Exhibit 4.1
[FORM OF WARRANT]
CHINA SECURITY & SURVEILLANCE TECHNOLOGY,
INC.
Warrant To Purchase Common Stock
Warrant No.: [ ]
Number of Shares of Common Stock:[__________]
Date of Issuance: August [__], 2009 (“ Issuance Date
”)
China Security
& Surveillance Technology, Inc., a Delaware corporation (the
“ Company ”), hereby certifies that, for good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, [___________], the registered holder
hereof or its permitted assigns (the “ Holder
”), is entitled, subject to the terms set forth below, to
purchase from the Company, at the Exercise Price (as defined below)
then in effect, upon surrender of this Warrant to Purchase Common
Stock (including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “
Warrant ”), at any time or times on or after the date
hereof (the “ Initial Exercise Eligibility Date
”), but not after 11:59 p.m., New York time, on the
Expiration Date (as defined below), (______________) 1
fully paid, nonassessable shares of Common Stock (as defined below)
(the “ Warrant Shares ”). Except as otherwise
defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 15. This Warrant is one of the
Warrants to purchase Common Stock (the “ SPA Warrant
”) issued pursuant to that certain Securities Purchase
Agreement, dated as of August 24, 2009 (the “ Subscription
Date ”), by and among the Company and the investors (the
“ Buyers ”) referred to therein (the “
Securities Purchase Agreement ”).
1. EXERCISE OF
WARRANT.
1.1. Mechanics
of Exercise . Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in
Section 1(f)), this Warrant may be exercised by the Holder on any
day on or after the Initial Exercise Eligibility Date, in whole or
in part, by (i) delivery of a written notice, in the form attached
hereto as Exhibit A (the “ Exercise
Notice ”), of the Holder’s election to exercise
this Warrant and (ii) (A) payment to the Company of an amount equal
to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the
“ Aggregate Exercise Price ”) in cash or by wire
transfer of immediately available funds or (B) by notifying the
Company that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 1(d)). The Holder shall not be
required to deliver the original Warrant in order to effect an
exercise hereunder. Execution and delivery of the Exercise Notice
with respect to less than all of the Warrant Shares shall have the
same effect as cancellation of the original Warrant and issuance of
a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. On or before the first (1 st )
Business Day following the date on which the Company has received
each of the Exercise Notice and the Aggregate Exercise Price (or
notice of a Cashless Exercise) (the “ Exercise
Delivery Documents ”), the Company shall transmit by
facsimile an acknowledgment of confirmation of receipt of the
Exercise Delivery Documents to the Holder and the Company’s
transfer agent (the “ Transfer Agent ”). On or
before the third (3 rd ) Trading Day following the date
on which the Company has received all of the Exercise Delivery
Documents (the “ Share Delivery Date ”),
the Company shall (X) provided that the Transfer Agent is
participating in The Depository Trust Company (“ DTC
”) Fast Automated Securities Transfer Program, upon the
request of the Holder, credit such aggregate number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to
the Holder’s or its designee’s balance account with DTC
through its Deposit Withdrawal Agent Commission system, or (Y) if
the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and dispatch by overnight
courier to the address as specified in the Exercise Notice, a
certificate, registered in the Company’s share register in
the name of the Holder or its designee, for the number of shares of
Common Stock to which the Holder is entitled pursuant to such
exercise. Upon delivery of the Exercise Delivery Documents, the
Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date such
Warrant Shares are credited to the Holder’s DTC account or
the date of delivery of the certificates evidencing such Warrant
Shares, as the case may be. If this Warrant is submitted in
connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for
exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as
practicable and in no event later than three Business Days after
any exercise and at its own expense, issue a new Warrant (in
accordance with Section 7(d)) representing the right to purchase
the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with
respect to which this Warrant is exercised. No fractional shares of
Common Stock are to be issued upon the exercise of this Warrant,
but rather the number of shares of Common Stock to be issued shall
be rounded up to the nearest whole number. The Company shall pay
any and all taxes which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this
Warrant.
