Unassociated Document


    

      THIS
        WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
        HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE TRANSFERRED
        UNTIL
        (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
        (THE “1933
        ACT”)
        SHALL
        HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY
        OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT
        THAT REGISTRATION UNDER THE 1933 ACT IS NOT REQUIRED IN CONNECTION WITH SUCH
        PROPOSED TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF ANY APPLICABLE STATE
        SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY WARRANT ISSUED IN
        EXCHANGE FOR THIS WARRANT OR ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
        OF THIS WARRANT.

       

      WARRANT
        TO PURCHASE COMMON STOCK

       

      OF

       

      ARGYLE
        SECURITY ACQUISITION CORPORATION

       

      W04122007-1

       

      This
        is
        to Certify That, FOR VALUE RECEIVED, John
        J. Smith
        or its
        assigns (“Holder”),
        is
        entitled to purchase, subject to the provisions of this Warrant, from Argyle
        Security Acquisition Corporation, a Delaware corporation (the “Company”),
        5,000
        shares of fully paid, validly issued and nonassessable shares of the common
        stock of the Company (“Common
        Stock”)
        at a
        price of $5.50 per share. The number of shares of Common Stock to be received
        upon the exercise of this Warrant and the price to be paid for each share
        of
        Common Stock may be adjusted from time to time as hereinafter set forth.
        The
        shares of Common Stock deliverable upon such exercise, and as adjusted from
        time
        to time, are hereinafter sometimes referred to as “Warrant
        Shares”
and
        the
        exercise price of a share Common Stock in effect at any time and as adjusted
        from time to time is hereinafter sometimes referred to as the “Exercise
        Price.”
        

       

      (a) EXERCISE
        OF WARRANT.

       

      (1) This
        Warrant may be exercised in whole or in part at any time or from time to
        time
        from the date the Company consummates a Business Combination (as defined
        in the
        Company’s certificate of incorporation) up to and including January 24, 2011
        (the “Exercise
        Period”);
        provided, however, that (i) if either such day is a day on which banking
        institutions in the State of New York are authorized by law to close, then
        on
        the next succeeding day which shall not be such a day, and (ii) in the
        event of any merger, consolidation or sale of substantially all the assets
        of
        the Company as an entirety, resulting in any distribution to the Company’s
        stockholders, prior to termination of the Exercise Period, the Holder shall
        have
        the right to exercise this Warrant commencing at such time through the
        termination of the Exercise Period into the kind and amount of shares of
        stock
        and other securities and property (including cash) receivable by a holder
        of the
        number of shares of Common Stock into which this Warrant might have been
        exercisable immediately prior thereto. This Warrant may be exercised by
        presentation and surrender hereof to the Company at its principal office
        with
        the Purchase Form annexed hereto duly executed and accompanied by payment
        of the
        Exercise Price for the number of Warrant Shares specified in such form. As
        soon
        as practicable after each such exercise of this Warrant, but not later than
        seven (7) days following the receipt of good and available funds, the Company
        shall issue and deliver to the Holder a certificate or certificates for the
        Warrant Shares issuable upon such exercise, registered in the name of the
        Holder
        or its designee. If this Warrant should be exercised in part only, the Company
        shall, upon surrender of this Warrant for cancellation, execute and deliver
        a
        new Warrant evidencing the rights of the Holder thereof to purchase the balance
        of the Warrant Shares purchasable hereunder. As of the end of business on
        the
        date of receipt by the Company of this Warrant at its office in proper form
        for
        exercise, the Holder shall be deemed to be the holder of record of the shares
        of
        Common Stock issuable upon such exercise, notwithstanding that the stock
        transfer books of the Company shall then be closed or that certificates
        representing such shares shall not then be physically delivered to the
        Holder.

