WARRANT CLARIFICATION AGREEMENT
This
Warrant Clarification Agreement (this “Agreement”), dated August 11, 2006, is to
the Warrant Agreement, dated as of January 24, 2006 (the “Warrant Agreement”),
by and between Argyle Security Acquisition Corporation, a Delaware corporation,
with offices at 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000
(“Company”), and American Stock Transfer & Trust Company, a New York
corporation, with offices at 0000 00xx
Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000 (“Warrant Agent”).
WHEREAS,
Section
9.8 of the Warrant Agreement provides that the parties to the Warrant Agreement
may amend the Warrant Agreement without the consent of any registered holder
for
the purpose of curing any ambiguity, or of curing, correcting or supplementing
any defective provision contained therein or adding or changing any other
provisions with respect to matters or questions arising under the Warrant
Agreement as the parties may deem necessary or desirable and that the parties
deem shall not adversely affect the interest of the registered
holders;
WHEREAS,
as
a
result of certain questions that have arisen regarding the accounting treatment
applicable to the Warrants, the parties hereto deem it necessary and desirable
to amend the Warrant Agreement to clarify that the registered holders do not
have the right to receive a net cash settlement in the event the Company does
not maintain a current prospectus relating to the common stock issuable upon
exercise of the warrants at the time such warrants are exercisable.
NOW,
THEREFORE,
in
consideration of the mutual agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
agree
to amend the Warrant Agreement as set forth herein.
1. Warrant
Agreements.
The
undersigned hereby agree that the Warrant Agreement is hereby amended by adding
the following last sentence to Section 3.3.2:
“In
no
event will the registered holder of a Warrant be entitled to receive a net-cash
settlement or other consideration in lieu of physical settlement in shares
of
Common Stock if the Common Stock underlying the Warrants is not covered by
an
effective registration statement.”
2. Miscellaneous.
a. Governing
Law; Jurisdiction.
The
validity, interpretation, and performance of this Agreement shall be governed
in
all respects by the laws of the State of New York, without giving effect to
conflict of laws. The Company 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. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenience forum. Any such process or summons to be served
upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it
in
care of the address set forth above or such other address as the undersigned
shall furnish in writing to the other. Such mailing shall be deemed personal
service and shall be legal and binding upon the Company in any action,
proceeding or claim.
b. Responsibility
of the Warrant Agent.
The
Warrant Agent has no responsibility for the correctness of the recitals above
which shall be taken as statements of the Company, and makes no representations
as to the validity, sufficiency or enforceability of this
Agreement.
c. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and assigns.
d. Entire
Agreement.
This
Agreement sets forth the entire agreement and understanding between the parties
as to the subject matter thereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among them.
Except as set forth in this Agreement, provisions of the original Warrant
Agreement which are not inconsistent with this Agreement shall remain in full
force and effect. This Agreement may be executed in counterparts.
e. Severability.
This
Agreement shall be deemed severable, and the invalidity or unenforceability
of
any term or provision hereof shall not affect the validity or enforceability
of
this Agreement or of any other term or provision hereof. Furthermore, in lieu
of
any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Agreement a provision as similar
in
terms to such invalid or unenforceable provision as may be possible and be
valid
and enforceable
NY504891.2
207873-10002
IN
WITNESS WHEREOF, the parties hereto have executed this Warrant Clarification
Agreement as of the date first written above.
ARGYLE
SECURITY ACQUISTION CORPORATION
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By: | /s/ Xxx Chaimovaki | |
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Name: |
Xxx Chaimovski |
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Title: | Co-CEO and Vice Chairman |
AMERICAN
STOCK TRANSFER & TRUST COMPANY
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By: | /s/ Xxxx Xxxxxx | |
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Name: |
Xxxx Xxxxxx |
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Title: | Vice President |