Attached files
Exhibit
10.5
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
SERIES A
WARRANT TO PURCHASE
SHARES OF
COMMON STOCK
OF
ECO
BUILDING INTERNATIONAL
Expires
April 27, 2015
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No.: ______
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Number of Shares:
___________
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Date
of Issuance: April 27, 2010
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FOR VALUE
RECEIVED, the undersigned, Eco Building International, a Nevada corporation
(together with its successors and assigns, the “Issuer”), hereby
certifies that ____________________________________ (the “Holder”) or its
registered assigns is entitled to subscribe for and purchase, during the Term
(as hereinafter defined), up to ____________________________________
(_____________) shares of the duly authorized, validly issued, fully paid and
non-assessable Common Stock of the Issuer, at an exercise price per share equal
to the Warrant Price then in effect, subject, however, to the provisions and
upon the terms and conditions hereinafter set forth. Capitalized terms used in
this Warrant and not otherwise defined herein shall have the respective meanings
specified in Section 8 hereof.
1.
Term. The term
of this Warrant shall commence on April 27, 2010 and shall expire at 6:00 p.m.,
Eastern Time, on April 27, 2015 (such period being the “Term” and such date,
the “Termination
Date”).
2.
Method of Exercise;
Payment; Issuance of New Warrant; Transfer and Exchange.
(a)
Time of
Exercise. The purchase rights represented by this Warrant may be
exercised in whole or in part during the Term for such number of shares of
Common Stock set forth above, which number is equal to forty percent (40%) of
the number of shares of Common Stock into which the Series A Convertible
Preferred Stock issued by the Issuer to the Holder on the Original Issue Date
pursuant to the Purchase Agreement may be converted.
(b)
Method of
Exercise. The Holder hereof may exercise this Warrant, in whole or in
part, by the surrender of this Warrant (with the exercise form attached hereto
duly executed (“Notice
of Exercise”)) at the principal office of the Issuer, and by the payment
to the Issuer of an amount of consideration therefor equal to the Warrant Price
in effect on the date of such exercise multiplied by the number of shares of
Warrant Stock with respect to which this Warrant is then being exercised,
payable at such Holder’s election (i) by certified or official bank check or by
wire transfer to an account designated by the Issuer, (ii) by “cashless
exercise” in accordance with the provisions of subsection (c) of this Section 2,
or (iii) by a combination of the foregoing methods of payment selected by the
Holder of this Warrant.
(c)
Cashless
Exercise. Notwithstanding any provision herein to the contrary and
commencing twelve (12) months following the Original Issue Date, if (i) the Per
Share Market Value of one share of Common Stock is greater than the Warrant
Price (at the date of calculation as set forth below) and (ii) a registration
statement under the Securities Act providing for the resale of the Warrant Stock
is not then in effect, in lieu of exercising this Warrant by payment of cash,
the Holder may elect to exercise this Warrant by a cashless exercise and shall
receive the number of shares of Common Stock equal to an amount (as determined
below) by surrender of this Warrant at the principal office of the Issuer
together with the properly endorsed Notice of Exercise in which event the Issuer
shall issue to the Holder a number of shares of Common Stock computed using the
following formula:
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X =
Y - (A)(Y)
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B
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Where
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X
=
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the
number of shares of Common Stock to be issued to the
Holder.
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Y
=
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the
number of shares of Warrant Stock issuable upon exercise of this Warrant
in accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise.
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A
=
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the
Warrant Price.
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B
=
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the
Per Share Market Value of one share of Common Stock on the Trading Day
immediately preceding the date of such
election.
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(d)
Issuance of
Stock Certificates. In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof, certificates for
the shares of Warrant Stock so purchased shall be dated the date of such
exercise and delivered to the Holder hereof within a reasonable time, not
exceeding five (5) Trading Days after such exercise (the “Delivery Date”) or,
at the request of the Holder (provided that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is then in effect
or that the shares of Warrant Stock are otherwise exempt from registration),
issued and delivered to the Depository Trust Company (“DTC”) account on the
Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a
reasonable time, not exceeding five (5) Trading Days after such exercise, and
the Holder hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such exercise.
Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent
shall only be obligated to issue and deliver the shares to the DTC on a holder’s
behalf via DWAC if such exercise is in connection with a sale or other exemption
from registration by which the shares may be issued without a restrictive legend
and the Issuer and its transfer agent are participating in DTC through the DWAC
system. The Holder shall deliver this original Warrant, or an indemnification
undertaking with respect to such Warrant in the case of its loss, theft or
destruction, at such time that this Warrant is fully exercised. With respect to
partial exercises of this Warrant, the Issuer shall keep written records for the
Holder of the number of shares of Warrant Stock exercised as of each date of
exercise.
(e)
Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In
addition to any other rights available to the Holder, if the Issuer fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Stock pursuant to an exercise on or before the Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the
Issuer shall: (1) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Issuer was required to deliver to the
Holder in connection with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed, and (2) at the
option of the holder, either reinstate the portion of the Warrant and equivalent
number of shares of Warrant Stock for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Issuer timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Issuer shall be required to pay the Holder $1,000. The
Holder shall provide the Issuer written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Issuer. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Issuer’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.
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(f)
Transferability
of Warrant. Subject to Section 2(h) hereof, this Warrant may be
transferred by a Holder, in whole or in part, without the consent of the Issuer.
If transferred pursuant to this paragraph, this Warrant may be transferred on
the books of the Issuer by the Holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant at the principal office of the Issuer,
properly endorsed (by the Holder executing an assignment in the form attached
hereto) and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. This Warrant is exchangeable at the principal
office of the Issuer for Warrants to purchase the same aggregate number of
shares of Warrant Stock, each new Warrant to represent the right to purchase
such number of shares of Warrant Stock as the Holder hereof shall designate at
the time of such exchange. All Warrants issued on transfers or exchanges shall
be dated the Original Issue Date and shall be identical with this Warrant except
as to the number of shares of Warrant Stock issuable pursuant thereto.
(g)
Continuing
Rights of Holder. The Issuer will, at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant, provided that if any
such Holder shall fail to make any such request, the failure shall not affect
the continuing obligation of the Issuer to afford such rights to such
Holder.
(h)
Compliance with
Securities Laws.
(i)
The Holder of this Warrant, by acceptance hereof, acknowledges that this
Warrant and the shares of Warrant Stock to be issued upon exercise hereof are
being acquired solely for the Holder’s own account and not as a nominee for any
other party, and for investment, and that the Holder will not offer, sell or
otherwise dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration statement, or
an exemption from registration, under the Securities Act and any applicable
state securities laws.
(ii)
Except as provided in paragraph (iii) below, this Warrant and all
certificates representing shares of Warrant Stock issued upon exercise hereof
shall be stamped or imprinted with a legend in substantially the following
form:
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(iii)
The Issuer agrees to reissue this Warrant or certificates representing
any of the Warrant Stock, without the legend set forth above if at such time,
prior to making any transfer of any such securities, the Holder shall give
written notice to the Issuer describing the manner and terms of such transfer.
Such proposed transfer will not be effected until: (a) either (i) the Issuer has
received an opinion of counsel reasonably satisfactory to the Issuer, to the
effect that the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a registration
statement under the Securities Act covering such proposed disposition has been
filed by the Issuer with the United States Securities and Exchange Commission
and has become effective under the Securities Act, or (iii) the Issuer has
received other evidence reasonably satisfactory to the Issuer that such
registration and qualification under the Securities Act and state securities
laws are not required; and (b) either (i) the Issuer has received an opinion of
counsel reasonably satisfactory to the Issuer, to the effect that registration
or qualification under the securities or “blue sky” laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or “blue sky” laws has been effected or a valid
exemption exists with respect thereto. The Issuer will respond to any such
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notice
from a holder within five (5) Trading Days. In the case of any proposed transfer
under this Section 2(h), the Issuer will use reasonable efforts to comply with
any such applicable state securities or “blue sky” laws, but shall in no event
be required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or “blue sky” laws of any state for which registration by
coordination is unavailable to the Issuer. The restrictions on transfer
contained in this Section 2(h) shall be in addition to, and not by way of
limitation of, any other restrictions on transfer contained in any other section
of this Warrant. Whenever a certificate representing the Warrant Stock is
required to be issued to the Holder without a legend, in lieu of delivering
physical certificates representing the Warrant Stock, the Issuer shall cause its
transfer agent to electronically transmit the Warrant Stock to the Holder by
crediting the account of the Holder or Holder’s Prime Broker with DTC through
its DWAC system (to the extent not inconsistent with any provisions of this
Warrant or the Purchase Agreement).
