**EXHIBIT 4.5**

 

**THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANYAPPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALEOR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENTUNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OFCOUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOTREQUIRED.**

 

# **WARRANT**

# ** **

**TO PURCHASE             SHARES OF COMMON STOCK OF**

 

**TRI-S SECURITY CORPORATION**

 

Issue Date:                                

 

**THISCERTIFIES THAT**, for value received,                                     or (subject to the restrictions on transfer contained herein) its registeredassigns (the “Holder”) is entitled to purchase from Tri-S SecurityCorporation, a Georgia corporation (the “Company”), at any time or fromtime to time after 9:00 a.m., Atlanta, Georgia time, after the date onwhich Shareholder Approval (as hereinafter defined) is obtained and prior to5:00 p.m., Atlanta, Georgia time, on the date which is the thirdanniversary of the Issue Date set forth above (the “Expiration Date”),at the place where the Warrant Agency (as hereinafter defined) is located, atthe Exercise Price (as hereinafter defined), the number of shares of commonstock, $0.001 par value per share (the “Common Stock”), of the Companyspecified above, all subject to adjustment and upon the terms and conditions ashereinafter provided.

 

Capitalized terms used and not otherwise defined in this Warrant shallhave the meanings set forth in Article V hereof.

 

**ARTICLE I**

 

**EXERCISE OF WARRANTS**

 

1.1.                              Method of Exercise.  To exercise this Warrant in whole or in part,after the date on which Shareholder Approval is obtained, the Holder shalldeliver to the Company at the Warrant Agency: (a) this Warrant; (b) a written notice, substantially in theform of the subscription notice attached hereto as Annex 1 (the “SubscriptionNotice”), of such Holder’s election to exercise this Warrant, which noticeshall specify the number of shares of Common Stock to be purchased, thedenominations of the share certificate or certificates desired and the name ornames of the Eligible Holder(s) in which such certificates are to be registered;and (c) payment of the Exercise Price with respect to such shares ofCommon Stock.  Such payment may be made,at the option of the Holder, by cash, money order, certified or bank cashier’scheck or wire transfer.

 

----

 

The Company shall, as promptly as practicable and in any event withinfive (5) Business Days thereafter, execute and deliver or cause to beexecuted and delivered, in accordance with such subscription notice, acertificate or certificates representing the aggregate number of shares ofCommon Stock specified in said notice. The share certificate or certificates so delivered shall be in suchdenominations as may be specified in such notice (or, if such notice shall notspecify denominations, one certificate shall be issued) and shall be issued inthe name of the Holder or such other name or names of Eligible Holder(s) asshall be designated in such notice.  Suchcertificate or certificates shall be deemed to have been issued, and suchHolder or any other person so designated to be named therein shall be deemedfor all purposes to have become holders of record of such shares, as of thedate the aforementioned notice is received by the Company.  If this Warrant shall have been exercisedonly in part, the Company shall, at the time of delivery of the certificate orcertificates, deliver to the Holder a new Warrant evidencing the right topurchase the remaining shares of Common Stock called for by this Warrant, whichnew Warrant shall in all other respects be identical with this Warrant.  The Company shall pay all expenses payable inconnection with the preparation, issuance and delivery of share certificatesand new Warrants as contemplated by Section 2.6 below (other than transferor similar taxes in connection with the transfer of securities), except that,if share certificates or new Warrants shall be registered in a name or namesother than the name of the Holder, funds sufficient to pay all transfer taxespayable as a result of such transfer shall be paid by the Holder at the time ofdelivering the aforementioned notice or promptly upon receipt of a writtenrequest of the Company for payment.

 

If this Warrant shall be surrendered for exercise within any periodduring which the transfer books for shares of the Common Stock of the Companyor other securities purchasable upon the exercise of this Warrant are closedfor any purpose, the Company shall not be required to make delivery ofcertificates for the securities purchasable upon such exercise until the dateof the reopening of said transfer books.

