Unassociated Document


    NOTE
      AND WARRANT ACQUISITION AGREEMENT

     

    


    Argyle
      Security Acquisition Corporation

    200
      Concord Plaza Suite 700

    San
      Antonio, TX 78216

    


    The
      undersigned (the “Investor”),
      hereby confirms its agreement with you as follows: 

    


    1. This
      Note
      and Warrant Acquisition Agreement (the “Agreement”)
      is
      made as of the date set forth below between Argyle Security Acquisition
      Corporation, a Delaware corporation (the “Company”),
      and
      the Investor.

     

    2. The
      Company is selling notes in the aggregate principal amount of $300,000 (each
      a
“Note”)
      bearing an interest rate of 4% in the form of Exhibit A hereto and 37,500
      warrants in the form of Exhibit B hereto (each a “Warrant”
and,
      together with the Notes, the “Securities”),
      each
      warrant to purchase one share of the common stock of the Company (the
“Common
      Stock”),
      to
      the investors in a private placement (the “Offering”).
      

     

    3. The
      terms
      and conditions of Annex I are incorporated by reference into this
      Agreement.

     

    4. The
      Company will issue to the Investor (i) $40,000 aggregate principal amount of
      Notes on the Closing Date, (ii) 5,000 Warrants.

     

    5. All
      transferees of the Securities and the Common Stock into which the Securities
      are
      exercisable shall be bound by the restrictions set forth herein, the Note and
      the Warrant.

     

    Please
      confirm that the foregoing correctly sets forth the agreement between us by
      signing in the space provided below for that purpose.

    

      
        	 	
                Dated
                  April 16, 2007

              
	
                 

              	
                 

              
	
                 

              	
                 

              
	
                 

              	
                “INVESTOR”

              
	
                 

              	
                 

              
	
                 

              	
                /s/
                  John J.
                  Smith                                                           
                  

              
	
                 

              	
                 

              
	
                 

              	
                Print
                  Name: John J.
                  Smith                                            
                  

              
	
                 

              	
                Address:    
                  7
                  Winding Way

                                    
                  Madison,
                  New Jersey 07940

              
	
                 

              	
                 

              
	
                 

              	
                Facsimile:
                  ______________________________

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


    AGREED
      AND ACCEPTED:

    ARGYLE
      SECURITY ACQUISITION CORPORATION

    


     

    By: /s/
      Bob
      Marbut                                                  


    Print
      Name: Bob Marbut

    Title:           
      Co-Chief Executive Officer

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    ANNEX
      I

    


     

    1. Waiver
      of Liquidation Distributions.
      In
      connection with the Securities purchased pursuant to this Agreement, the
      Investor hereby waives any and all right, title, interest or claim of any kind
      in or to any liquidating distributions by the Company in the event of a
      liquidation of the Company upon the Company's failure to timely complete a
      Business Combination (as defined in the Company’s Second Amended and Restated
      Certificate of Incorporation). 

     

    2. Lock-Up
      Agreement.
      The
      Investor may not sell, assign, hypothecate, or transfer any of the Securities
      purchased pursuant to this Agreement until the earlier of consummation of a
      Business Combination or liquidation of the Company. 

     

    3. Representations
      and Warranties of the Investors.
      The
      Investor represents and warrants to the Company that:

     

    3.1 The
      Investor is an “accredited investor” as that term is defined in Rule 501 of
      Regulation D promulgated under the Securities Act of 1933, as amended (the
      “Securities Act”).

     

    3.2 The
      Securities are being acquired for the Investor’s own account, only for
      investment purposes and not with a view to, or for resale in connection with,
      any distribution or public offering thereof within the meaning of the Securities
      Act.

     

    3.3 The
      Investor has the full right, power and authority to enter into this Agreement
      and this Agreement is a valid and legally binding obligation of the Investor
      enforceable against the Investor in accordance with its terms.

     

    4. Registration
      Rights.

     

    4.1 Demand
      Registration.
      At any
      time and from time to time on or after the date on which the Company has
      consummated a Business Combination, persons holding a majority-in-interest
      of
      the shares of Common Stock underlying the Warrants sold on the date hereof
      (the
“Registrable Securities”) may make a written demand for registration under the
      Securities Act of all or part of their Registrable Securities (a “Demand
      Registration”). Any demand for a Demand Registration shall specify the number of
      Registrable Securities proposed to be sold. The Company will notify all holders
      of Registrable Securities of the demand, and each holder of Registrable
      Securities who wishes to include all or a portion of such holder’s Registrable
      Securities in the Demand Registration (each such holder including shares of
      Registrable Securities in such registration, a “Demanding Holder”) shall so
      notify the Company within fifteen (15) days after the receipt by the holder
      of
      the notice from the Company. Upon any such request, the Demanding Holders shall
      be entitled to have their Registrable Securities included in the Demand
      Registration. 