(i)
Accredited
Investor Status. In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is an “accredited investor” as defined in
Regulation D under the Securities Act.
3.
Stock Fully Paid;
Reservation and Listing of Shares; Covenants.
(a)
Stock Fully
Paid. The Issuer represents, warrants, covenants and agrees that all
shares of Warrant Stock which may be issued upon the exercise of this Warrant or
otherwise hereunder will, when issued in accordance with the terms of this
Warrant, be duly authorized, validly issued, fully paid and non-assessable and
free from all taxes, liens and charges created by or through the Issuer. The
Issuer further covenants and agrees that during the period within which this
Warrant may be exercised, the Issuer will at all times have authorized and
reserved for the purpose of the issuance upon exercise of this Warrant a number
of authorized but unissued shares of Common Stock equal to at least one hundred
twenty-five percent (125%) of the number of shares of Common Stock issuable upon
exercise of this Warrant without regard to any limitations on
exercise.
(b)
Reservation. If any
shares of Common Stock required to be reserved for issuance upon exercise of
this Warrant or as otherwise provided hereunder require registration or
qualification with any Governmental Authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such shares to be
duly registered or qualified, in accordance with the terms and provisions of the
Registration Rights Agreement. If the Issuer shall list any shares of Common
Stock on any securities exchange or market it will, at its expense, list
thereon, and maintain and increase when necessary such listing, of, all shares
of Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such
Warrant Stock has been registered pursuant to a registration statement under the
Securities Act then in effect), and, to the extent permissible under the
applicable securities exchange rules, all unissued shares of Warrant Stock which
are at any time issuable hereunder, so long as any shares of Common Stock shall
be so listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.
(c)
Covenants. The Issuer
shall not by any action including, without limitation, amending the Certificate
of Incorporation or the by-laws of the Issuer, or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of the Holder
hereof against dilution (to the extent specifically provided herein) or
impairment. Without limiting the generality of the foregoing, the Issuer will
(i) not permit the par value, if any, of its Common Stock to exceed the then
effective Warrant Price, (ii) not amend or modify any provision of the
Certificate of Incorporation or by-laws of the Issuer in any manner that would
adversely affect the rights of the Holders of the Warrants, (iii) take all such
action as may be reasonably necessary in order that the Issuer may validly and
legally issue fully paid and nonassessable shares of Common Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (iv) use its best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this
Warrant.
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(d)
Loss, Theft,
Destruction of Warrants. Upon receipt of evidence satisfactory to the
Issuer of the ownership of and the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will
make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant,
a new Warrant of like tenor and representing the right to purchase the same
number of shares of Common Stock.
(e)
Payment of
Taxes. The Issuer will pay any documentary stamp taxes attributable to
the initial issuance of the Warrant Stock issuable upon exercise of this
Warrant; provided, however, that the
Issuer shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificates
representing Warrant Stock in a name other than that of the Holder in respect to
which such shares are issued.
4.
Approval Required for
New Issuance. Unless otherwise approved by Maxim Group, LLC, for a period
of two years following the Date of Issuance, the Company shall not issue any
securities, as compensation or otherwise, except for the Exempt Issuances (as
defined in the Series A Certificate of Designation).
5.