 

1.2.                              Shares To Be Fully Paid and Nonassessable.  All shares of Common Stockissued upon the exercise of this Warrant shall be validly issued, fully paidand nonassessable.

 

1.3.                              No Fractional Shares To Be Issued.  The Company shall not be required to issuefractions of shares of Common Stock upon exercise of this Warrant.  If any fraction of a share would, but forthis Section, be issuable upon any exercise of this Warrant, in lieu of suchfractional share the Company shall issue to the Holder a whole share of CommonStock.

 

1.4.                              Securities Laws; Share Legend.  The Holder, by acceptance of this Warrant,agrees that this Warrant and all shares of Common Stock issuable upon exerciseof this Warrant will be disposed of only in accordance with the Securities Actof 1933, as amended (the “Securities Act”) and the rules andregulations of the Securities and Exchange Commission (the “Commission”)promulgated thereunder.  In addition toany other legend which the Company may deem advisable under the Securities Act andapplicable state securities laws, all certificates representing shares ofCommon Stock (as well as any other securities issued hereunder in respect ofany such shares) issued upon exercise of this Warrant shall be endorsed asfollows:

 

2

----

 

THE SECURITIESREPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOTBE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATESECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUERTHAT SUCH REGISTRATION IS NOT REQUIRED.

 

Any certificate issued at any time in exchange or substitution for anycertificate bearing such legend (except a new certificate issued uponcompletion of a public distribution pursuant to a registration statement underthe Securities Act) shall also bear such legend unless, in the opinion ofcounsel (in form and substance reasonably satisfactory to the Company) selectedby the Holder of such certificate and reasonably acceptable to the Company, thesecurities represented thereby need no longer be subject to restrictions onresale under the Securities Act.

 

# **ARTICLE II**

# ** **

**WARRANT AGENCY; TRANSFER, EXCHANGE AND**

**REPLACEMENT OF WARRANT**

 

2.1.                              Warrant Agency.  Until such time, if any, as an independentagency shall be appointed by the Company to perform services described hereinwith respect to this Warrant (the “Warrant Agency”), the Company shallperform the obligations of the Warrant Agency provided herein at its principaloffice address or such other address as the Company shall specify by priorwritten notice to the Holder.

 

2.2.                              Ownership of Warrant.  The Company may deem and treat the person inwhose name this Warrant is registered as the holder and owner hereof(notwithstanding any notations of ownership or writing hereon made by anyperson other than the Company) for all purposes and shall not be affected byany notice to the contrary, until presentation of this Warrant for registrationof transfer as provided in this Article II.

 

2.3.                              Transfer of Warrant.  This Warrant may only be transferred to apurchaser subject to and in accordance with this Section 2.3, and anyattempted transfer which is not in accordance with this Section 2.3 shallbe null and void and the transferee shall not be entitled to exercise any ofthe rights of the holder of this Warrant. The Company agrees to maintain at the Warrant Agency books for theregistration of such transfers of Warrants, and transfer of this Warrant andall rights hereunder shall be registered, in whole or in part, on such books,upon surrender of this Warrant at the Warrant Agency in accordance with this Section 2.3,together with: (i) a written assignment of this Warrant, substantially inthe form of the assignment attached hereto as Annex 2, dulyexecuted by the Holder or its duly authorized agent or attorney-in-fact, withsignatures guaranteed by a bank or trust company or a broker or dealerregistered with the NASD, and funds sufficient to pay any transfer taxespayable upon such transfer; and (ii) an investment representation letter,in form and substance acceptable to the Company, executed by the assignee orassignees of this Warrant.  Uponsurrender of this Warrant in accordance with this Section 2.3, the Company(subject to being satisfied that such transfer is in compliance with

 

3

----

 

Section 1.4) shall execute and deliver a newWarrant or Warrants of like tenor and representing in the aggregate the rightto purchase the same number of shares of Common Stock in the name of theassignee or assignees and in the denominations specified in the instrument ofassignment, and this Warrant shall promptly be canceled.  Notwithstanding the foregoing, a Warrant maybe exercised by a new Holder without having a new Warrant issued.  The Company shall not be required to pay anyFederal or state transfer tax or charge that may be payable in respect of anytransfer of this Warrant or the issuance or delivery of certificates for CommonStock in a name other than that of the registered Holder of this Warrant.

