ex4-2.htm


    
      

    

    Exhibit 4.2

     

    
      THIS WARRANT
AND THE COMMON SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IDO SECURITY
INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.

      


      
        	 
      	
                Right to Purchase ________ shares
      of Common Stock of IDO Security Inc. (subject to adjustment as
      provided herein)

              


      

      


      FORM
OF CLASS C COMMON STOCK PURCHASE WARRANT

       

      
        
          	No. 2008-C-001 	
                  Issue Date: October 31, 2008

                


        

         

      

      IDO
SECURITY INC., a corporation organized under the laws of the State of Nevada
(the “Company”), hereby certifies that, for value received,
________________________,
__________________________________________________________, or its assigns (the “Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company at any time after the Issue Date until 5:00 p.m.,
E.S.T on the fifth anniversary of the Issue Date (the “Expiration Date”), ________ fully paid and nonassessable
shares of Common Stock at a per share purchase price of $0.25. The aforedescribed purchase price per
share, as adjusted from
time to time as herein provided, is referred to herein as the “Purchase Price.”  The number and character of
such shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein.  The Company may reduce the Purchase Price without the consent of the
Holder.  Capitalized terms used and not otherwise defined herein shall
have the meanings set forth in that certain Subscription Agreement (the
“Subscription
Agreement”), dated October 31, 2008, entered into by the Company and Holders.

      


      As used herein the following terms,
unless the context otherwise requires, have the following respective
meanings:

       

      (a)           The term “Company” shall mean IDO Security Inc. and any corporation which shall succeed
or assume the obligations of IDO Security Inc. hereunder.

       

      (b)           The term “Common Stock” includes (a) the
Company’s common stock, $0.001 par value per share, as authorized on
the date of the Subscription Agreement, and (b) any Other Securities into which or for which any of the
securities described in
(a) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.

       

      (c)           The term “Other Securities” refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange
for or in replacement of Common Stock or Other Securities pursuant to
Section 5 or otherwise.

       

      (d)           The term “Warrant Shares” shall mean the Common Stock issuable
upon exercise of this Warrant.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

         

      

      1.           Exercise of
Warrant.

       

      1.1.           Number of
Shares Issuable upon Exercise.  From and after the Issue
Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in
part in accordance with subsection 1.3, Common Stock of the Company,
subject to adjustment pursuant to Section 4.

       

      1.2.           Full
Exercise.  This
Warrant may be exercised in full by the Holder hereof by delivery of an
original or facsimile copy
of the form of subscription attached as Exhibit A hereto (the “Subscription Form”) duly executed by such Holder
and delivery within two
days thereafter of payment,
in cash, wire transfer or by certified or official bank check payable
to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase Price then in
effect.  The original Warrant is not required to be surrendered to the
Company until it has been fully
exercised.

       

      1.3.           Partial
Exercise.  This
Warrant may be exercised in part (but not for a fractional share) by surrender
of this Warrant in the manner and at the place provided in subsection 1.2
except that the amount payable by the Holder on such partial exercise shall be
the amount obtained by multiplying (a) the number of whole shares of Common
Stock designated by the Holder in the Subscription Form by (b) the Purchase
Price then in effect.  On any such partial exercise provided
the Holder has surrendered the original
Warrant, the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in the name of
the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may
request, the whole number of shares of Common Stock for which such Warrant may
still be exercised for the balance of.

       

      1.4.           Fair Market
Value. Fair Market Value of
a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

       

      (a)           If the Company’s Common Stock is traded on an exchange
or is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation (“NASDAQ”), National Market System, the NASDAQ
Capital Market or the American Stock Exchange, Inc., then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date;

       

      (b)           If the Company’s Common Stock is not traded on an
exchange or on the NASDAQ National Market System, the NASDAQ Capital Market or the American Stock Exchange,
Inc., but is traded in the over-the-counter
market, then the average of the closing bid and ask prices reported for the last
business day immediately preceding the Determination Date;

       

      (c)           Except as provided in clause
(d) below, if the Company’s Common Stock is not publicly traded,
then as the Holder and the Company agree, or in the absence of such an
agreement, by arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided; or

       

      (d)           If the Determination Date is the date of
a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company’s charter, then all amounts to be
payable per share to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of all of the Warrants are outstanding at the Determination
Date.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

         

      

      1.5.           Company
Acknowledgment. The Company
will, at the time of the exercise of the Warrant, upon the request of the Holder
hereof acknowledge in writing its continuing obligation to afford to such Holder
any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such rights.