Fractional
Shares. No fractional shares of Warrant Stock will be issued in
connection with any exercise hereof, but in lieu of such fractional shares, the
Issuer shall, at its option, (a) pay an amount in cash equal to the Warrant
Price multiplied by such fraction or (b) round the number of shares to be issued
upon exercise up to the nearest whole number of shares.
6.
Ownership Cap and
Exercise Restriction. Notwithstanding anything to the contrary set forth
in this Warrant, at no time may the Holder exercise this Warrant if the number
of shares of Common Stock to be issued pursuant to such exercise would cause the
number of shares of Common Stock beneficially owned by the Holder at such time
to exceed, when aggregated with all other shares of Common Stock owned by the
Holder and its affiliates at such time, the number of shares of Common Stock
which would result in the Holder, its affiliates, any investment manager having
discretionary investment authority over the accounts or assets of the Holder and
its affiliates, or any other persons whose beneficial ownership of Common Stock
would be aggregated for purposes of Section 13(d) and Section 16 of the Exchange
Act, beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules thereunder) in excess of 4.9% of the then issued and
outstanding shares of Common Stock; provided, however, that upon
the Holder providing the Issuer with sixty-one (61) days notice (pursuant to
this certificate) (the “Waiver Notice”) that
the Holder would like to waive this Section 6 with regard to any or all shares
of Common Stock issuable upon exercise of this Warrant, this Section 6 shall be
of no force or effect with regard to those shares of Common Stock referenced in
the Waiver Notice; provided, further, that during
the sixty-one (61) day period prior to the Termination Date, the Holder may
waive this Section 6 by providing a Waiver Notice at any time during such
sixty-one (61) day period; provided, further, that any
Waiver Notice provided during the sixty-one (61) day period prior to the
Termination Date will not be effective until the Termination Date.
7.
Registration
Rights. The Holder of this Warrant is entitled to the benefit of certain
registration rights with respect to the shares of Warrant Stock issuable upon
the exercise of this Warrant pursuant to that certain Registration Rights
Agreement, of even date herewith, by and among the Issuer and Persons listed on
Schedule I
thereto (the “Registration Rights
Agreement”) and the registration rights with respect to the shares of
Warrant Stock issuable upon the exercise of this Warrant by any subsequent
Holder may only be assigned in accordance with the terms and provisions of the
Registrations Rights Agreement.
8.
Definitions.
For the purposes of this Warrant, the following terms have the following
meanings:
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“Additional Shares of Common
Stock” means all shares of Common Stock issued by the Issuer after the
Original Issue Date, and all shares of Other Common, if any, issued by the
Issuer after the Original Issue Date, except: (i) securities issued (other than
for cash) in connection with a strategic merger, acquisition, or consolidation,
provided that the issuance of such securities in connection with such strategic
merger, acquisition, (ii) securities issued pursuant to the conversion or
exercise of convertible or exercisable securities issued or outstanding on or
prior to the date of the Purchase Agreement or issued pursuant to the Purchase
Agreement (so long as the conversion or exercise price in such securities are
not amended to lower such price and/or adversely affect the Holders) which have
previously been disclosed to the Holder, (iii) the Warrant Stock, (iv)
securities issued in connection with bona fide strategic license agreements or
other partnering arrangements so long as such issuances are not for the purpose
of raising capital, (v) Common Stock issued or the issuance or grants of options
to purchase Common Stock pursuant to the Issuer’s equity incentive plans
outstanding as they exist on the date of the Purchase Agreement, (vi) the
issuance or grants of options to purchase Common Stock to employees, officers or
directors of the Issuer pursuant to any equity incentive plan duly adopted by
the Board or a committee thereof established for such purpose so long as such
issuances in the aggregate do not exceed ten percent (10%) of the total number
of then issued and outstanding shares of Common Stock, and the specified price
at which the options may be exercised is equal to or greater than the Per Share
Market Value as of the date of such grant, (vii) any warrants, shares of Common
Stock or other securities issued to a placement agent and its designees for the
transactions contemplated by the Purchase Agreement, which have been previously
disclosed to the Holder or in any other sales of the Issuer’s securities and any
securities issued in connection with any financial advisory agreements of the
Issuer and the shares of Common Stock issued upon exercise of any such warrants
or conversions of any such other securities and (viii) any warrants, shares of
Common Stock or other securities issued to any advisor or consultant to the
Company that are outstanding as of the date of the Purchase Agreement, or are to
be issued pursuant to the terms of an engagement letter or other contractual
obligation as of the date of the Purchase Agreement, and which have previously
been disclosed to the Holder.