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      (2) At
        any
        time during the Exercise Period, the Holder may, at its option, exercise
        this
        Warrant on a cashless basis by exchanging this Warrant, in whole or in part
        (a
“Warrant
        Exchange”),
        into
        the number of Warrant Shares determined in accordance with this
        Section (a)(2), by surrendering this Warrant at the principal office of the
        Company or at the office of its stock transfer agent, accompanied by a notice
        stating such Holder’s intent to effect such exchange, the number of Warrant
        Shares to be exchanged and the date on which the Holder requests that such
        Warrant Exchange occur (the “Notice
        of Exchange”).
        The
        Warrant Exchange shall take place on the date specified in the Notice of
        Exchange or, if later, the date the Notice of Exchange is received by the
        Company (the “Exchange
        Date”).
        Certificates for the shares issuable upon such Warrant Exchange and, if this
        Warrant should be exercised in part only, a new Warrant evidencing the rights
        of
        the Holder thereof to purchase the balance of the Warrant Shares purchasable
        hereunder, shall be issued as of the Exchange Date and delivered to the Holder
        within seven (7) days following the Exchange Date. In connection with any
        Warrant Exchange, this Warrant shall represent the right to subscribe for
        and
        acquire the number of Warrant Shares equal to (i) the number of Warrant
        Shares specified by the Holder in its Notice of Exchange (the “Total
        Number”)
        less
        (ii) the number of Warrant Shares equal to the quotient obtained by
        dividing (A) the product of the Total Number and the existing Exercise
        Price by (B) the current market value of a share of Common Stock. Current
        market value shall means the average closing sales price for a share of the
        Common Stock for the five trading days immediately preceding the date of
        the
        Notice of Exchange.

       

      (b) RESERVATION
        OF SHARES. The Company shall at all times reserve for issuance and/or delivery
        upon exercise of the this Warrant such number of shares of Common Stock as
        shall
        be required for issuance and delivery upon exercise of this Warrant.


       

      (c) FRACTIONAL
        SHARES. No fractional shares or scrips representing fractional shares shall
        be
        issued upon the exercise of this Warrant. With respect to any fraction of
        a
        share called for upon any exercise hereof, the Company shall pay to the Holder
        an amount in cash equal to such fraction multiplied by the current market
        value
        of a share of Common Stock, as defined in Section (a)(2) above.

       

      (d) LOSS
        OR
        DESTRUCTION OF WARRANT. Upon receipt by the Company of evidence satisfactory
        to
        it of the loss, theft, destruction or mutilation of this Warrant, and (in
        the
        case of loss, theft or destruction) of reasonably satisfactory indemnification,
        and upon surrender and cancellation of this Warrant, if mutilated, the Company
        will execute and deliver a new Warrant of like tenor and date. Any such new
        Warrant executed and delivered shall constitute an additional contractual
        obligation on the part of the Company, whether or not this Warrant so lost,
        stolen, destroyed, or mutilated shall be at any time enforceable by
        anyone.

       

      (e) RIGHTS
        OF
        THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights
        of
        a shareholder in the Company, either at law or equity, and the rights of
        the
        Holder are limited to those expressed in this Warrant and are not enforceable
        against the Company except to the extent set forth herein.

       

      (f) ANTI-DILUTION
        PROVISIONS. In case the Company shall hereafter (i) declare a dividend or
        make a
        distribution on its outstanding Common Stock in shares of Common Stock, (ii)
        subdivide or reclassify its outstanding Common Stock into a greater number
        of
        shares, or (iii) combine or reclassify its outstanding Common Stock into
        a
        smaller number of shares, the Exercise Price in effect at the time of the
        record
        date for such dividend or distribution or of the effective date of such
        subdivision, combination or reclassification shall be adjusted so that it
        shall
        equal the price determined by multiplying the Exercise Price by a fraction,
        the
        denominator of which shall be the number of shares of Common Stock outstanding
        after giving effect to such action, and the numerator of which shall be the
        number of shares of Common Stock outstanding immediately prior to such action.
        The
        number of shares of Common Stock that the Holder shall thereafter, on the
        exercise hereof, 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 (f)) be issuable on such exercise by
        a
        fraction of which (a) the numerator is the Exercise Price that would otherwise
        (but for the provisions of this Section (f)) be in effect, and (b) the
        denominator is the Exercise Price in effect on the date of such exercise
        (taking
        into account the provisions of this Section (f)). Notwithstanding the foregoing,
        in no event shall the Exercise Price be less than the par value of the Common
        Stock. Adjustment
        pursuant to this Section shall be made successively whenever any event listed
        above shall occur. 

       


      
        
          
          

        

        
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      (g) NOTICES
        TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if
        the Company shall pay any dividend or make any distribution upon the Common
        Stock or (ii) if the Company shall offer to the holders of Common Stock for
        subscription or purchase by them any share of any class or any other rights
        or
        (iii) if any capital reorganization of the Company, reclassification of the
        capital stock of the Company, consolidation or merger of the Company with
        or
        into another corporation, sale, lease or transfer of all or substantially
        all of
        the property and assets of the Company to another corporation, or voluntary
        or
        involuntary dissolution, liquidation or winding up of the Company shall be
        effected, then in any such case, the Company shall cause to be mailed by
        certified mail to the Holder, at least fifteen days prior the date specified
        in
        (x) or (y) below, as the case may be, a notice containing a brief
        description of the proposed action and stating the date on which (x) a
        record is to be taken for the purpose of such dividend, distribution or rights,
        or (y) such reclassification, reorganization, consolidation, merger,
        conveyance, lease, dissolution, liquidation or winding up is to take place
        and
        the date, if any is to be fixed, as of which the holders of Common Stock
        or
        other securities shall receive cash or other property deliverable upon such
        reclassification, reorganization, consolidation, merger, conveyance,
        dissolution, liquidation or winding up.

