option transaction, option
writing or equity swap.

(6)           Neither Warrantholder nor or any person acting on Warrantholder’s
behalf has engaged, nor will engage, in any directed selling efforts to a U.S.
Person with respect to the Warrants and Warrant Shares and the Warrantholder and
any person acting on Warrantholder’s behalf have complied and will comply with
the “offering restrictions” requirements of Regulation S under the Securities
Act.

(7)           The transactions contemplated by this Agreement have not been
pre-arranged with a buyer located in the United States or with a U.S. Person,
and are not part of a plan or scheme to evade the registration requirements of
the Securities Act.

(8)           Neither Warrantholder nor any person acting on Warrantholder’s
behalf has undertaken or carried out any activity for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States, its territories or possessions, for any of the Warrants and
Warrant Shares.  Warrantholder agrees not to cause any advertisement of the
Warrants and Warrant Shares to be published in any newspaper or periodical or
posted in any public place and not to issue any circular relating to the
Warrants and Warrant Shares, except such advertisements that include the
statements required by Regulation S under the Securities Act, and only offshore
and not in the U.S. or its territories, and only in compliance with any local
applicable securities laws.

(9)           Each certificate representing the Warrants and Warrant Shares
shall be endorsed with the following legends, in addition to any other legend
required to be placed thereon by applicable federal or state securities laws:
 
 
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(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S.
PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING
TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

(10)           Warrantholder consents to the Company making a notation on its
records or giving instructions to any transfer agent of the Company in order to
implement the restrictions on transfer of the Warrants and Warrant Shares set
forth in this Section 11.

Section 12.  
No Rights or Liabilities as Stockholder.

 
No holder, as such, of any Warrant Certificate shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock which may at any time
be issuable on the exercise of the Warrants represented thereby for any purpose
whatever, nor shall anything contained herein or in any Warrant Certificate be
construed to confer upon the holder of any 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
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 or to receive dividend or subscription rights, or otherwise, until
such Warrant Certificate shall have been exercised in accordance with the
provisions hereof and the receipt and collection of the Exercise Price and any
other amounts payable upon such exercise by the Company.  No provision hereof,
in the absence of affirmative action by Warrantholder to purchase Warrant Shares
shall give rise to any liability of such holder for the Exercise Price or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
 
Section 13.  
Fractional Interests.

 
The Company shall not be required to issue fractional shares of Common Stock
upon exercise of the Warrants or to distribute certificates that evidence
fractional shares of Common Stock.  If any fraction of a Warrant Share would,
except for the provisions of this Section 13, be issuable on the exercise of a
Warrant, the number of Warrant Shares to be issued by the Company shall be
rounded to the nearest whole number, with one-half or greater being rounded up.
 
Section 14.  
Definitions.

 
Unless the context otherwise requires, the terms defined in this Section 15,
whenever used in this Agreement shall have the respective meanings hereinafter
specified and words in the singular or in the plural shall each include the
singular and the plural and the use of any gender shall include all genders.
 
 “Business Day” shall mean any day on which banking institutions are generally
open for business in Delaware.
 
“Common Stock” means the common stock of the Company.
 
“Exercise Price” shall be the price per Warrant Share at which Warrantholder is
entitled to purchase Warrant Shares upon exercise of any Warrant determined in
accordance with Section 7 and  subject to adjustment as provided in Sections 8
and 17 hereof.
 
“Person” shall mean any corporation, association, partnership, limited liability
company, joint venture, trust, organization, business, individual, government or
political subdivision thereof or governmental body.
 
 
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“Securities Act” shall mean the Securities Act of 1933, as amended, or any
similar federal statute as at the time in effect, and any reference to a
particular section of such Act shall include a reference to the comparable
section, if any, of such successor federal statute.
 
Section 15.  
Notices.

 
All notices, consents, requests, waivers or other communications required or
permitted under this Agreement (each a “Notice”) shall be in writing and shall
be sufficiently given (a) if hand delivered, (b) if sent by nationally
recognized overnight courier, or (c) if sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
 
if to the Company:

Suspect Detection Systems, Inc.
150 West 56th Street, Suite 4005
New York, NY 10019

if to Warrantholder:

or such other address as shall be furnished by any of the parties hereto in a
Notice.  Any Notice shall be deemed given upon receipt.
 
Section 16.  
Supplements, Amendments and Waivers.

 
This Agreement may be supplemented or amended only by a subsequent writing
signed by each of the parties hereto (or their successors or permitted assigns),
and any provision hereof may be waived only by a written instrument signed by
the party charged therewith.
 
Section 17.  
Successors and Assigns.

 
Except as otherwise provided herein, the provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and permitted assigns of the parties hereto.  Warrants issued under this
Agreement may be assigned by Warrantholder only to the extent such assignment
satisfies the restrictions on transfer set forth in this Agreement; any
attempted assignment of Warrants in violation of the terms hereof shall be void
ab initio.
 
Section 18.  
Termination.

 
This Agreement (other than Sections 7C, 11, and Sections 16 through 27,
inclusive, and all related definitions, all of which shall survive such
termination) shall terminate on the earlier of (i) the Warrant Expiration Date
and (ii) the date on which all Warrants have been exercised by the Warrantholder
or redeemed by the Company.
 