“Board” shall mean the
Board of Directors of the Issuer.
“Capital Stock” means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
“Certificate of
Incorporation” means the Certificate of Incorporation of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.
“Common Stock” means
the Common Stock, $0.001 par value per share, of the Issuer and any other
Capital Stock into which such stock may hereafter be changed.
“Common Stock
Equivalent” means any Convertible Security or warrant, option or other
right to subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Security.
“Convertible
Securities” means evidences of Indebtedness, shares of Capital Stock or
other Securities which are or may be at any time convertible into or
exchangeable for Additional Shares of Common Stock. The term “Convertible
Security” means one of the Convertible Securities.
“Governmental
Authority” means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.
“Holders” mean the
Persons who shall from time to time own any Warrant. The term “Holder” means one
of the Holders.
“Independent
Appraiser” means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing (which may be the firm that regularly examines the financial statements
of the Issuer) that is regularly engaged in the business of appraising the
Capital Stock or assets of corporations or other entities as going concerns, and
which is not affiliated with either the Issuer or the Holder of any
Warrant.
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“Issuer” means Eco
Building International, a Nevada corporation, and its successors.
“Original Issue Date”
means April 27, 2010.
“OTC Bulletin Board”
means the over-the-counter electronic bulletin board.
“Other Common” means
any other Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.
“Outstanding Common
Stock” means, at any given time, the aggregate amount of outstanding
shares of Common Stock, assuming full exercise, conversion or exchange (as
applicable) of all options, warrants and other Securities which are convertible
into or exercisable or exchangeable for, and any right to subscribe for, shares
of Common Stock that are outstanding at such time.
“Person” means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.
“Per Share Market
Value” means on any particular date (a) the last closing price per share
of the Common Stock on such date on the Trading Market or another registered
national stock exchange on which the Common Stock is then listed, or if there is
no closing price on such date, then the closing bid price on such date, or if
there is no closing bid price on such date, then the closing price on such
exchange or quotation system on the date nearest preceding such date, or (b) if
the Common Stock is not listed then on a Trading Market or any registered
national stock exchange, the last closing price for a share of Common Stock in
the over-the-counter market, as reported by the Trading Market or any registered
national stock exchange or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of reporting prices)
at the close of business on such date, or if there is no closing price on such
date, then the closing bid price on such date, or (c) if the Common Stock is not
then reported by the Trading Market or any registered national stock exchange or
in the National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the “Pink
Sheet” quotes for the five (5) Trading Days preceding such date of
determination, or (d) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by an Independent
Appraiser.
The determination of fair market value by an Independent Appraiser shall be
based upon the fair market value of the Issuer determined on a going concern
basis as between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and binding on
all parties. In determining the fair market value of any shares of Common Stock,
no consideration shall be given to any restrictions on transfer of the Common
Stock imposed by agreement or by federal or state securities laws, or to the
existence or absence of, or any limitations on, voting rights.
“Preferred Stock”
means the Company’s Series A Convertible Preferred Stock, $0.001 par value per
share.
“Purchase Agreement”
means the Securities Purchase Agreement dated as of April 27, 2010, among the
Issuer and the Purchasers.
“Purchasers” means the
purchasers of the Units (as defined in the Purchase Agreement), each containing
one share of Preferred Stock and the Warrants issued by the Issuer pursuant to
the Purchase Agreement.
“Securities” means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any Security.
“Security” means one of the Securities.
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“Securities Act” means
the Securities Act of 1933, as amended, or any similar federal statute then in
effect.
