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WARRANT TO PURCHASE SHARES OF COMMON STOCK

Warrant Agreement

WARRANT TO PURCHASE SHARES OF COMMON STOCK | Document Parties: SECURITY WITH ADVANCED TECHNOLOGY, INC. You are currently viewing:
This Warrant Agreement involves

SECURITY WITH ADVANCED TECHNOLOGY, INC.

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Title: WARRANT TO PURCHASE SHARES OF COMMON STOCK
Governing Law: Colorado     Date: 3/27/2007
Industry: Security Systems and Services     Sector: Services

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Exhibit 4.2

This Warrant and the underlying shares of Common Stock represented by this Certificate have not been registered under the Securities Act of 1933 (the “Act”), and are “restricted securities” as that term is defined in Rule 144 under the Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the reasonable satisfaction of the Company.

Warrant No. A-2007-__

WARRANT TO PURCHASE SHARES OF COMMON STOCK

Warrant to Purchase [__________] Shares
(subject to adjustment as set forth herein)

Exercise Price $4.75 Per Share
(subject to adjustment as set forth herein)

VOID AFTER 5:00 P.M., MOUNTAIN TIME, ON MARCH 26, 2011

        THIS CERTIFIES THAT [________________________________________________________] is entitled to purchase from Security With Advanced Technology, Inc., a Colorado corporation (hereinafter called the “Company”), with its principal office located at 10855 Dover Street, Suite 1100, Westminster, Colorado 80021, at any time beginning on September 26, 2007 but before 5:00 P.M., Mountain Time, on March 26, 2011, at the purchase price of $4.75 per share (the “Exercise Price”), the number of shares (the “Shares”) of the Company’s Common Stock (the “Common Stock”) set forth above. The number of Shares purchasable upon exercise of this Warrant and the Exercise Price per Share shall be subject to adjustment from time to time as set forth in Section 4 below.

         Section 1.        Definitions.

        The following terms used in this agreement (this “Agreement”) shall have the following meanings (unless otherwise expressly provided herein):

         The "Act." The Securities Act of 1933, as amended.

         The "Commission." The Securities and Exchange Commission.

         The "Company." Security With Advanced Technology, Inc.

         “Common Stock.” The Company’s Common Stock.

         "Current Market Price." The Current Market Price shall be determined as follows:

 

        (a)   if the security at issue is listed on a national securities exchange or admitted to unlisted trading privileges on such an exchange or quoted on either the Global Market, Global Select Market or the Capital Market of the automated quotation service operated by The Nasdaq Stock Market, Inc. (“Nasdaq”), the current value shall be the last reported sale price of that security on such exchange or system on the day for which the Current Market Price is to be determined or, if no such sale is made on such day, the average of the highest closing bid and lowest asked price for such day on such exchange or system; or




 

        (b)   if the security at issue is not so listed or quoted or admitted to unlisted trading privileges, the Current Market Value shall be the average of the last reported highest bid and lowest asked prices quoted on the Nasdaq Electronic Bulletin Board, or, if not so quoted, then by the National Quotation Bureau, Inc. on the last business day prior to the day for which the Current Market Price is to be determined; or



 

        (c)   if the security at issue is not so listed or quoted or admitted to unlisted trading privileges and bid and asked prices are not reported, the current market value shall be determined in such reasonable manner as may be prescribed from time to time by the Board of Directors of the Company, subject to the objection and arbitration procedure as described in Section 7 below.



         “Expiration Date.” March 26, 2011.

        “ Holder ” or “Warrantholder.” The person to whom this Warrant is issued, and any valid transferee thereof pursuant to Section 3.1 below.

         "NASD." The National Association of Securities Dealers, Inc.

         "Nasdaq." The automated quotation system operated by the Nasdaq Stock Market, Inc.

         “Person” means any individual, sole proprietorship, partnership, joint venture, trust, incorporated organization, association, corporation, limited liability company, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

         “Termination of Business.” Any sale, lease or exchange of all, or substantially all, of the Company’s assets or business or any dissolution, liquidation or winding up of the Company.