Section 19.  
Governing Law; Jurisdiction.

 
                                                                A.  Governing
Law. This Agreement and each Warrant Certificate issued hereunder shall be
governed by and construed in accordance with the laws of the state of Delaware
and the federal laws of the United States applicable herein.
 
                                                                B.  Submission
to Jurisdiction.  Each party to this Agreement hereby irrevocably and
unconditionally submits, for itself and its property, to the jurisdiction of the
state of Delaware, and any appellate court from any thereof, in respect of
actions brought against it as a defendant, in any action, suit or proceeding
arising out of or relating to this Agreement or the Warrant Certificates and
Warrants to be issued pursuant hereto, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action, suit or proceeding may be
heard and determined in such courts.  Each of the parties hereto agrees that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
 
 
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                                                                C.  Venue.  Each
party hereto irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any action, suit or proceeding arising out of or
relating to this Agreement, or the Warrant Certificates and Warrants to be
issued pursuant hereto, in any court referred to in this Subsection B.  Each of
the parties hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action, suit
proceeding in any such court and waives any other right to which it may be
entitled on account of its place of residence or domicile.
 
Section 20.  
Third Party Beneficiaries.

 
Each party intends that this Agreement shall not benefit or create any right or
cause of action in or on behalf of any Person other than the parties hereto and
their successors and permitted assigns.
 
Section 21.  
Headings.

 
The headings in this Agreement are for convenience only and shall not affect the
construction or interpretation of this Agreement.
 
Section 22.  
Entire Agreement.

 
This Agreement, together with the Warrant Certificates and Exhibits, and the
Subscription Agreement, dated of even date herewith, by and between the Company
and the Warrantholder, constitute the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and shall supersede
any prior agreements and understandings between the parties hereto with respect
to such subject matter.
 
Section 23.  
Expenses.

 
Each of the parties hereto shall pay its own expenses and costs incurred or to
be incurred in negotiating, closing and carrying out this Agreement and in
consummating the transactions contemplated herein, except as otherwise expressly
provided for herein.
 
Section 24.  
Neutral Construction.

 
The parties to this Agreement agree that this Agreement was negotiated fairly
between them at arm’s length and that the final terms of this Agreement are the
product of the parties’ negotiations.  Each party represents and warrants that
it has sought and received legal counsel of its own choosing with regard to the
contents of this Agreement and the rights and obligations affected hereby.  The
parties agree that this Agreement shall be deemed to have been jointly and
equally drafting by them, and that the provisions of this Agreement therefore
should not be construed against a party or parties on the grounds that such
party or parties drafted or was more responsible for the drafting of any such
provision(s).
 
Section 25.  
Representations and Warranties.

 
The Company hereby represents and warrants to the Warrantholder that:
 
                                                                (a)  the Company
has all requisite corporate power and authority to (i) execute and deliver this
Agreement and (ii) issue and sell the Common Stock upon the conversion thereof
and carry out provisions of this Agreement.  All corporate action on the part of
the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder, and the authorization (or reservation for
issuance), sale and issuance of the Common Stock to be sold hereunder has been
taken or will be taken prior to the date hereof;
 
 
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                                                                (b)  this
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws relating to
application affecting enforcement of creditor’s rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief of other equitable remedies;
 
                                                                (c)  the Common
Stock issuable upon the conversion thereof that is being purchased hereunder,
when issued, sold and delivered in accordance with the terms of this Agreement
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable and will be free of restrictions on transfer, other than
restrictions on transfer under applicable state and federal securities laws;
 
                                                                (d)  subject in
part to the truth and accuracy of Warrantholder’s representations set forth in
Section 11 of this Agreement, the offer, sale and issuance of the Common Stock
issuable upon the conversion thereof as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act and the
qualification or registration requirements of any state securities or other
applicable blue sky laws; and
 
                                                                (e)  the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not result in any such violation, or
be in conflict with or constitute, with or without the passage of time and
giving of notice, either a default under any such provision or an event that
results in creation of any lien, charge or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture or nonremoval of
any material permit, license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.
 
Section 26.  
Counterparts.

 
This Agreement may be executed in counterparts and by facsimile and each such
counterpart shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
 
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 

 
SUSPECT DETECTION SYSTEMS, INC.
         
 
By:
        Name:        Title:  

 
[WARRANTHOLDER]
         
 
By:
        Name:       Title:          

 

 
 
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EXHIBIT 1
WARRANT FORM
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH
ACT AND LAWS.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF, AND MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH, A CLASS
A WARRANT AGREEMENT BETWEEN SUSPECT DETECTION SYSTEMS, INC. AND THE HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE.  COPIES OF SUCH AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE COMPANY.
 
NO. ___________
 _______ CLASS A WARRANTS

 
FORM OF
 
Class A Warrant Certificate
 
SUSPECT DETECTION SYSTEMS, INC..
 