 

2.4.                              Division or Combination of Warrants.  This Warrant may be divided or combined withother Warrants, in connection with the partial exercise of this Warrant, uponsurrender hereof and of any Warrant or Warrants with which this Warrant is tobe combined at the Warrant Agency, together with a written notice specifyingthe names and denominations in which the new Warrant or Warrants are to beissued, signed by the Holders hereof and thereof or their respective dulyauthorized agents or attorneys-in-fact. Subject to compliance with Section 2.3 as to any transfer which maybe involved in the division or combination, the Company shall execute anddeliver a new Warrant or Warrants in exchange for the Warrant or Warrants to bedivided or combined in accordance with such notice.

 

2.5.                              Loss, Theft, Destruction of Warrant Certificates.  Upon receipt by the Companyof evidence reasonably satisfactory to the Company of the loss, theft,destruction or mutilation of this Warrant and, in the case of any such loss,theft or destruction, upon receipt of indemnity or security (in customary form)reasonably satisfactory to the Company, or, in the case of any such mutilation,upon surrender and cancellation of such Warrant and upon reimbursement of theCompany’s reasonable incidental expenses, the Company will make and deliver, inlieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant oflike tenor and representing the right to purchase the same aggregate number ofshares of Common Stock.

 

2.6.                              Expenses of Delivery of Warrants.  Except as otherwise expressly providedherein, the Company shall pay all expenses (other than transfer taxes asdescribed in Section 2.3) and other charges payable in connection with thepreparation, issuance and delivery of Warrants hereunder and shares of CommonStock upon the exercise hereof.

 

**ARTICLE III**

 

**LIMITATIONS ON EXERCISE;ADJUSTMENT PROVISIONS**

 

3.1                                 Shareholder Approval.  In no event shall the Holder of this Warrantbe permitted to exercise this Warrant or any portion hereof pursuant to Article Ihereof until the Company has obtained Shareholder Approval.  No later than thirty (30) days after the termination of theOffering, the Company shall file with the Commission a preliminary proxystatement pursuant to the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), in connection with a Shareholder Meeting and shall seek to convenesuch meeting as promptly thereafter as practicable.  

 

3.2                                 Beneficial Ownership.  In no event shall the Holder of this Warrantbe permitted to exercise this Warrant or any portion hereof pursuant to Article Ihereof if, upon

 

4

----

 

such exercise, the number of shares of Common Stock tobe issued pursuant to such exercise plus the number of shares of CommonStock beneficially owned by the Holder would exceed 9.99% of the number ofshares of Common Stock then issued and outstanding, it being the intent of theCompany and the Holder that the Holder not be deemed at any time to have thepower to vote or dispose of greater than 9.99% of the number of shares ofCommon Stock issued and outstanding at any time. Nothing contained herein shallbe deemed to restrict the right of the Holder to exercise this Warrant or anyportion thereof at such time as such exercise will not violate the provisionsof this Section 3.2.  As usedherein, beneficial ownership shall be determined in accordance with Section 13(d) ofthe Exchange Act.  To the extent that thelimitation contained in this Section 3.2 applies (and without limiting anyrights the Company may otherwise have), the Company may rely on the Holder’sdetermination of whether this Warrant is exercisable pursuant to the termshereof, the Company shall have no obligation whatsoever to verify or confirmthe accuracy of such determination, and the submission of a Subscription Noticeby the Holder shall be deemed to be the Holder’s representation that thisWarrant is exercisable pursuant to the terms hereof.