_________________
1 Insert number of
Warrant Shares equal to the number of Common Stock issued pursuant
to the Securities Purchase Agreement.
Exhibit 4 1 -- Form of
Warrant
1.2. Exercise
Price . For purposes of this Warrant, “ Exercise
Price ” means $8.62, subject to adjustment as provided
herein.
1.3.
Company’s Failure to Timely Deliver Securities . If
within three (3) Trading Days after the Company’s receipt of
the Exercise Delivery Documents the Company shall fail to issue and
deliver a certificate to the Holder and register such shares of
Common Stock on the Company’s share register or credit the
Holder’s balance account with DTC for the number of shares of
Common Stock to which the Holder is entitled upon the
Holder’s exercise hereunder, and if on or after such Trading
Day the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of shares of Common Stock issuable upon such
exercise that the Holder anticipated receiving from the Company (a
“ Buy-In ”), then the Company shall, within
three (3) Business Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased (the “ Buy-In Price ”), at which point
the Company’s obligation to deliver such certificate (and to
issue such Warrant Shares) shall terminate, or (ii) promptly honor
its obligation to deliver to the Holder a certificate or
certificates representing such Warrant Shares and pay cash to the
Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common
Stock, times (B) the Closing Bid Price on the date of
exercise.
Exhibit 4 1 -- Form of
Warrant 2
1.4. Cashless
Exercise . Notwithstanding anything contained herein to the
contrary, if a Registration Statement (as defined in the Securities
Purchase Agreement) covering the Warrant Shares that are the
subject of the Exercise Notice (the “ Unavailable
Warrant Shares ”) is not available for the resale of
such Unavailable Warrant Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu
of making the cash payment otherwise contemplated to be made to the
Company upon such exercise in payment of the Aggregate Exercise
Price, elect instead to receive upon such exercise the “
Net Number ” of shares of Common Stock
determined according to the following formula (a “
Cashless Exercise ”):
Net
Number = (A x B) - (A x C)
B
For
purposes of the foregoing formula:
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A
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= the total number of shares with
respect to which this Warrant is then being exercised.
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B
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= the Weighted Average Price of
the shares of Common Stock (as reported by Bloomberg) for the five
(5) consecutive Trading Days ending on the date immediately
preceding the date of the Exercise Notice.
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C
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= the Exercise Price then in
effect for the applicable Warrant Shares at the time of such
exercise.
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1.5.
Disputes . In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall promptly issue to the Holder the number
of Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 12.
1.6. Beneficial
Ownership Limitation . The Company shall not effect the
exercise of this Warrant, and the Holder shall not have the right
to exercise this Warrant, to the extent that after giving effect to
such exercise, such Person (together with such Person’s
affiliates) would beneficially own in excess of 4.99% (the “
Maximum Percentage ”) of the shares of Common Stock
outstanding immediately after giving effect to such exercise. For
purposes of the foregoing sentence, the aggregate number of shares
of Common Stock beneficially owned by such Person and its
affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude
shares of Common Stock which would be issuable upon (x) exercise of
the remaining, unexercised portion of this Warrant beneficially
owned by such Person and its affiliates and (y) exercise or
conversion of the unexercised or unconverted portion of any other
securities of the Company beneficially owned by such Person and its
affiliates (including, without limitation, any convertible notes or
convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the
number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as reflected in
(1) the Company’s most recent Form 10-K, Form 10-Q, Current
Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common
Stock outstanding. For any reason at any time, upon the written or
oral request of the Holder, the Company shall within one Business
Day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including the SPA Warrants, by the Holder and its affiliates since
the date as of which such number of outstanding shares of Common
Stock was reported. By written notice to the Company, the Holder
may from time to time increase or decrease the Maximum Percentage
to any other percentage not in excess of 9.99% specified in such
notice; provided that (x) any such increase will not be effective
until the sixty-first (61 st ) day after such notice is
delivered to the Company, and (y) any such increase or decrease
will apply only to the Holder and not to any other holder of SPA
Warrants.