This Warrant Certificate certifies that __________________ (the
“Warrantholder”), is the registered holder of _____________ Class A Warrants
(the “Warrants”) to purchase shares (the “Warrant Shares”) of Common Stock of
Suspect Detection Systems, Inc. (the “Company”).  Each Warrant entitles the
holder, subject to the satisfaction of the conditions to exercise set forth in
Section 7 of the Warrant Agreement referred to below, to purchase from the
Company at any time or from time to time on and after _________(the “Warrant
Commencement Date”) and terminate on or prior to 5:00 p.m., Eastern time, on
_________________ (the “Warrant Expiration Date”) one fully paid and
nonassessable Warrant Share at the Exercise Price set forth in the Warrant
Agreement.  The number of Warrant Shares for which each Warrant is exercisable
and the Exercise Price are subject to adjustment as provided in the Warrant
Agreement.
 
The Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants to purchase Warrant Shares and are issued pursuant to a Class
A Warrant Agreement, dated as of ________________ (the “Warrant Agreement”),
between the Company and the Warrantholder, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and Warrantholder.
 
Warrantholder may exercise vested Warrants by surrendering this Warrant
Certificate, with the Election to Purchase attached hereto properly completed
and executed, together with payment of the aggregate Exercise Price, at the
offices of the Company specified in Section 16 of the Warrant Agreement.  If
upon any exercise of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby, there shall be
issued to the holder hereof or its assignee a new Warrant Certificate evidencing
the number of Warrants not exercised.
 
This Warrant Certificate, when surrendered at the offices of the Company
specified in Section 16 of the Warrant Agreement, by the registered holder
thereof in person, by legal representative or by attorney duly authorized in
writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, for one or more other Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
 
The Company may deem and treat the registered holder hereof as the absolute
owner of this Warrant Certificate (notwithstanding any notation of ownership or
other writing hereon made by anyone), for the purpose of any exercise hereof and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
 
WITNESS the signatures of the duly authorized officers of the Company.
 
Dated:  _____________

  SUSPECT DETECTION SYSTEMS, INC.          
 
By:
        Name        Title           

 
 
 

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Exhibit 2
 
Form of Election to Purchase
 
The undersigned hereby irrevocably elects to exercise _________ of the Class A
Warrants evidenced by the attached Warrant Certificate to purchase Warrant
Shares, and herewith tenders (or is concurrently tendering) payment for such
Warrant Shares in an amount determined in accordance with the terms of the
Warrant Agreement.  The undersigned requests that a certificate representing
such Warrant Shares be registered in the name of , whose address is  and that
such certificate be delivered to , whose address is .  If said number of
Warrants is less than the number of Warrants evidenced by the Warrant
Certificate (as calculated pursuant to the Warrant Agreement), the undersigned
requests that a new Warrant Certificate evidencing the number of Warrants
evidenced by this Warrant Certificate that are not being exercised be registered
in the name of , whose address is  and that such Warrant Certificate be
delivered to , whose address is .
 
Dated:                                   ,              

Name of holder of Warrant Certificate:
________________________________________ 
(Please Print)
Address: _________________________________

                 _________________________________

Federal Tax ID No.: _________________________

Signature: ________________________________                                                             

 
Note:
The above signature must correspond with the name as written in the first
sentence of the attached Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and if the certificate
evidencing the Warrant Shares or any Warrant Certificate representing Warrants
not exercised is to be registered in a name other than that in which this
Warrant Certificate is registered, the signature above must be guaranteed.

 
Dated:                           ,                

 
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CLASS B WARRANT AGREEMENT
 
CLASS B WARRANT AGREEMENT (“Agreement”), dated as of November __, 2010, by and
between Suspect Detection Systems, Inc., a Delaware corporation (the “Company”),
and ____________________ (“Warrantholder”).  Certain capitalized terms used
herein are defined in Section 15 hereof.
 
In consideration of the mutual terms, conditions, representations, warranties
and agreements herein set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
 
Section 27.  
Issuance of Warrants.

 
The Company hereby issues and grants to Warrantholder ________ (_______) stock
purchase warrants, which are hereby designated and shall be known as “Class B
Warrants” (hereinafter referred to as “Warrants”).  Each Warrant shall grant to
the holder thereof the right to purchase one (1) share of common stock of the
Company (the “Common Stock”).  Commencing on _____________ (the “Warrant
Commencement Date”), and terminating two year from the date of such issuance
(the “Warrant Expiration Date”), the holder shall have the right, subject to the
satisfaction of the conditions to exercise set forth in Section 7 of this
Agreement, to purchase one (1) share of Common Stock per each Warrant (the
shares of Common Stock issuable upon exercise of the Warrants being collectively
referred to herein as the “Warrant Shares”) at an exercise price of $0.15 per
Warrant Share (the “Exercise Price”).  The number of Warrant Shares issuable on
exercise of each Warrant and the Exercise Price are all subject to adjustment
pursuant to Section 8 of this Agreement.
 
Section 28.  
Form of Warrant Certificates.

