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

         

        W04122007-4

         

        This
          is
          to Certify That, FOR VALUE RECEIVED, Graham
          Wallis 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”),
          3,125
          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/
                    Graham Wallis

                

              	 	 	 
	
                Graham Wallis

              	 	 	 


        


        
          
             

          

          
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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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