         “Warrants.” The warrants issued in accordance with the terms of this Agreement and any Warrants issued in substitution for or replacement of such warrants, including those evidenced by a certificate or certificates originally issued or issued upon division, exchange, substitution or transfer pursuant to this Agreement.

         “Warrant Securities .” The Common Stock purchasable upon exercise of a Warrant including the Common Stock underlying unexercised portions of a Warrant.

         Section 2.         Term of Warrants; Exercise of Warrant.

        2.1.        Exercise of Warrant. Subject to the terms of this Agreement, the Holder shall have the right, at any time beginning on September 26, 2007 prior to 5:00 p.m., Mountain Time, on the Expiration Date, to purchase from the Company up to the number of fully paid and nonassessable Shares to which the Holder may at the time be entitled to purchase pursuant to this Agreement, upon surrender to the Company, at its principal office, of the Warrant to be exercised, together with the purchase form, attached hereto as Exhibit 1, duly filled in and signed, and upon payment to the Company of the Exercise Price for the number of Shares in respect of which such Warrants are then exercised, but in no event for less than 100 Shares (unless fewer than an aggregate of 100 shares are then purchasable under all outstanding Warrants held by a Holder).

        2.2.        Exercise Price. The exercise price (“Exercise Price”) is $4.75 per Share, as modified in accordance with Section 4, below.

        2.3.        Issuance of Shares. Upon such surrender of the Warrants and payment of such Exercise Price as aforesaid, the Company shall issue and cause to be delivered within three business days to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate or certificates for the number of full Shares so purchased upon the exercise of the Warrant, together with cash, as provided in Section 13 hereof, in respect of any fractional Shares otherwise issuable upon such surrender. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Securities, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Securities called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant, or at the request of the Holder, appropriate notation may be made on this Warrant and the same returned to the Holder.


        2.4.        Effect of Exercise . Upon receipt of the Warrant by the Company as described in Sections 2.1 above, the Holder shall be deemed to be the holder of record of the Shares issuable upon such exercise, notwithstanding that the transfer books of the Company may then be closed or that certificates representing such Shares may not have been prepared or actually delivered to the Holder.

        2.5       Restrictions on Exercise Amount.

    (i)        Unless Vision Opportunity Master Fund, Ltd. (“ Vision ”) delivers to the Company irrevocable written notice prior to the date of issuance hereof or sixty-one days prior to the effective date of such notice that this Section 2.5(i) shall not apply to Vision, Vision may not acquire a number of shares of Common Stock upon exercise of this Warrant to the extent that, upon such exercise, the number of shares of Common Stock then beneficially owned by such holder and its affiliates and any other persons or entities whose beneficial ownership of Common Stock would be aggregated with Vision’s for purposes of Section 13(d) of the Exchange Act (including shares held by any “group” of which the holder is a member, but excluding shares beneficially owned by virtue of the ownership of securities or rights to acquire securities that have limitations on the right to convert, exercise or purchase similar to the limitation set forth herein) exceeds 9.99% of the total number of shares of Common Stock of the Company then issued and outstanding. For purposes hereof, “group” has the meaning set forth in Section 13(d) of the Exchange Act and applicable regulations of the Commission, and the percentage held by Vision shall be determined in a manner consistent with the provisions of Section 13(d) of the Securities Exchange Act of 1934, as amended. Each delivery of a notice of exercise by Vision will constitute a representation by Vision that it has evaluated the limitation set forth in this paragraph and determined, based on the most recent public filings by the Company with the Commission, that the issuance of the full number of shares of Common Stock requested in such notice of exercise is permitted under this paragraph.

        (ii)        In the event the Company is prohibited from issuing shares of Warrant Stock as a result of any restrictions or prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization, the Company shall as soon as possible seek the approval of its stockholders and take such other action to authorize the issuance of the full number of shares of Common Stock issuable upon exercise of this Warrant.