       

      1.6.           Trustee for
Warrant Holders. In the
event that a qualified bank or trust company shall have been appointed as
trustee for the Holder of the Warrants pursuant to Subsection 3.2, such
bank or trust company shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

       

                                      1.7.           Delivery of
Stock Certificates, etc. on Exercise. The Company agrees that the shares of
Common Stock purchased upon exercise of this Warrant shall be deemed to be
issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for such shares as aforesaid. As soon as practicable after the
exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter (“Warrant Share Delivery Date”), the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable securities
laws, a certificate or certificates for the number of duly and validly issued,
fully paid and nonassessable shares of Common Stock (or Other Securities) to which such Holder
shall be entitled on such exercise, plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then Fair Market Value of one full share of Common Stock, together with any other stock or
other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or
otherwise.  The
Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share
Delivery Date could result in economic loss to the Holder.  As
compensation to the Holder for such loss, the Company agrees to pay (as
liquidated damages and not as a penalty) to the Holder for late issuance of
Warrant Shares upon exercise of this Warrant
the amount of $100 per business day after the Warrant Share Delivery Date for
each $10,000 of Purchase Price of Warrant Shares for which this Warrant is
exercised which are not timely delivered.  The Company shall
pay any payments incurred under this Section
in immediately available funds upon demand.  Furthermore, in addition
to any other remedies which may be available to the Holder, in the event that
the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery
Date, the Holder may revoke all or part of the relevant Warrant exercise by
delivery of a notice to such effect to the Company whereupon the Company and the
Holder shall each be restored to their respective positions immediately prior to the exercise of the
relevant portion of this Warrant, except that the liquidated damages described
above shall be payable through the date notice of revocation or rescission is
given to the Company.

       

      2.           Cashless
Exercise.

       

      (a)           Commencing six months after the Closing Date (as defined in the Subscription
Agreement), or sooner if
the shares underlying the Warrant have been included for resale in an effective
registration statement, payment upon exercise may be made at the
option of the Holder either
in (i) cash, wire transfer or by certified or official bank check payable
to the order of the Company equal to the applicable aggregate Purchase Price,
(ii) by cashless exercise in accordance with Section (b) below or
(iii) by a combination of any of the foregoing methods, for the number
of shares of Common Stock specified in such form (as such exercise number shall
be adjusted to reflect any adjustment in the total number of shares of Common
Stock issuable to the Holder per the terms of this Warrant) and the Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully-paid
and non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

      

      (b)           If the Fair Market Value of one share of
Common Stock is greater
than the Purchase Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant for cash, the Holder may elect to receive shares
equal to the value (as determined below) of this Warrant (or the portion
thereof being cancelled) by surrender of
this Warrant at the principal office of the Company together with the properly
endorsed Subscription Form in which event the Company shall issue to the Holder
a number of shares of Common Stock computed using the following formula:

       

                                                     
X=Y
(A-B)

                                                               
A

       

      
        
          	
                  Where         
      

                	
                  X=

                	
                  the number of shares of Common
      Stock to be issued to the
holder

                


        

         

      

      
        	
                 
      

              	
                Y=

              	
                the number of shares of Common
      Stock purchasable under the Warrant or, if only a portion of the Warrant
      is being exercised, the portion of the Warrant being exercised
      (at the date of such
calculation)

              


      

       

      
        	
                 
      

              	
                A=

              	
                the average of the closing sale
      prices of the Common Stock for the five (5) Trading Days immediately prior
      to (but not including) the Exercise
Date

              


      

       

      
        	
                 
      

              	
                B=

              	
                Purchase Price (as adjusted to the
      date of such
      calculation)

              


      

       

      For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Subscription
Agreement.