     

    The
      Company shall, as expeditiously as possible and in any event within sixty (60)
      days after receipt of a request for a Demand, prepare and file with the SEC
      a
      registration statement on any form for which the Company then qualifies or
      which
      counsel for the Company shall deem appropriate and which form shall be available
      for the sale of all Registrable Securities to be registered thereunder, and
      shall use its best efforts to cause such registration statement to become
      effective as promptly as practicable. 

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    The
      Company shall not be obligated to effect more than two Demand Registrations
      in
      respect of the Registrable Securities.

     

    4.2 “Piggyback”
      Registration Rights.
      Subject
      to the last sentence of this Section 4.2, at any time after a Business
      Combination, if the Company shall determine to proceed with the actual
      preparation and filing of a new registration statement under the Securities
      Act
      in connection with the proposed offer and sale of any of its securities by
      it or
      any of its security holders (other than a registration statement on Form S-4,
      S-8 or other limited purpose form), the Company will give written notice of
      its
      determination to the Investor or its nominee. Upon the written request from
      a
      majority-in-interest of the Registrable Securities, within 15 days after receipt
      of any such notice from the Company, the Company will, except as herein
      provided, cause all of the Registrable Securities covered by such request (the
      “Requested Stock”) held by the Investors making such request (the “Requesting
      Holders”) to be included in such registration statement (each, a “Piggy-Back
      Registration”), all to the extent requisite to permit the sale or other
      disposition by the prospective seller or sellers of the Requested Stock;
      provided, further, that nothing herein shall prevent the Company from, at any
      time, abandoning or delaying any registration. If any registration pursuant
      to
      this Section 4.2 shall be underwritten in whole or in part, the Company may
      require that the Requested Stock be included in the underwriting on the same
      terms and conditions as the securities otherwise being sold through the
      underwriters. In such event, the Requesting Holders shall, if requested by
      the
      underwriters, execute an underwriting agreement containing customary
      representations and warranties by selling stockholders and a lock-up on
      Registrable Securities not being sold. If in the good faith judgment of the
      managing underwriter of such public offering the inclusion of all of the
      Requested Stock would reduce the number of shares to be offered by the Company
      or interfere with the successful marketing of the shares of stock offered by
      the
      Company, the number of shares of Requested Stock otherwise to be included in
      the
      underwritten public offering may be reduced pro rata (by number of shares)
      among
      the Requesting Holders and all other holders of registration rights who have
      requested inclusion of their securities or excluded in their entirety if so
      required by the underwriter. To the extent only a portion of the Requested
      Stock
      is included in the underwritten public offering, those shares of Requested
      Stock
      which are thus excluded from the underwritten public offering and any other
      securities of the Company held by such holders shall be withheld from the market
      by the holders thereof for a period, not to exceed 90 days, which the managing
      underwriter reasonably determines is necessary in order to effect the
      underwritten public offering. At such time as the provisions of the registration
      rights agreement filed as an exhibit to the registration statement relating
      to
      the Company’s initial public offering may be exercised, the exercise and
      procedural provisions of such agreement, rather than the provisions of Sections
      4.2, 4.3 and 4.4 hereof, shall govern the Registrable Securities with respect
      to
      Piggy-Back Registrations.

     

    4.3 Registration
      Procedures.
      To the
      extent required by Sections 4.1 or 4.2, the Company will:

     

    (a) prepare
      and file with the SEC a registration statement with respect to such securities,
      and use its best efforts to cause such registration statement to become and
      remain effective until the earlier of the date on which all of the Registrable
      Securities included in the registration statement have been disposed of in
      accordance with the intended method(s) of distribution set forth in such
      registration statement or three years from the effective date;

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (b) prepare
      and file with the SEC such amendments to such registration statement and
      supplements to the prospectus contained therein as may be necessary to keep
      such
      registration statement effective until the earlier of the date on which all
      of
      the Registrable Securities included in the registration statement have been
      disposed of in accordance with the intended method(s) of distribution set forth
      in such registration statement or three years from the effective
      date;

     

    (c) furnish
      to the holders participating in such registration and to the underwriters of
      the
      securities being registered such reasonable number of copies of the registration
      statement, preliminary prospectus, final prospectus and such other documents
      as
      such underwriters may reasonably request in order to facilitate the public
      offering of such securities;