 

3.3                                 Adjustment Provision.  In the event that, after the date hereof, theCompany shall: (i) pay a dividend or make a distribution on theoutstanding shares of Common Stock in the Company’s capital stock (which shallinclude any options, warrants or other rights to acquire capital stock); (ii) subdividethe outstanding shares of Common Stock into a larger number of shares; (iii) combinethe outstanding shares of Common Stock into a smaller number of shares; or (iv) issueany shares of the Company’s capital stock in reclassification of the CommonStock, then, and in each such case, the Exercise Price in effect immediatelyprior to such event shall be adjusted so that the Holder shall, upon exerciseof this Warrant, be entitled to receive the number of shares of Common Stock orother securities of the Company that the Holder would have owned or would havebeen entitled to receive upon or by reason of any of the events describedabove, had this Warrant had been exercised prior to the occurrence of suchevent.  In the event that the shares ofCommon Stock are ever converted into a greater or lesser number of shares ofanother corporation or entity through a merger or similar transaction, aproportionate adjustment shall be made to the Exercise Price to account forsuch change.  The Company shall giveprompt written notice to the Holder following the occurrence of any event whichrequires an adjustment to the Exercise Price pursuant to the terms hereof.

 

## **ARTICLE IV**

## ** **

**REPRESENTATIONSAND WARRANTIES**

 

4.1                                 Representations and Warranties of Holder.  The Holder represents and warrants to theCompany as follows:

 

(a)                                  Purchase for Own Account.  This Warrant and the shares of Common Stockto be acquired upon exercise of this Warrant by the Holder will be acquired forinvestment for the Holder’s account, not as a nominee or agent, and not with aview to the public resale or distribution within the meaning of the SecuritiesAct, and the Holder has no present intention of selling, granting anyparticipation in, or otherwise distributing the same.  If not an individual, the

 

5

----

 

Holder also represents that the Holder has not beenformed for the specific purpose of acquiring this Warrant or the shares ofCommon Stock to be acquired upon exercise of this Warrant.

 

(b)                                 Disclosure of Information.  The Holder has received or has had fullaccess to all the information it considers necessary or appropriate to make aninformed investment decision with respect to the acquisition of this Warrantand the underlying shares of Common Stock. The Holder further has had an opportunity to ask questions and receive answersfrom the Company regarding the terms and conditions to the offering of thisWarrant and its underlying shares of Common Stock and to obtain additionalinformation (to the extent the Company possessed such information or couldacquire it without unreasonable effort or expense) necessary to verify anyinformation furnished to the Holder or to which the Holder has access.

 

(c)                                  Investment Experience.  The Holder understands that the purchase ofthis Warrant and its underlying shares of Common Stock involves substantialrisk.  The Holder: (i) hasexperience as an investor in securities and acknowledges that the Holder isable to fend for itself, can bear the economic risk of such Holder’s investmentin this Warrant and its underlying shares of Common Stock and has suchknowledge and experience in financial or business matters that the Holder iscapable of evaluating the merits and risks of its investment in this Warrantand its underlying shares of Common Stock; and/or (ii) has a preexistingpersonal or business relationship with the Company and certain of its officers,directors or controlling persons of a nature and duration that enables theHolder to be aware of the character, business acumen and financialcircumstances of such persons.

 

(d)                                 Accredited Investor Status.  The Holder is an “accredited investor” withinthe meaning of Regulation D promulgated under the Securities Act.

 

**ARTICLE V**

 

**DEFINITIONS**

 

The following terms, as used in this Warrant, have the followingrespective meanings:

 

“Business Days” means each day in which banking institutions inAtlanta, Georgia are not required or authorized by law or executive order toclose.

 

“Commission” has the meaning set forth in Section 1.4.

 

“Common Stock” has the meaning set forth in the first paragraphof this Warrant.

 

“Company” has the meaning set forth in the first paragraph ofthis Warrant.

 

“Eligible Holder” means the Holder and any permitted transfereeof the Holder pursuant to and in accordance with this Warrant.

 

“Exchange Act” has the meaning set forth in Section 3.1.