       

      3.           Adjustment
for Reorganization, Consolidation, Merger, etc.

       

      3.1.           Fundamental Transaction. 
If, at any time while this Warrant is outstanding, (A) the Company 
effects any merger or  consolidation  of the Company with or into
another entity, (B) the Company effects any sale of all or
substantially all of its assets in one or
a series of related transactions,  (C)
any tender offer or exchange offer (whether by the
Company or another entity) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their
shares for other securities, cash or property, (D) the Company
consummates a stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, or spin-off) with one or
more persons or entities whereby such other persons or entities acquire more
than the 50% of the outstanding shares of Common Stock (not including any shares
of Common Stock held by such other persons or entities making or party to, or
associated or affiliated with the other persons or entities making or party to,
such stock purchase agreement or other business combination), (E) any "person"
or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of
the 1934 Act) is or shall become the "beneficial owner" (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate
Common Stock of the Company, or (F) the Company effects any
reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such
case, a "Fundamental  Transaction"), then, upon
any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder, (a) upon
exercise of this Warrant, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the
"Alternate

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

         

      

      Consideration") receivable upon
or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is
acquired in (1) a transaction where the consideration paid to the holders
of the Common Stock consists solely of cash, (2) a “Rule 13e-3 transaction” as
defined in Rule 13e-3 under the 1934 Act, or (3) a transaction involving a
person or entity not traded on a national securities exchange, the Nasdaq Global
Select Market, the Nasdaq Global Market or the Nasdaq Capital
Market, cash equal to the Black-Scholes Value. 
For purposes of any such exercise, the determination of the
Purchase Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common
Stock in such fundamental Transaction, and the Company shall
apportion the Purchase Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of
the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a
Fundamental Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction.  To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with
the foregoing provisions and evidencing the
Holder's right to exercise such warrant into Alternate
Consideration.  The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of
this Section 3.1 and insuring that this Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.  “Black-Scholes
Value” shall be determined in accordance with the Black-Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per
share of Common Stock equal to the VWAP of the Common Stock for the Trading Day
immediately preceding the date of consummation of the applicable Fundamental
Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of the date of
such request and (iii) an expected volatility equal to the 100 day volatility
obtained from the HVT function on Bloomberg L.P. determined as of the Trading
Day immediately following the public announcement of the applicable Fundamental
Transaction.

       

      3.2.           Dissolution.  In the event of any
dissolution of the Company following the transfer of all or substantially all of
its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable in accordance with Section 3 by the Holder upon their
exercise after the effective date of such dissolution
pursuant to this Section 3 to a bank or trust company (a
“Trustee”) having its principal office in
New York, NY, as trustee for the Holder.

       

      3.3.          Continuation
of Terms.  Upon
any reorganization, consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 3, this Warrant shall continue in
full force and effect and the terms hereof shall be applicable to the Other
Securities and property receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any Other Securities, including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4.  In the event this Warrant does not continue
in full force and effect after the
consummation of the transaction described in this Section 3, then only in
such event will the Company’s securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered to
the Trustee as contemplated by
Section 3.2.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

         

      

      3.4           Share
Issuance.  Until
the Expiration Date, if the Company shall issue any Common Stock except for the
Excepted Issuances (as defined in the Subscription Agreement), prior to the
complete exercise of this Warrant for a consideration less than the
Purchase Price that would be in effect at the time of such issue, then, and
thereafter successively upon each such issue, the Purchase Price shall be
reduced to such other lower purchase price.  For purposes of this
adjustment, the issuance of any security or
debt instrument of the Company carrying the right to convert such security or
debt instrument into Common Stock or of any warrant, right or option to purchase
Common Stock shall result in an adjustment to the Purchase Price upon the issuance of the
above-described security, debt instrument, warrant, right, or option if such
issuance is at a price lower than the Purchase Price in effect upon such
issuance.  The reduction of the Purchase Price described in this
Section 3.4 is subject to the provisions of,
and in addition to the other rights of the Holder described in, the Subscription
Agreement.