“Subsidiary” means any
corporation at least 50% of whose outstanding Voting Stock shall at the time be
owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.
“Term” has the meaning
specified in Section 1 hereof.
“Trading Day” means
(a) a day on which the Common Stock is traded on a Trading Market, or (b) if the
Common Stock is not traded on a Trading Market, a day on which the Common Stock
is quoted in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding its
functions of reporting prices); provided , however , that in the
event that the Common Stock is not listed or quoted as set forth in (a) or (b)
hereof, then Trading Day shall mean any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.
“Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board.
“Voting Stock” means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election of
a majority of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by reason of
the happening of a contingency.
“VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
New York City time to 4:00 p.m. New York City time); (b) if the OTC Bulletin
Board is not a Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC Bulletin Board;
(c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board
and if prices for the Common Stock are then reported in the "Pink Sheets"
published by Pink Sheets, LLC (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (d) in all other cases, the fair market value of a
share of Common Stock as determined by an Independent Appraiser, the fees and
expenses of which shall be paid by the Issuer.
“Warrants” means the
Warrants issued and sold pursuant to the Purchase Agreement, including, without
limitation, this Warrant, and any other warrants of like tenor issued in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c), 2(d) or 2(e) hereof or of any of such other Warrants.
“Warrant Price”
initially means $5.06.
“Warrant Share Number”
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant.
“Warrant Stock” means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.
9.
Other Notices.
In case at any time:
(a)
the Issuer shall make any distributions to the holders of Common Stock;
or
8
(b)
the Issuer shall authorize the granting to all holders of its Common
Stock of rights to subscribe for or purchase any shares of Capital Stock of any
class or other rights; or
(c)
there shall be any reclassification of the Capital Stock of the Issuer;
or
(d)
there shall be any capital reorganization by the Issuer; or
(e)
there shall be any (i) consolidation or merger involving the Issuer or
(ii) sale, transfer or other disposition of all or substantially all of the
Issuer’s property, assets or business (except a merger or other reorganization
in which the Issuer shall be the surviving corporation and its shares of Capital
Stock shall continue to be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a wholly-owned
Subsidiary); or
(f)
there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Issuer or any partial liquidation of the Issuer or
distribution to holders of Common Stock;
then, in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than ten (10) days prior
to the record date or the date on which the Issuer’s transfer books are closed
in respect thereto. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.
10.
Amendment and
Waiver. Any term, covenant, agreement or condition in this Warrant may be
amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), by a written
instrument or written instruments executed by the Issuer and Maxim Group, LLC;
provided, however , that no
such amendment or waiver shall reduce the Warrant Share Number, increase the
Warrant Price, shorten the period during which this Warrant may be exercised or
modify any provision of this Section 10 without the consent of the Holder of
this Warrant. No consideration shall be offered or paid to any person to amend
or consent to a waiver or modification of any provision of this Warrant unless
the same consideration is also offered to all holders of the
Warrants.
11.
Governing Law;
Jurisdiction. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This Warrant shall
not be interpreted or construed with any presumption against the party causing
this Warrant to be drafted. The Issuer and the Holder agree that venue for any
dispute arising under this Warrant will lie exclusively in the state or federal
courts located in New York County, New York, and the parties irrevocably waive
any right to raise forum non conveniens or any other argument that New York is
not the proper venue. The Issuer and the Holder irrevocably consent to personal
jurisdiction in the state and federal courts of the state of New York. The
Issuer and the Holder consent to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Warrant and agree that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 11 shall affect or limit any right to serve process in any other
manner permitted by law. The Issuer and the Holder hereby agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
this Warrant or the Purchase Agreement, shall be entitled to reimbursement for
reasonable legal fees from the non-prevailing party. The parties hereby waive
all rights to a trial by jury.
12.
Notices.