 

“Exercise Price” means $4.80 per share of Common Stock, subjectto adjustment pursuant to Article III.

 

6

----

 

“Expiration Date” has the meaning set forth in the firstparagraph of this Warrant.

 

“Holder” has the meaning set forth in the first paragraph ofthis Warrant.

 

“Memorandum” means the Company’s Confidential Private OfferingMemorandum dated July 26, 2005, as the same may be amended or supplementedfrom time to time.

 

“NASD” means The National Association of Securities Dealers, Inc.

 

“Offering” means the offer and sale of the Company’s securitiesas contemplated by the Memorandum.

 

“Shareholder Approval” means the affirmative vote of at least amajority of the votes cast at a Shareholder Meeting at which a quorum ispresent to approve the potential issuance in connection with the Offering ofmore than 20% of the outstanding shares of Common Stock for purpose ofcomplying with the rules governing The Nasdaq Stock Market, Inc.

 

“Shareholder Meeting” means a meeting of the Company’sshareholders.

 

“Securities Act” has the meaning set forth in Section 1.4.

 

“Subscription Notice” has the meaning set forth in Section 1.1.

 

“Warrant Agency” has the meaning set forth in Section 2.1.

 

“Warrant” means this Warrant which is issued as part of a seriesof similar warrants issued pursuant to the Memorandum and the terms of thatcertain Subscription Agreement entered into between the Company and the Holder,accepted by the Company on [                    ],2005 (the “Subscription Agreement”).

 

**ARTICLE VI**

 

**MISCELLANEOUS**

 

6.1.                              Governing Law.  This Warrant shall be governed in allrespects by the laws of the State of Georgia, without reference to itsconflicts of law principles.

 

6.2.                              Covenants To Bind Successor and Assigns.  All covenants, stipulations, promises andagreements contained in this Warrant by or on behalf of the Company shall bindits successors and assigns, whether or not so expressed.

 

6.3.                              Entire Agreement.  This Warrant, the Memorandum and theSubscription Agreement constitute the full and entire understanding andagreement between the parties with regard to the subject matter hereof and noparty shall be liable or bound to any other party in any manner by anywarranties, representations, or covenant except as specifically set forthherein or therein.

 

6.4.                              Waivers and Amendments.  No failure or delay of the Holder inexercising any power or right hereunder shall operate as a waiver thereof, norshall any single or partial exercise

 

7

----

 

of such right or power, or any abandonment ordiscontinuance of steps to enforce such a right or power, preclude any other orfurther exercise thereof or the exercise of any other right or power.  The rights and remedies of the Holder arecumulative and not exclusive of any rights or remedies which it would otherwisehave.  The provisions of this Warrant maybe amended, modified or waived with (and only with) the written consent of theCompany and the Holders of a majority in interest of the Warrants issuedpursuant to the Memorandum then outstanding.

 

Any such amendment, modification or waiver effected pursuant to this Section shallbe binding upon the Holders of all Warrants issued pursuant to the Memorandumand upon the Company.  In the event ofany such amendment, modification or waiver the Company shall give prompt noticethereof to all holders of Warrants issued pursuant to the Memorandum and, ifappropriate, notation thereof shall be made on all such Warrants thereaftersurrendered for registration of transfer or exchange.

 

6.5.                              Notices. All notices or other communications required or permitted hereundershall be in writing and shall be mailed by express, registered or certifiedmail, postage prepaid, return receipt requested, sent by telecopy, or bycourier service guaranteeing overnight delivery with charges prepaid, orotherwise delivered by hand or by messenger, and shall be conclusively deemedto have been received by a party hereto and to be effective on the day on whichdelivered or telecopied to such party at its address set forth below (or atsuch other address as such party shall specify to the other parties hereto inwriting), or, if sent by registered or certified mail, on the third BusinessDay after the day on which mailed, addressed to such party at such address.