       

      4.           Extraordinary
Events Regarding Common Stock.  In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each
such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then Purchase Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event, and the product so obtained shall thereafter be the Purchase Price then
in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this
Section 4. The number of shares of Common Stock that the Holder of this
Warrant shall thereafter, on the exercise hereof as provided in Section 1,
be entitled to receive shall be adjusted to a
number determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for
the provisions of this Section 4) be in effect, and (b) the
denominator is the Purchase Price in effect on the date of such
exercise.

       

      5.           Certificate
as to Adjustments.  In each case of any
adjustment or readjustment in the shares of Common Stock issuable on the exercise of the
Warrants, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of Common Stock
issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock outstanding or deemed to be outstanding,
and (c) the Purchase Price and the number of shares of Common Stock to be
received upon exercise of
this Warrant, in effect immediately prior to such adjustment or readjustment and
as adjusted or readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to the Holder of the Warrant and
any Warrant Agent of the Company (appointed
pursuant to Section 11 hereof).

       

      6.           Reservation
of Stock, etc. Issuable on Exercise of Warrant; Financial Statements.   Subject to the filing by the Company of the Charter Amendment no later than
____________ to increase the authorized shares of Common Stock,
the Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock from time to time issuable on the exercise
of the Warrant.  This Warrant entitles the Holder hereof to
receive copies of all financial and other information distributed or required to be distributed to the
holders of the Company’s Common Stock.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

         

      

      7.           Assignment;
Exchange of Warrant.  Subject to compliance with
applicable securities laws,
this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a “Transferor”). On the surrender for exchange of this
Warrant, with the Transferor’s endorsement in the form of
Exhibit B attached hereto (the “Transferor Endorsement Form”) and together with an opinion of
counsel reasonably satisfactory to the Company that the transfer of this Warrant
will be in compliance with applicable securities laws, the Company at its
expense, twice, only, but with payment by the Transferor of any applicable
transfer taxes, will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock called for on the face
or faces of the Warrant so surrendered by the Transferor.  No such
transfers shall result in a public distribution of the
Warrant.

       

      8.           Replacement
of Warrant.  On
receipt of 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 of this Warrant, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of this Warrant, the
Company at its expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of like
tenor.

       

      9.           Maximum
Exercise.  The
Holder shall not be entitled to exercise this Warrant on an exercise
date, in connection with
that number of shares of Common Stock which would be in excess of the sum of
(i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates on an
exercise date, and (ii) the number of shares of Common Stock issuable upon
the exercise of this Warrant with respect to which the determination of this
limitation is being made on an exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock on such date.  For the
purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder.  Subject to the foregoing, the Holder
shall not be limited to aggregate exercises which would result in the
issuance of more than
4.99%.  The restriction described in this paragraph may be
waived, in whole or in part, upon sixty-one (61) days prior notice from the
Holder to the Company to increase such percentage to up to 9.99%, but not in
excess of 9.99%.  The Holder may decide whether to convert a
Convertible Note, Preferred Stock or exercise this Warrant to achieve an actual
4.99% or up to 9.99% ownership position as described above, but not in excess of
9.99%.

       

      10.           Warrant
Agent.  The
Company may, by written notice to the Holder of the Warrant, appoint an
agent (a “Warrant
Agent”) for the purpose of
issuing Common Stock on the exercise of this Warrant pursuant
to Section 1, exchanging this Warrant pursuant to Section 7, and
replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter
any such issuance, exchange or replacement, as the case may be, shall be made at
such office by such Warrant Agent.

       

      11.           Transfer on
the Company’s
Books.  Until
this Warrant is transferred on the books of the Company, the Company may treat the registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

         

      

      12.           Notices.   All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur or (c) three business days after
deposited in the mail if delivered pursuant to subsection (ii)
above.  The addresses for such communications shall be: (i) if
to the Company to: IDO Security Inc., 17 State Street, New York, NY 10004,
Fax: (646) 285-0026, with a copy by telecopier only to: Aboudi &
Brounstein, 3 Gavish St., Kfar Saba, Israel, Fax: 972-9-764-4834, (ii) if to the
Holder, to the addresses and telecopier number set forth in the first paragraph
of this Warrant, with an additional copy by telecopier only to: Grushko &
Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, Fax:
(212) 697-3575.