Any notice, demand, request, waiver or other communication required or permitted
to be given hereunder shall be in writing and shall be effective (a) immediately
upon hand delivery, telecopy or facsimile at the address or number designated
below (if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
9
|
If
to the Issuer:
|
Eco
Building International
c/o
City Zone Holdings Limited
Unit
106, Tern Centre, Tower II
251
Queen’s Road
Central
Hong Kong
Attention:
Jianming Hao
Telephone
No.: 86-13828824414
Fax
No.: 86-354-257-1345
|
|
with
copies (which copies
shall
not constitute notice)
to:
|
Anslow
& Jaclin LLP
195
Route 9 South, Suite 204
Manalapan,
NJ 07726
Attn:
Richard I. Anslow, Esq.
Eric
M. Stein, Esq.
Tel.
No.: (732) 409-1212
Fax
No.: (732)
577-1188
|
|
At
the address of such Holder set forth on Exhibit A to this Agreement, with
copies to Holder’s counsel as set forth on Exhibit A or as specified in
writing by such Holder with copies to:
|
|
|
with
copies (which copies
shall
not constitute notice)
to:
|
Gersten
Savage LLP
600
Lexington Avenue, 9th Floor
New
York, NY 10022
Attention:
Jay Kaplowitz, Esq.
Tel.
No.: (212) 752-9700
Fax
No.: (212) 980-5192
|
Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
13.
Warrant
Agent. The Issuer may, by written notice to the Holder of this Warrant,
appoint an agent having an office in New York, New York for the purpose of
issuing shares of Warrant Stock on the exercise of this Warrant pursuant to
subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to
subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
14.
Remedies. The Issuer
stipulates that the remedies at law of the Holder of this Warrant in the event
of any default or threatened default by the Issuer in the performance of or
compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
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15.
Successors and
Assigns. This Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors and assigns of the Issuer, the
Holder hereof and (to the extent provided herein) the Holders of Warrant Stock
issued pursuant hereto, and shall be enforceable by any such Holder or Holder of
Warrant Stock.
16.
Modification
and Severability. If, in any action before any court or agency legally
empowered to enforce any provision contained herein, any provision hereof is
found to be unenforceable, then such provision shall be deemed modified to the
extent necessary to make it enforceable by such court or agency. If any such
provision is not enforceable as set forth in the preceding sentence, the
unenforceability of such provision shall not affect the other provisions of this
Warrant, but this Warrant shall be construed as if such unenforceable provision
had never been contained herein.
17. No Rights as
Stockholders. Prior to the exercise of this Warrant, the Holder shall not
have or exercise any rights as a stockholder of the Issuer by virtue of its
ownership of this Warrant.
18.
Headings. The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
11
IN
WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
| Eco Building International | |||
|
|
By:
|
/s/ | |
| Name: Mr. Jianming Hao | |||
| Title: Chairman and CEO | |||
12
EXERCISE
FORM
SERIES A
WARRANT
Eco
Building International
The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of
________________________________ covered by the within Warrant.
|
Dated:
|
Signature
|
|||
|
Address
|
||||
Number of
shares of Common Stock beneficially owned or deemed beneficially owned by the
Holder on the date of Exercise: _________________________
The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.
The
undersigned intends that payment of the Warrant Price shall be made as (check
one):
Cash
Exercise_______
Cashless
Exercise_______
If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Issuer in
accordance with the terms of the Warrant.
If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________. The Issuer shall pay a
cash adjustment in respect of the fractional portion of the product of the
calculation set forth below in an amount equal to the product of the fractional
portion of such product and the Per Share Market Value on the date of exercise,
which product is ____________.
|
X =
Y - (A)(Y)
|
|
|
|
B
|
Where:
The
number of shares of Common Stock to be issued to the Holder
__________________(“X”).
The
number of shares of Common Stock purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised ___________________________ (“Y”).
The
Warrant Price ______________ (“A”).
The Per
Share Market Value of one share of Common Stock _______________________
(“B”).
13
ASSIGNMENT
FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
|
Dated:
|
Signature
|
|||
|
Address
|
||||
PARTIAL
ASSIGNMENT
FOR VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.
|
Dated:
|
Signature
|
|||
|
Address
|
||||
FOR USE
BY THE ISSUER ONLY:
This
Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
14