 

In the case of the Holder, such notices and communications shall beaddressed to its address set forth under its signature below, which shall bethe address shown on the books maintained by the Warrant Agency, until theHolder shall notify the Company and the Warrant Agency in writing that noticesand communications should be sent to a different address, in which case suchnotices and communications shall be sent to the address specified by theHolder.  In the case of the Company, suchnotices and communications shall be addressed as follows:  Attention: Chief Executive Officer, Tri-S Security Corporation, 3700 Mansell Road, Suite 200,Alpharetta, Georgia 30022.

 

6.6.                              Survival of Agreements; Representations and Warranties, etc.  All covenants made by theCompany herein shall be considered to have been relied upon by the Holder andshall survive the issuance and delivery of the Warrant, regardless of anyinvestigation made by the Holder, and shall continue in full force and effectso long as this Warrant is outstanding.

 

6.7.                              Severability.  In case any one or more of the provisionscontained in this Warrant shall be held to be invalid, illegal or unenforceablein any respect, the validity, legality and enforceability of the remainingprovisions contained herein shall not in any way be affected or impairedthereby. The parties shall endeavor in good faith negotiations to replace theinvalid, illegal or unenforceable provisions with valid provisions the economiceffect of which comes as close as possible to that of the invalid, illegal orunenforceable provisions.

 

8

----

 

6.8.                              Section Headings.  The section headings used herein are forconvenience of reference only, do not constitute a part of this Warrant andshall not affect the construction of or be taken into consideration ininterpreting this Warrant.

 

6.9.                              No Rights as Shareholder; No Limitations on Company Action.  This Warrant shall notentitle the Holder to any rights as a shareholder of the Company. No provisionof this Warrant and no right or option granted or conferred hereunder shall inany way limit, affect or abridge the exercise by the Company of any of itscorporate rights or powers to recapitalize, amend its certificate ofincorporation, reorganize, consolidate or merge with or into anothercorporation or to transfer all or any part of its property or assets, or theexercise of any other of its corporate rights or powers.

 

 

**[Signature Page Follows]**

 

9

----

 

**INWITNESS WHEREOF**, the Company and Holder haveduly executed and delivered this Warrant, or caused this Warrant to be dulyexecuted and delivered, all as of the date first written above.

 
|       | **TRI-S SECURITY CORPORATION**                                                                                                                                                                                                                                                                                           |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                     |
|       |                                                                                                                                                                                                                                                                                                                     |
|       | By:                                                                                                                                                                                                                                                                                                                      |   |   |
|       |                                                                                                                                                                                                                                                                                                                     | Name: Ronald G. Farrell |
|       |                                                                                                                                                                                                                                                                                                                     | Title: Chief Executive Officer |
|       |                                                                                                                                                                                                                                                                                                                     |   |
| ** ** | **HOLDER:**                                                                                                                                                                                                                                                                                                              |
| ** ** | ** **                                                                                                                                                                                                                                                                                                               | ** ** |
|       | **[                                                   ]** |
|       |                                                                                                                                                                                                                                                                                                                     |   |
|       |                                                                                                                                                                                                                                                                                                                     |   |
|       | By:                                                                                                                                                                                                                                                                                                                      |   |   |
|       |                                                                                                                                                                                                                                                                                                                     | Name: |
|       |                                                                                                                                                                                                                                                                                                                     | Title: |
|       |                                                                                                                                                                                                                                                                                                                     |   |
|       |                                                                                                                                                                                                                                                                                                                     |   |
|       | **Address:**                                                                                                                                                                                                                                                                                                             |   |   |
|       | ** **                                                                                                                                                                                                                                                                                                               | ** ** | ** ** |
|       | ** **                                                                                                                                                                                                                                                                                                               | ** ** | ** ** |
|       | ** **                                                                                                                                                                                                                                                                                                               | ** ** | ** ** |
|       | **Facsimile No.:**                                                                                                                                                                                                                                                                                                       |   |   |
|            |                                                                                                                                                                                                                                                                                                                          |  |  |  |  |

 

10

----

 

Annex 1

 

SUBSCRIPTION NOTICE

 

Dated:                      

 

The undersigned hereby irrevocably elects to exercise the right ofpurchase evidenced by the attached Warrant for, and to purchase thereunder,                     shares of Common Stock of Tri-s Security Corporation as provided for therein.The undersigned tenders herewith payment of the Exercise Price (as defined inthe attached Warrant) for such shares in the form of cash, money order,certified or bank cashier’s check or wire transfer.