       

      (h) RECLASSIFICATION,
        REORGANIZATION OR MERGER. In case of any reclassification, capital
        reorganization or other change of outstanding Common Stock of the Company,
        or in
        case of any consolidation or merger of the Company with or into another
        corporation (other than a merger with a subsidiary in which merger the Company
        is the continuing corporation and which does not result in any reclassification,
        capital reorganization or other change of outstanding Common Stock of the
        class
        issuable upon exercise of this Warrant) or in case of any sale, lease or
        conveyance to another corporation of the property of the Company as an entirety,
        the Company shall, as a condition precedent to such transaction, cause effective
        provisions to be made so that the Holder shall have the right thereafter
        by
        exercising this Warrant at any time prior to the expiration of the Warrant,
        to
        purchase the kind and amount of shares of stock and other securities and
        property receivable upon such reclassification, capital reorganization and
        other
        change, consolidation, merger, sale or conveyance by a holder of the number
        of
        shares of Common Stock that might have been purchased upon exercise of this
        Warrant immediately prior to such reclassification, change, consolidation,
        merger, sale or conveyance. Any such provision shall include provision for
        adjustments which shall be as nearly equivalent as may be practicable to
        the
        adjustments provided for in this Warrant. The foregoing provisions of this
        Section (h) shall similarly apply to successive reclassifications, capital
        reorganizations and changes of Common Stock and to successive consolidations,
        mergers, sales or conveyances. In the event that in connection with any such
        capital reorganization or reclassification, consolidation, merger, sale or
        conveyance, additional shares of Common Stock shall be issued in exchange,
        conversion, substitution or payment, in whole or in part, for a security
        of the
        Company other than Common Stock, any such issue shall be treated as an issue
        of
        Common Stock covered by the provisions of Section (f) hereof.

       


      
        
          
          

        

        
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      (i) No
        Net-Cash Settlement.
        In
        no
        event will the Holder be entitled to receive a net-cash settlement or other
        consideration in lieu of physical settlement in securities.

       

      (j) MODIFICATION
        OF AGREEMENT. The provisions of this Warrant may from time to time be amended,
        modified or waived, by the Company and the holder of this Warrant.

       

    

    
      Dated:
        April 16, 2007

      
         

        
          	 	 	
                  ARGYLE
                    SECURITY ACQUISITION CORPORATION

                
	 	 	 	 
	 	 	
                  By:

                	
                  /s/
                    Bob Marbut

                
	 	 	 	
                  Name:
                    Bob Marbut

                
	 	 	 	
                  Title:  
                    Co-Chief Executive Officer

                
	 	 	 	 
	
                  Holder:

                	 	 	 
	 	 	 	 
	 	 	 	 
	
                  
                    /s/
                      John J. Smith

                  

                	 	 	 
	
                  John
                    J. Smith

                	 	 	 


        


        
          
            
            

          

          
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      PURCHASE
        FORM

       

      
        
          	 	Dated
                  ____________________


        

      

       

      (1)
        The
        undersigned hereby irrevocably elects to exercise the within Warrant to the
        extent of purchasing shares of Common Stock of Argyle Security Acquisition
        Corporation (or such number of shares of Common Stock or other securities
        or
        property to which the undersigned is entitled in lieu thereof or in addition
        thereto under the provisions of the Warrant).

       

      (2)
        The
        undersigned hereby elects to make payment (Please check one):

       

      ___
        on a
        cashless basis pursuant to the provisions of Section (a)(2) of the
        Warrant.

       

      ___
        with
        the enclosed bank draft, certified check or money order payable to the Company
        in payment of the exercise price determined under, and on the terms specified
        in, the Warrant.

       

      (3)
        The
        undersigned hereby irrevocably directs that the said shares be issued and
        delivered as follows: 

       

      
        	
                Name(s)
                  in Full

              	 	
                Address(es)

              	 	
                Number
                  of Shares 

              	 	
                S.S.
                  or IRS #

              
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 


      

       

       

       

      _____________________________

      Signature
        of Holder

       

      _____________________________

      Print
        Name

       

      
        
          
          

        

        
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