 
Promptly after the execution and delivery of this Agreement by the parties
hereto, the Company may, in its sole and absolute discretion, cause to be
executed and delivered to Warrantholder one or more certificates evidencing the
Warrants (the “Warrant Certificates”).  Each Warrant Certificate delivered
hereunder shall be substantially in the form set forth in Exhibit 1 – Warrant
Form attached hereto and may have such letters, numbers or other identification
marks and legends, summaries or endorsements printed thereon as the Company may
deem appropriate and that are not inconsistent with the terms of this Agreement
or as may be required by applicable law, rule or regulation.  Each Warrant
Certificate shall be dated the date of execution by the Company.
 
Section 29.  
Execution of Warrant Certificates.

 
Each Warrant Certificate delivered hereunder shall be signed on behalf of the
Company by at least one of the following: its Chief Executive Officer,
President, Vice President, Secretary or Assistant Secretary.  Each such
signature may be in the form of a facsimile thereof and may be imprinted or
otherwise reproduced on the Warrant Certificates.
 
If any officer of the Company who signed any Warrant Certificate ceases to be an
officer of the Company before the Warrant Certificate so signed shall have been
delivered by the Company, such Warrant Certificate nevertheless may be delivered
as though such person had not ceased to be such officer of the Company.
 
Section 30.  
Registration of Ownership and Transfer.

 
Warrant Certificates shall be issued in registered form only.  The Company will
keep or cause to be kept books for registration of ownership and transfer of
each Warrant Certificate issued pursuant to this Agreement.  Each Warrant
Certificate issued pursuant to this Agreement shall be numbered by the Company
and shall be registered by the Company in the name of the holder thereof
(initially the Warrantholder).  The Company may deem and treat the registered
holder of any Warrant Certificate as the absolute owner thereof (notwithstanding
any notation of ownership or other writing thereon made by anyone) for the
purpose of any exercise thereof and for all other purposes, and the Company
shall not be affected by any notice to the contrary.
 
Section 31.  
No Transfers.

 
No Warrant may be sold, pledged, hypothecated, assigned, conveyed, transferred
or otherwise disposed of without the agreement of the Company, which will not be
unreasonably withheld.
 
 
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Section 32.  
Mutilated or Missing Warrant Certificates.

 
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the Company
shall issue, upon surrender and cancellation of any mutilated Warrant
Certificate, or in lieu of and substitution for any lost, stolen or destroyed
Warrant Certificate, a new Warrant Certificate of like tenor and representing an
equal number of Warrants.  In the case of a lost, stolen or destroyed Warrant
Certificate, a new Warrant Certificate shall be issued by the Company only upon
the Company’s receipt of reasonably satisfactory evidence of such loss, theft or
destruction and, if requested, an indemnity or bond reasonably satisfactory to
the Company.
 
Section 33.  
Exercise of Warrants.

 
       A.  Exercise.  Subject to the terms and conditions set forth in this
Section 7, Warrants may be exercised, in whole or in part (but not as to any
fractional part of a Warrant), at any time or from time to time on and after the
Warrant Commencement Date and on or prior to 5:00 p.m., Eastern time, on the
Warrant Expiration Date.
 
In order to exercise any Warrant, Warrantholder shall deliver to the Company at
its office referred to in Section 16 the following: (i) a written notice in the
form of the Election to Purchase appearing at the end of the form of Warrant
Certificate attached as Exhibit 2 – Form of Election to Purchase hereto of such
Warrantholder’s election to exercise the Warrants, which notice shall specify
the number of such Warrantholder’s Warrants being exercised; (ii) the Warrant
Certificate or Warrant Certificates, if any, evidencing the Warrants being
exercised; and (iii) payment of the aggregate Exercise Price.
 
All rights of Warrantholder with respect to any Warrant that has not been
exercised, on or prior to 5:00 p.m., Eastern time, on the Warrant Expiration
Date shall immediately cease and such Warrants shall be automatically cancelled
and void.
 
       B.           Payment of Exercise Price.  Payment of the Exercise Price
with respect to Warrants being exercised hereunder shall be made by the payment
to the Company, in cash, by check or wire transfer, of an amount equal to the
Exercise Price multiplied by the number of Warrants then being exercised.
 
C.           Payment of Taxes.  The Company shall be responsible for paying any
and all issue, documentary, stamp or other taxes that may be payable in respect
of any issuance or delivery of Warrant Shares on exercise of a Warrant.
Notwithstanding anything contained herein to the contrary, the Warrantholder
shall be responsible for all taxes that may be due and payable by the
Warrantholder as a result of the issuance of this Warrant to the Warrantholder
or as a result of the issuance of the Warrant Shares upon due exercise hereof.
 