         Section 3.        Transferability and Form of Warrant

        3.1.        Limitation on Transfer. Any assignment or transfer of a Warrant shall be made by the presentation and surrender of the Warrant to the Company at its principal office or the office of its transfer agent, if any, accompanied by a duly executed Assignment Form. Upon the presentation and surrender of these items to the Company, the Company, at its sole expense, shall execute and deliver to the new Holder or Holders a new Warrant or Warrants, in the name of the new Holder or Holders as named in the Assignment Form, and the Warrant presented or surrendered shall at that time be canceled.

        3.2.        Exchange of Certificate. Any Warrant may be exchanged for another certificate or certificates entitling the Warrantholder to purchase a like aggregate number of Shares as the certificate or certificates surrendered then entitled such Warrantholder to purchase. Any Warrant holder desiring to exchange a Warrant shall make such request in writing delivered to the Company, and shall surrender, properly endorsed, with signatures guaranteed, the certificate evidencing the Warrant to be so exchanged. Thereupon, the Company shall execute and deliver to the person entitled thereto a new Warrant as so requested.

        3.3.        Mutilated, Lost, Stolen, or Destroyed Certificate . In case the certificate or certificates evidencing the Warrants shall be mutilated, lost, stolen or destroyed, the Company shall, at the request of the Warrantholder, issue and deliver in exchange and substitution for and upon cancellation of the mutilated certificate or certificates, or in lieu of and substitution for the certificate or certificates lost, stolen or destroyed, a new Warrant or certificates of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss, theft or destruction of such Warrant and a bond of indemnity, if requested, also satisfactory in form and amount, at the applicant’s cost. Applicants for such substitute Warrant shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe.


         Section 4.         Adjustment of Number of Shares.

        The number and kind of securities purchasable upon the exercise of the Warrants and the Warrant Price shall be subject to adjustment from time to time upon the happening of certain events, as follows:

        4.1.        Adjustments. The number of Shares purchasable upon the exercise of the Warrants shall be subject to adjustments as follows:

 

        (a)        In case the Company shall (i) pay a dividend in Common Stock or make a distribution to its stockholders in Common Stock, (ii) subdivide its outstanding Common Stock, (iii) combine its outstanding Common Stock into a smaller number of shares of Common Stock, or (iv) issue by reclassification of its Common Stock other securities of the Company, the number of Shares purchasable upon exercise of the Warrants immediately prior thereto shall be adjusted so that the Warrant holder shall be entitled to receive the kind and number of Shares or other securities of the Company which it would have owned or would have been entitled to receive immediately after the happening of any of the events described above, had the Warrants been exercised immediately prior to the happening of such event or any record date with respect thereto. Any adjustment made pursuant to this subsection 4.1(a) shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.



 

        (b)        No adjustment in the number of Shares purchasable pursuant to the Warrants shall be required unless such adjustment would require an increase or decrease of at least one percent in the number of Shares then purchasable upon the exercise of the Warrants or, if the Warrants are not then exercisable, the number of Shares purchasable upon the exercise of the Warrants on the first date thereafter that the Warrants become exercisable; provided, however, that any adjustments which by reason of this subsection 4.1(b) are not required to be made immediately shall be carried forward and taken into account in any subsequent adjustment.



 

        (c)        Whenever the number of Shares purchasable upon the exercise of the Warrant is adjusted, as herein provided, the Exercise Price payable upon exercise of the Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Warrant Shares so purchasable immediately thereafter.



 

        (d)        Whenever the number of Shares purchasable upon exercise of the Warrants is adjusted as herein provided, the Company shall cause to be promptly mailed to the Warrantholder by first class mail, postage prepaid, notice of such adjustment and a certificate of the chief financial officer of the Company setting forth the number of Shares purchasable upon the exercise of the Warrants after such adjustment, a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made.



 

        (e)        For the purpose of this Section 4.1, the term “Common Stock” shall mean (i) the class of stock designated as the Common Stock of the Company at the date of this Agreement, or (ii) any other class of stock resulting from successive changes or reclassifications of


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