      


      13.           Miscellaneous.  This Warrant and any term
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of New York.  Any dispute relating to
this Warrant shall be adjudicated in New York County in the State of New York.  The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.  The invalidity or unenforceability of
any provision hereof shall in no way affect the validity or enforceability of
any other provision.

      


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

         

      

      IN WITNESS WHEREOF, the Company has executed this Warrant as of
the date first written above.

       

      
        	 
      	
                IDO SECURITY
      INC.

                 

                 

                 

                By: ___________________________________________________________________________

                                           Name:

                                           Title:

                 

                 

                 

                 

                 

                 

              
	
                Witness:

                 

                 

                ___________________________________

                 

              	 
      	 
      


      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      Exhibit A

      FORM OF SUBSCRIPTION

      (to be signed only on exercise of
Warrant)

      TO:  IDO Security Inc.

      The undersigned, pursuant to the
provisions set forth in the attached Warrant (No.____), hereby irrevocably
elects to purchase (check applicable box):

      


      ___           ________ shares of the Common Stock
covered by such Warrant;
or

       

      ___           the maximum number of shares of Common
Stock covered by such Warrant pursuant to the cashless exercise procedure set
forth in Section 2.

      


      The undersigned herewith makes payment
of the full purchase price for such shares at the price per share provided for in such Warrant, which
is $___________.  Such payment takes the form of (check applicable box
or boxes):

      ___           $__________ in lawful money of the
United States; and/or

       

      ___           the cancellation of the Warrant to the
extent necessary, in accordance with the formula set forth in
Section 2, to exercise this Warrant with respect to the maximum number of
shares of Common Stock purchasable pursuant to the cashless exercise procedure
set forth in Section 2.

      


      The
undersigned requests that the certificates for
such shares be issued in the name of, and delivered to
_____________________________________________________ whose address is


      ________________________________________________________________________________________________________________________

      ________________________________________________________________________________________________________________________

      Number
of Shares of Common Stock Beneficially Owned on the date of exercise:
Less
than five percent (5%) of the outstanding Common Stock of IDO Security
Inc.

      


      The undersigned represents and warrants
that the representations
and warranties in Section 4 of the Subscription Agreement (as defined in this
Warrant) are true and accurate with respect to the undersigned on the date
hereof.

      


      The undersigned represents and warrants
that all offers and sales by the undersigned of the securities issuable upon
exercise of the within Warrant shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or pursuant to an exemption from
registration under the Securities Act.

       

      
        	
                Dated:___________________

              	
                _____________________________________

                (Signature must conform to name of
      holder as 

                specified on the face of the
      Warrant)

                 

                 

                _____________________________________

                _____________________________________

                (Address)

              


      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

         

      

      Exhibit B

      


      FORM OF TRANSFEROR
ENDORSEMENT

      (To be signed only on transfer of
Warrant)

       

      For value received, the undersigned hereby sells,
assigns, and transfers unto the person(s) named below under the heading
“Transferees” the right represented by the within
Warrant to purchase the percentage and number of shares of Common Stock of
IDO Security Inc. to which the within Warrant relates specified
under the headings “Percentage Transferred” and “Number Transferred,” respectively, opposite the name(s) of
such person(s) and appoints each such person Attorney to transfer its respective
right on the books of IDO Security Inc. with full power of substitution in the
premises.

       

      
        
          
            
              
                
                  
                    
                      
                        	
                                   Transferees

                              	
                                   Percentage
      Transferred

                              	
                                   Number
      Transferred

                              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      


                      

                    

                  

                

              

            

          

        

      

      


      


      
        	
                Dated:  ______________,
      _____________

                 

                 

                 

                Signed in the presence
      of:

                 

                
                  
                    __________________________________

                  

                  (Name)

                

                 

                 

                ACCEPTED AND
      AGREED:

                [TRANSFEREE]

                 

                 

                
                  __________________________________

                

                (Name)

                 

              	
                ____________________________________________

                (Signature must conform to name of
      holder as specified 

                on the face of the
      warrant)

                 

                 

                 

                ____________________________________________

                ____________________________________________

                (address)

                 

                

                   

                  ____________________________________________

                  ____________________________________________

                  (address)