D.           Delivery of Warrant Shares.  Upon receipt of the items referred to
in Section 7A, the Company shall, as promptly as practicable, execute and
deliver or cause to be executed and delivered, to or upon the written order of
Warrantholder, and in the name of Warrantholder or Warrantholder’s designee, a
stock certificate or stock certificates representing the number of Warrant
Shares to be issued on exercise of the Warrant(s).  If the Warrant Shares shall
in accordance with the terms thereof have become automatically convertible into
shares of the Company’s Common Stock prior to the time a Warrant is exercised,
the Company shall in lieu of issuing shares of Common Stock, issue to the
Warrantholder or its designee on exercise of such Warrant, a stock certificate
or stock certificates representing the number of shares of Common Stock into
which the Warrant Shares issuable on exercise of such Warrant are
convertible.  The certificates issued to Warrantholder or its designee shall
bear any restrictive legend required under applicable law, rule or
regulation.  The stock certificate or certificates so delivered shall be
registered in the name of Warrantholder or such other name as shall be
designated in said notice.  A Warrant shall be deemed to have been exercised and
such stock certificate or stock certificates shall be deemed to have been
issued, and such holder or any other Person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date that such notice, together with payment of the
aggregate Exercise Price and the Warrant Certificate or Warrant Certificates
evidencing the Warrants to be exercised, is received by the Company as
aforesaid.  If the Warrants evidenced by any Warrant Certificate are exercised
in part, the Company shall, at the time of delivery of the stock certificates,
deliver to the holder thereof a new Warrant Certificate evidencing the Warrants
that were not exercised or surrendered, which shall in all respects (other than
as to the number of Warrants evidenced thereby) be identical to the Warrant
Certificate being exercised.  Any Warrant Certificates surrendered upon exercise
of Warrants shall be canceled by the Company.
 
 
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Section 34.  
Adjustment of Number of Warrant Shares Issuable Upon Exercise of a Warrant and
Adjustment of Exercise Price.

 
             A.  Adjustment for Stock Splits, Stock Dividends,
Recapitalizations.  The number of Warrant Shares issuable upon exercise of each
Warrant and the Exercise Price shall each be proportionately adjusted to reflect
any stock dividend, stock split, reverse stock split, recapitalization or the
like affecting the number of outstanding shares of Common Stock that occurs
after the date hereof.
 
             B.  Adjustments for Reorganization, Consolidation, Merger.  If
after the date hereof, the Company (or any other entity, the stock or other
securities of which are at the time receivable on the exercise of the Warrants),
consolidates with or merges into another entity or conveys all or substantially
all of its assets to another entity, then, in each such case, Warrantholder,
upon any permitted exercise of a Warrant (as provided in Section 7), at any time
after the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of the Warrant prior to
such consummation, the stock or other securities or property to which such
Warrantholder would have been entitled upon the consummation of such
reorganization, consolidation, merger or conveyance if such Warrantholder had
exercised the Warrant immediately prior thereto, all subject to further
adjustment as provided in this Section 8.  The successor or purchasing entity in
any such reorganization, consolidation, merger or conveyance (if other than the
Company) shall duly execute and deliver to Warrantholder a written
acknowledgment of such entity’s obligations under the Warrants and this
Agreement.
 
             C.  Notice of Certain Events.  Upon the occurrence of any event
resulting in an adjustment in the number of Warrant Shares (or other stock or
securities or property) receivable upon the exercise of the Warrants or the
Exercise Price, the Company shall promptly thereafter (i) compute such
adjustment in accordance with the terms of the Warrants, (ii) prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, and (iii) mail copies of such certificate to
Warrantholder.
 
Section 35.  
Reservation of Shares.

 
The Company shall at all times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued Common Stock, or its
authorized and issued Common Stock held in its treasury, the aggregate number of
the Warrant Shares deliverable upon the exercise of all outstanding Warrants,
for the purpose of enabling it to satisfy any obligation to issue the Warrant
Shares upon the due and punctual exercise of the Warrants, through 5:00 p.m.,
Eastern time, on the Warrant Expiration Date.
 
Section 36.  
No Impairment.

 
The Company shall not, by amendment of its certificate of incorporation or
bylaws, or through reorganization, consolidation, merger, dissolution, issuance
or sale of securities, sale of assets or any other voluntary action, willfully
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants or this Agreement, and shall at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate in order to protect the rights of Warrantholder under
the Warrants and this Agreement against wrongful impairment.  Without limiting
the generality of the foregoing, the Company:  (i) shall not set or increase the
par value of any Warrant Shares above the amount payable therefor upon exercise,
and (ii) shall take all actions that are necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of the Warrants.
 
 
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Section 37.  
Representations and Warranties of Warrantholder.

 
Warrantholder represents and warrants to the Company that, on the date hereof
and on the date the Warrantholder exercises the Warrant pursuant to the terms of
this Agreement:
 
A.           Warrantholder understands that the Warrants and the Warrant Shares
have not been registered under the Securities Act and acknowledges that the
Warrants and the Warrant Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration becomes available.
 
B.           Warrantholder is acquiring the Warrants for Warrantholder’s own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof.
 