Exhibit 4 1 -- Form of
Warrant 3
1.7.
Insufficient Authorized Shares . If at any time while any of
the Warrants remain outstanding the Company does not have a
sufficient number of authorized and unreserved shares of Common
Stock to satisfy its obligation to reserve for issuance upon
exercise of the Warrants at least a number of shares of Common
Stock equal to (the “ Required Reserve Amount
”) the number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of all of the Warrants
then outstanding (an “ Authorized Share Failure
”), then the Company shall immediately take all action
necessary to increase the Company’s authorized shares of
Common Stock to an amount sufficient to allow the Company to
reserve the Required Reserve Amount for the Warrants then
outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than seventy
five (75) days after the occurrence of such Authorized Share
Failure, the Company shall hold a meeting of its stockholders for
the approval of an increase in the number of authorized shares of
Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders’ approval of such
increase in authorized shares of Common Stock and to cause its
board of directors to recommend to the stockholders that they
approve such proposal.
2. ADJUSTMENT OF EXERCISE PRICE
AND NUMBER OF WARRANT SHARES. The Exercise Price and the number of
Warrant Shares shall be adjusted from time to time as
follows:
2.1. Adjustment
upon Subdivision or Combination of Common Stock . If the
Company at any time on or after the Subscription Date subdivides
(by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately
increased. If the Company at any time on or after the Subscription
Date combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately
decreased. Any adjustment under this Section 2(b) shall become
effective at the close of business on the date the subdivision or
combination becomes effective.
Exhibit 4 1 -- Form of
Warrant 4
2.2. Voluntary
Adjustment By Company . The Company may at any time during the
term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board
of Directors of the Company.
2.3. Other
Events . If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with
equity features to the holders of the Company’s Common
Stock), then the Company’s Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of
Warrant Shares so as to protect the rights of the Holder; provided
that no such adjustment pursuant to this Section 2(c) will increase
the Exercise Price or decrease the number of Warrant Shares as
otherwise determined pursuant to this Section 2.
3. RIGHTS UPON DISTRIBUTION OF
ASSETS. If the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to
holders of shares of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash,
stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “
Distribution ”), at any time after the issuance of
this Warrant, then, in each such case:
(1) any Exercise
Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of shares of
Common Stock entitled to receive the Distribution shall be reduced,
effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction
of which (i) the numerator shall be the Closing Bid Price of the
shares of Common Stock on the Trading Day immediately preceding
such record date minus the value of the Distribution (as determined
in good faith by the Company’s Board of Directors) applicable
to one share of Common Stock, and (ii) the denominator shall be the
Closing Bid Price of the shares of Common Stock on the Trading Day
immediately preceding such record date; and
(2) the number of
Warrant Shares shall be increased to a number of shares equal to
the number of shares of Common Stock obtainable immediately prior
to the close of business on the record date fixed for the
determination of holders of shares of Common Stock entitled to
receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding paragraph (a);
provided that in the event that the Distribution is of shares of
Common Stock (or common stock) (“ Other Shares of
Common Stock ”) of a company whose common shares are
traded on a national securities exchange or a national automated
quotation system, then the Holder may elect to receive a warrant to
purchase Other Shares of Common Stock in lieu of an increase in the
number of Warrant Shares, the terms of which shall be identical to
those of this Warrant, except that such warrant shall be
exercisable into the number of shares of Other Shares of Common
Stock that would have been payable to the Holder pursuant to the
Distribution had the Holder exercised this Warrant immediately
prior to such record date and with an aggregate exercise price
equal to the product of the amount by which the exercise price of
this Warrant was decreased with respect to the Distribution
pursuant to the terms of the immediately preceding paragraph (a)
and the number of Warrant Shares calculated in accordance with the
first part of this paragraph (b).
Exhibit 4 1 -- Form of
Warrant 5
4. PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.
4.1. Purchase
Rights . In addition to any adjustments pursuant to
Section