 

Instructions for Registration of Common Stock

 

Please issue a certificate or certificates for such shares of CommonStock in the following name or names and denominations:

 
| Name:         |                                           |   |
|---------------|------------------------------------------------|--------|
|          | (Please  typewrite or print in block letters.) |   |
|          |                                           |   |
| Address:      |                                           |   |
|          |                                           |   |
| Denomination: |                                           |   |
|               |                                                |        |  |  |

 

Representations and Warranties

 

In connection with the exercise of the attached Warrant, theundersigned hereby represents and warrants that:

 

(i) it recognizes that the shares of Common Stock issuablepursuant to the attached Warrant have not been registered under the SecuritiesAct of 1933, as amended (the “Securities Act”), or any applicable statesecurities laws, and may not transferred, sold, or offered for sale unlessregistered pursuant to the Securities Act and all applicable state securitieslaws or unless an exemption from such registration in available and the Companyhas received an opinion to that effect from counsel reasonably satisfactory tothe Company;

 

(ii) it recognizes that the shares of Common Stock issuablepursuant to the attached Warrant are subject to, and are transferable only uponcompliance with, the provisions of the Warrant;

 

(iii) if the undersigned is an individual, the undersigned is an “accreditedinvestor” as that term is defined in Rule 501(a)(5) or (6) ofRegulation D promulgated under the Securities Act by reason that theundersigned is an individual (i) having an individual net worth, or ajoint net worth with the undersigned’s spouse, at the time of the purchase thatexceeds $1,000,000, or (ii) who had an individual income in excess of$200,000 in each of the two most recent years or joint 

 

----

 

income with the undersigned’s spouse inexcess of $300,000 in each of those years and has a reasonable expectation ofreaching the same income level in the current year; or if the undersigned is acorporation or other entity, the undersigned is an “accredited investor” asthat term is defined in Rule 501(a)(1), (2), (3) or (7) ofRegulation D promulgated under the Securities Act; and

 

(iv) it is purchasing the shares of Common Stock for investmentand not with a view to resale or distribution or any present intention toresell or distribute, except in compliance with the Securities Act and allapplicable state securities laws.

 

Issuance of New Warrant

 

If said number of shares shall not be all the shares issuable uponexercise of the attached Warrant, a new Warrant is to be issued in the name ofthe undersigned for the balance remaining of such shares less any fraction of ashare paid in cash.

 
| Signature: |   |
|------------|--------|
|       | Note:  | The  above signature should correspond exactly with the name on the face of the  attached Warrant or with the name of the assignee appearing in the assignment  form below. |

 

2

----

 

Annex 2

 

Assignment

 

For value received, the undersigned hereby sells, assigns and transfersunto:

 
| Name:    |                                     |   |
|----------|------------------------------------------|--------|
|     | (Please  type or print in block letters) |   |
|     |                                     |   |
| Address: |                                     |   |
|          |                                          |        |  |

 

the right topurchase Common Stock (as defined in the attached Warrant) represented by theattached Warrant to the extent of                               shares as to which such right is exercisable and does hereby irrevocablyconstitute and appoint                                                                                                                                               ,attorney-in-fact, to transfer said Warrant on the books of Verso Technologies, Inc.,with full power of substitution in the premises.

 
| Dated:     |   |                                                                                               |
|------------|--------|----------------------------------------------------------------------------------------------------|
|       |   |
| Signature: |   |
|       | Note:  | The  above signature should correspond exactly with the name on the face of the  attached Warrant. |
|            |        |                                                                                                    |  |  |

 

----