C.           Warrantholder understands that the Warrants and the Warrant Shares
are being offered and sold to him in reliance on an exemption from the
registration requirements of United States federal and state securities laws
under Regulation S promulgated under the Securities Act and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Warrantholder set forth
herein in order to determine the applicability of such exemptions and the
suitability of the Warrantholder to acquire the Warrants and Warrant Shares.  In
this regard, Warrantholder represents, warrants and agrees that:

(1)           Warrantholder is not a U.S. Person (as defined below) and is not
an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company
and is not acquiring the Warrants and Warrant Shares for the account or benefit
of a U.S. Person.  A U.S. Person means any one of the following:

                (A) any natural person resident in the United States of America;
               
                (B)  any partnership or corporation organized or incorporated
under the laws of the United States of America;

                (C) any estate of which any executor or administrator is a U.S.
person;

                (D) any trust of which any trustee is a U.S. person;

                (E)  any agency or branch of a foreign entity located in the
United States of America;

                (F) any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for the benefit or
account of a U.S. person;

                (G) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized, incorporated or
(if an individual) resident in the United States of America; and

                (H) any partnership or corporation if:
 
 
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(i)     organized or incorporated under the laws of any foreign jurisdiction;
and

(ii)    formed by a U.S. person principally for the purpose of investing in
securities not registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule 501(a)
under the Securities Act) who are not natural persons, estates or trusts.

(2)           At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement,
Warrantholder was outside of the United States.

(3)           Warrantholder will not, during the period commencing on the date
of issuance of the Warrants and Warrant Shares and ending on the first
anniversary of such date, or such shorter period as may be permitted by
Regulation S or other applicable securities law (the “Restricted Period”),
offer, sell, pledge or otherwise transfer the Warrants and Warrant Shares in the
United States, or to a U.S. Person for the account or for the benefit of a U.S.
Person, or otherwise in a manner that is not in compliance with Regulation S.

(4)           Warrantholder will, after expiration of the Restricted Period,
offer, sell, pledge or otherwise transfer the Warrants and Warrant Shares only
pursuant to registration under the Securities Act or an available exemption
therefrom and, in accordance with all applicable state and foreign securities
laws and this Agreement.

(5)           Warrantholder was not in the United States, engaged in, and prior
to the expiration of the Restricted Period will not engage in, any short selling
of or any hedging transaction with respect to the Warrants and Warrant Shares,
including without limitation, any put, call or other option transaction, option
writing or equity swap.

(6)           Neither Warrantholder nor or any person acting on Warrantholder’s
behalf has engaged, nor will engage, in any directed selling efforts to a U.S.
Person with respect to the Warrants and Warrant Shares and the Warrantholder and
any person acting on Warrantholder’s behalf have complied and will comply with
the “offering restrictions” requirements of Regulation S under the Securities
Act.

(7)           The transactions contemplated by this Agreement have not been
pre-arranged with a buyer located in the United States or with a U.S. Person,
and are not part of a plan or scheme to evade the registration requirements of
the Securities Act.

(8)           Neither Warrantholder nor any person acting on Warrantholder’s
behalf has undertaken or carried out any activity for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States, its territories or possessions, for any of the Warrants and
Warrant Shares.  Warrantholder agrees not to cause any advertisement of the
Warrants and Warrant Shares to be published in any newspaper or periodical or
posted in any public place and not to issue any circular relating to the
Warrants and Warrant Shares, except such advertisements that include the
statements required by Regulation S under the Securities Act, and only offshore
and not in the U.S. or its territories, and only in compliance with any local
applicable securities laws.

(9)           Each certificate representing the Warrants and Warrant Shares
shall be endorsed with the following legends, in addition to any other legend
required to be placed thereon by applicable federal or state securities laws:
 
 
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(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S.
PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING
TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

(10)           Warrantholder consents to the Company making a notation on its
records or giving instructions to any transfer agent of the Company in order to
implement the restrictions on transfer of the Warrants and Warrant Shares set
forth in this Section 11.

Section 38.  
No Rights or Liabilities as Stockholder.

 
No holder, as such, of any Warrant Certificate shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock which may at any time
be issuable on the exercise of the Warrants represented thereby for any purpose
whatever, nor shall anything contained herein or in any Warrant Certificate be
construed to confer upon the holder of any 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
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 or to receive dividend or subscription rights, or otherwise, until
such Warrant Certificate shall have been exercised in accordance with the
provisions hereof and the receipt and collection of the Exercise Price and any
other amounts payable upon such exercise by the Company.  No provision hereof,
in the absence of affirmative action by Warrantholder to purchase Warrant Shares
shall give rise to any liability of such holder for the Exercise Price or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
 
Section 39.  
Fractional Interests.

 
The Company shall not be required to issue fractional shares of Common Stock
upon exercise of the Warrants or to distribute certificates that evidence
fractional shares of Common Stock.  If any fraction of a Warrant Share would,
except for the provisions of this Section 13, be issuable on the exercise of a
Warrant, the number of Warrant Shares to be issued by the Company shall be
rounded to the nearest whole number, with one-half or greater being rounded up.
 
Section 40.  
Definitions.

 
Unless the context otherwise requires, the terms defined in this Section 15,
whenever used in this Agreement shall have the respective meanings hereinafter
specified and words in the singular or in the plural shall each include the
singular and the plural and the use of any gender shall include all genders.
 
 “Business Day” shall mean any day on which banking institutions are generally
open for business in Delaware.
 
“Common Stock” means the common stock of the Company.
 
“Exercise Price” shall be the price per Warrant Share at which Warrantholder is
entitled to purchase Warrant Shares upon exercise of any Warrant determined in
accordance with Section 7 and  subject to adjustment as provided in Sections 8
and 17 hereof.
 