     

    (d) use
      its
      best efforts to register or qualify the securities covered by such registration
      statement under such state securities or blue sky laws of such jurisdictions
      as
      the holders may reasonably request in writing within 20 days following the
      original filing of such registration statement, except that the Company shall
      not for any purpose be required to execute a general consent to service of
      process or to qualify to do business as a foreign corporation in any
      jurisdiction wherein it is not so qualified;

     

    (e) notify
      the holders, promptly after it shall receive notice thereof, of the time when
      such registration statement has become effective or a supplement to any
      prospectus forming a part of such registration statement has been
      filed;

     

    (f) notify
      the holders promptly of any request by the SEC for the amending or supplementing
      of such registration statement or prospectus or for additional
      information;

     

    (g) prepare
      and promptly file with the SEC and promptly notify such holders of the filing
      of
      such amendment or supplement to such registration statement or prospectus as
      may
      be necessary to correct any statements or omissions if, at the time when a
      prospectus relating to such securities is required to be delivered under the
      Securities Act, any event shall have occurred as the result of which any such
      prospectus or any other prospectus as then in effect would include an untrue
      statement of a material fact or omit to state any material fact necessary to
      make the statements therein, in the light of the circumstances in which they
      were made, not misleading; and 

     

    (i) advise
      the holders, promptly after it shall receive notice or obtain knowledge thereof,
      of the issuance of any stop order by the SEC suspending the effectiveness of
      such registration statement or the initiation or threatening of any proceeding
      for that purpose and promptly use its best efforts to prevent the issuance
      of
      any stop order or to obtain its withdrawal if such stop order should be
      issued.

     

    The
      Investors shall cooperate with the Company in providing the information
      necessary to effect the registration of the Registrable Securities, including
      completion of customary questionnaires. 

     

    4.4 Expenses.
      The
      Company shall bear all costs and expenses incurred in connection with any Demand
      Registration pursuant to Section 4.1, any Piggy-Back Registration pursuant
      to
      Section 4.2, and all expenses incurred in performing or complying with its
      other
      obligations under this Agreement, whether or not the registration statement
      becomes effective, including, without limitation: (i) all registration and
      filing fees; (ii) fees and expenses of compliance with securities or “blue sky”
laws (including fees and disbursements of counsel in connection with blue sky
      qualifications of the Registrable Securities); (iii) printing expenses; (iv)
      the
      Company’s internal expenses (including, without limitation, all salaries and
      expenses of its officers and employees); (v) the fees and expenses incurred
      in
      connection with the exchange listing of the Registrable Securities; (vi)
      National Association of Securities Dealers, Inc. fees; (vii) fees and
      disbursements of counsel for the Company and fees and expenses for independent
      certified public accountants retained by the Company (including the expenses
      or
      costs associated with the delivery of any opinions or comfort letters); (viii)
      the fees and expenses of any special experts retained by the Company in
      connection with such registration and (ix) the fees and expenses of one legal
      counsel selected by the holders of a majority-in-interest of the Registrable
      Securities included in such registration. The Company shall have no obligation
      to pay any underwriting discounts or selling commissions attributable to the
      Registrable Securities being sold by the holders thereof, which underwriting
      discounts or selling commissions shall be borne by such holders. Additionally,
      in an underwritten offering, all selling shareholders and the Company shall
      bear
      the expenses of the underwriter pro rata in proportion to the respective amount
      of shares each is selling in such offering.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    5. Waiver
      and Indemnification.
      The
      Investor hereby waives any and all rights to assert any present or future
      claims, including any right of rescission, against the Company with respect
      to
      its purchase of Securities, and agrees to indemnify and hold the Company from
      all losses, damages or expenses that relate to claims or proceedings brought
      against the Company by any transferee of the Securities.

     

    6. Counterparts;
      Facsimile.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and all of which taken together
      shall
      constitute one and the same instrument. This Agreement or any counterpart may
      be
      executed via facsimile transmission, and any such executed facsimile copy shall
      be treated as an original.

     

    7.Governing
      Law.
      This
      Agreement shall for all purposes be deemed to be made under and shall be
      construed in accordance with the laws of the State of New York. Each of the
      parties hereby agrees that any action, proceeding or claim against it arising
      out of or relating in any way to this Agreement shall be brought and enforced
      in
      the courts of the State of New York or the United States District Court for
      the
      Southern District of New York, and irrevocably submits to such jurisdiction,
      which jurisdiction shall be exclusive. Each of the parties hereby waives any
      objection to such exclusive jurisdiction and that such courts represent an
      inconvenient forum.