“Person” shall mean any corporation, association, partnership, limited liability
company, joint venture, trust, organization, business, individual, government or
political subdivision thereof or governmental body.
 
 
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“Securities Act” shall mean the Securities Act of 1933, as amended, or any
similar federal statute as at the time in effect, and any reference to a
particular section of such Act shall include a reference to the comparable
section, if any, of such successor federal statute.
 
Section 41.  
Notices.

 
All notices, consents, requests, waivers or other communications required or
permitted under this Agreement (each a “Notice”) shall be in writing and shall
be sufficiently given (a) if hand delivered, (b) if sent by nationally
recognized overnight courier, or (c) if sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
 
if to the Company:

Suspect Detection Systems, Inc.
150 West 56th Street, Suite 4005
New York, NY 10019

if to Warrantholder:

or such other address as shall be furnished by any of the parties hereto in a
Notice.  Any Notice shall be deemed given upon receipt.
 
Section 42.  
Supplements, Amendments and Waivers.

 
This Agreement may be supplemented or amended only by a subsequent writing
signed by each of the parties hereto (or their successors or permitted assigns),
and any provision hereof may be waived only by a written instrument signed by
the party charged therewith.
 
Section 43.  
Successors and Assigns.

 
Except as otherwise provided herein, the provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and permitted assigns of the parties hereto.  Warrants issued under this
Agreement may be assigned by Warrantholder only to the extent such assignment
satisfies the restrictions on transfer set forth in this Agreement; any
attempted assignment of Warrants in violation of the terms hereof shall be void
ab initio.
 
Section 44.  
Termination.

 
This Agreement (other than Sections 7C, 11, and Sections 16 through 27,
inclusive, and all related definitions, all of which shall survive such
termination) shall terminate on the earlier of (i) the Warrant Expiration Date
and (ii) the date on which all Warrants have been exercised by the Warrantholder
or redeemed by the Company.
 
Section 45.  
Governing Law; Jurisdiction.

 
             A.  Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be governed by and construed in accordance with the laws
of the state of Delaware and the federal laws of the United States applicable
herein.
 
           B.  Submission to Jurisdiction.  Each party to this Agreement hereby
irrevocably and unconditionally submits, for itself and its property, to the
jurisdiction of the state of Delaware, and any appellate court from any thereof,
in respect of actions brought against it as a defendant, in any action, suit or
proceeding arising out of or relating to this Agreement or the Warrant
Certificates and Warrants to be issued pursuant hereto, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action, suit
or proceeding may be heard and determined in such courts.  Each of the parties
hereto agrees that a final judgment in any such action, suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
 
 
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             C.  Venue.  Each party hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
action, suit or proceeding arising out of or relating to this Agreement, or the
Warrant Certificates and Warrants to be issued pursuant hereto, in any court
referred to in this Subsection B.  Each of the parties hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action, suit proceeding in any such court and
waives any other right to which it may be entitled on account of its place of
residence or domicile.
 
Section 46.  
Third Party Beneficiaries.

 
Each party intends that this Agreement shall not benefit or create any right or
cause of action in or on behalf of any Person other than the parties hereto and
their successors and permitted assigns.
 
Section 47.  
Headings.

 
The headings in this Agreement are for convenience only and shall not affect the
construction or interpretation of this Agreement.
 
Section 48.  
Entire Agreement.

 
This Agreement, together with the Warrant Certificates and Exhibits, and the
Subscription Agreement, dated of even date herewith, by and between the Company
and the Warrantholder, constitute the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and shall supersede
any prior agreements and understandings between the parties hereto with respect
to such subject matter.
 
Section 49.  
Expenses.

 
Each of the parties hereto shall pay its own expenses and costs incurred or to
be incurred in negotiating, closing and carrying out this Agreement and in
consummating the transactions contemplated herein, except as otherwise expressly
provided for herein.
 
Section 50.  
Neutral Construction.

 
The parties to this Agreement agree that this Agreement was negotiated fairly
between them at arm’s length and that the final terms of this Agreement are the
product of the parties’ negotiations.  Each party represents and warrants that
it has sought and received legal counsel of its own choosing with regard to the
contents of this Agreement and the rights and obligations affected hereby.  The
parties agree that this Agreement shall be deemed to have been jointly and
equally drafting by them, and that the provisions of this Agreement therefore
should not be construed against a party or parties on the grounds that such
party or parties drafted or was more responsible for the drafting of any such
provision(s).
 
Section 51.  
Representations and Warranties.

 
The Company hereby represents and warrants to the Warrantholder that:
 
                (a)  the Company has all requisite corporate power and authority
to (i) execute and deliver this Agreement and (ii) issue and sell the Common
Stock upon the conversion thereof and carry out provisions of this
Agreement.  All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement, the performance of all obligations of the Company
hereunder, and the authorization (or reservation for issuance), sale and
issuance of the Common Stock to be sold hereunder has been taken or will be
taken prior to the date hereof;
 
 
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                (b)  this Agreement constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws relating to application affecting enforcement of creditor’s rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief of other equitable remedies;
 
                (c)  the Common Stock issuable upon the conversion thereof that
is being purchased hereunder, when issued, sold and delivered in accordance with
the terms of this Agreement for the consideration expressed herein, will be duly
and validly issued, fully paid and nonassessable and will be free of
restrictions on transfer, other than restrictions on transfer under applicable
state and federal securities laws;
 
                (d)  subject in part to the truth and accuracy of
Warrantholder’s representations set forth in Section 11 of this Agreement, the
offer, sale and issuance of the Common Stock issuable upon the conversion
thereof as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act and the qualification or registration
requirements of any state securities or other applicable blue sky laws; and
 
                (e)  the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not result in
any such violation, or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision
or an event that results in creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonremoval of any material permit, license, authorization or approval applicable
to the Company, its business or operations or any of its assets or properties.
 
Section 52.  
Counterparts.

 
This Agreement may be executed in counterparts and by facsimile and each such
counterpart shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 

 
SUSPECT DETECTION SYSTEMS, INC.
         
 
By:
        Name:       Title:  

 
 

 
[WARRANTHOLDER]
         
 
By:
        Name:       Title:          

 
 
 
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EXHIBIT 1
WARRANT FORM
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH
ACT AND LAWS.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF, AND MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH, A CLASS
B WARRANT AGREEMENT BETWEEN SUSPECT DETECTION SYSTEMS, INC. AND THE HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE.  COPIES OF SUCH AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE COMPANY.
 
NO. __________
 _______ CLASS B WARRANTS

 
FORM OF
 
Class B Warrant Certificate
 
  SUSPECT DETECTION SYSTEMS, INC.
 
This Warrant Certificate certifies that __________________ (the
“Warrantholder”), is the registered holder of _____________ Class B Warrants
(the “Warrants”) to purchase shares (the “Warrant Shares”) of Common Stock of
Suspect Detection Systems, Inc. (the “Company”).  Each Warrant entitles the
holder, subject to the satisfaction of the conditions to exercise set forth in
Section 7 of the Warrant Agreement referred to below, to purchase from the
Company at any time or from time to time on and after _________(the “Warrant
Commencement Date”) and terminate on or prior to 5:00 p.m., Eastern time, on
_________________ (the “Warrant Expiration Date”) one fully paid and
nonassessable Warrant Share at the Exercise Price set forth in the Warrant
Agreement.  The number of Warrant Shares for which each Warrant is exercisable
and the Exercise Price are subject to adjustment as provided in the Warrant
Agreement.
 
The Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants to purchase Warrant Shares and are issued pursuant to a Class
B Warrant Agreement, dated as of ________________ (the “Warrant Agreement”),
between the Company and the Warrantholder, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and Warrantholder.
 
Warrantholder may exercise vested Warrants by surrendering this Warrant
Certificate, with the Election to Purchase attached hereto properly completed
and executed, together with payment of the aggregate Exercise Price, at the
offices of the Company specified in Section 16 of the Warrant Agreement.  If
upon any exercise of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby, there shall be
issued to the holder hereof or its assignee a new Warrant Certificate evidencing
the number of Warrants not exercised.
 
This Warrant Certificate, when surrendered at the offices of the Company
specified in Section 16 of the Warrant Agreement, by the registered holder
thereof in person, by legal representative or by attorney duly authorized in
writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, for one or more other Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
 
The Company may deem and treat the registered holder hereof as the absolute
owner of this Warrant Certificate (notwithstanding any notation of ownership or
other writing hereon made by anyone), for the purpose of any exercise hereof and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
 
WITNESS the signatures of the duly authorized officers of the Company.
 
Dated:  _____________
 

  SUSPECT DETECTION SYSTEMS, INC          
 
By:
        Name:        Title:  

 
 
 

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Exhibit 2
 
Form of Election to Purchase
 
The undersigned hereby irrevocably elects to exercise _________ of the Class B
Warrants evidenced by the attached Warrant Certificate to purchase Warrant
Shares, and herewith tenders (or is concurrently tendering) payment for such
Warrant Shares in an amount determined in accordance with the terms of the
Warrant Agreement.  The undersigned requests that a certificate representing
such Warrant Shares be registered in the name of , whose address is  and that
such certificate be delivered to , whose address is .  If said number of
Warrants is less than the number of Warrants evidenced by the Warrant
Certificate (as calculated pursuant to the Warrant Agreement), the undersigned
requests that a new Warrant Certificate evidencing the number of Warrants
evidenced by this Warrant Certificate that are not being exercised be registered
in the name of , whose address is  and that such Warrant Certificate be
delivered to , whose address is .
 
Dated:                                   ,              

Name of holder of Warrant Certificate:
______________________________
______________________________ 
(Please Print)

Address: _______________________
             _______________________
 
Federal Tax ID No.:
________________                                                              
 
Signature: _______________________

 
Note:
The above signature must correspond with the name as written in the first
sentence of the attached Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, and if the certificate
evidencing the Warrant Shares or any Warrant Certificate representing Warrants
not exercised is to be registered in a name other than that in which this
Warrant Certificate is registered, the signature above must be guaranteed.

 
Dated:                           ,                
 
 
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