Attached files
file | filename |
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8-K - Eco-Trade Corp. | v170351_8k.htm |
EX-3.1 - Eco-Trade Corp. | v170351_ex3-1.htm |
EX-10.1 - Eco-Trade Corp. | v170351_ex10-1.htm |
EX-10.3 - Eco-Trade Corp. | v170351_ex10-3.htm |
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.
Yasheng
Eco-Trade Corporation
Warrant
To Purchase Common Stock
Warrant
No.: 2009-1
|
Issuance
Date: December 30, 2009
|
Number of
Warrant Shares: 306,818,182
Initial
Exercise Price: $0.022 per share
Yasheng
Eco-Trade Corporation, a Delaware corporation (“Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Socius CG II, Ltd., a Bermuda exempted
company, the holder hereof or its designees or assigns (“Holder”), is
entitled, subject to the terms set forth herein, to purchase from the Company,
at the Exercise Price then in effect, upon exercise of this Warrant to Purchase
Common Stock (including any Warrant to Purchase Common Stock issued in exchange,
transfer or replacement hereof, the “Warrant”), at any
time or times after issuance of the Warrant and until 11:59 p.m. Eastern time on
the fifth anniversary of the Tranche Notice Date for each applicable Warrant
Tranche, subject to acceleration pursuant to Section 3.3 hereof,
that number of duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock set forth above and as adjusted herein (the “Warrant Shares”);
provided, however, that this
Warrant may only be exercised, from time to time, for that number of shares of
Common Stock equal to 135% of the cumulative amount of Tranche Purchase Prices
under Tranche Notices delivered prior to or on the date of
exercise. Except as otherwise defined herein, capitalized terms in
this Warrant shall have the meanings set forth in ARTICLE 13
hereof.
1
This
Warrant is issued pursuant to the Preferred Stock Purchase Agreement dated
December 30, 2009, by and among the Company and the investor referred to therein
(the “Purchase Agreement”).
This
Warrant shall consist of and be exercisable in tranches (each, a “Warrant
Tranche”), with a separate tranche being created upon each delivery of a Tranche
Notice under the Purchase Agreement. Each Warrant Tranche will grant
to the Holder the right, for a five-year period commencing on the applicable
Tranche Notice Date, to exercise the Warrant and purchase up to a number of
shares of Common Stock with an Aggregate Exercise Price equal to 135% of the
Tranche Purchase Price for the applicable Tranche Notice. Attached to
this Warrant is a schedule (the “Warrant Tranche Schedule”) that sets forth the
issuance date, the number of Warrant Shares, and the Exercise Price for each
Warrant Tranche. The Warrant Tranche Schedule shall be updated by the
Company, with an updated copy provided to the Holder, promptly following each
exercise of this Warrant. No portion of this Warrant shall vest or be
exercisable except under the Warrant Tranches.
ARTICLE 1
EXERCISE
OF WARRANT.
1.1 Mechanics
of Exercise.
1.1.1 Subject
to the terms and conditions hereof, this Warrant may be exercised by the Holder
on any day on or after the Issuance Date, in whole or in part, by (i) delivery
of a written notice to the Company, in the form attached hereto as Appendix 1
(the “Exercise Notice”), of the Holder’s election to exercise this Warrant, and
(ii) 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”), with such payment made, at
Investor’s option, (x) in cash or by wire transfer of immediately available
funds, (y) by the issuance and delivery of a recourse promissory note
substantially in the form attached hereto as Appendix 2 (each, a “Recourse
Note”), or (z) if applicable, by cashless exercise pursuant to Section
1.3.
1.1.2 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.
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1.1.3 On
the Trading Day on which the Company has received each of the Exercise Notice
and the Aggregate Exercise Price (the “Exercise Delivery Documents”) from the
Holder by 6:30 p.m. Eastern time, or on the next Trading Day if the Exercise
Delivery Documents are received after 6:30 p.m. Eastern time or on a non-Trading
Day (in each case, the “Exercise Delivery Date”), the Company shall transmit (i)
a facsimile acknowledgment of confirmation of receipt of the Exercise Delivery
Documents to the Holder, and (ii) an electronic copy of its share issuance
instructions to the Holder and to the Company’s transfer agent (the “Transfer
Agent”), with such transmissions to comply with the notice provisions contained
in Section 6.2 of the Purchase Agreement, and shall instruct and authorize the
Transfer Agent to credit such aggregate number of freely-tradable Warrant Shares
to which the Holder is entitled to receive upon such exercise to the Holder’s or
its designee’s balance account with The Depository Trust Company (DTC) through
the Fast Automated Securities Transfer (FAST) Program through its Deposit
Withdrawal Agent Commission (DWAC) system, with such credit to occur no later
than 12:00 p.m. Eastern Time on the Trading Day following the Exercise Delivery
Date, time being of the essence; provided, however, that if the Warrant Shares
are not credited as DWAC Shares by 12:00 p.m. Eastern Time on the Trading Day
following the Exercise Delivery Date, then the Tranche Closing Date applicable
to the Exercise Notice shall be extended by one Trading Day for each Trading Day
that timely credit of DWAC Shares is not made.
1.1.4 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. Any
Warrant delivered in connection with a Tranche Notice and exercised by Holder
shall be deemed exercised (i) on the Tranche Notice Date, if exercised by 6:30
p.m. Eastern time on the Tranche Notice Date, or (ii) on the next Trading Day,
if exercised by Investor after 6:30 p.m. Eastern Time on the Tranche Notice Date
or on any other date, in each case with Holder deemed to be a holder of record
as of such date.
1.1.5 If
this Warrant is exercised and the number of Warrant Shares represented by this
Warrant is greater than the number of Warrant Shares being acquired upon such
exercise, then the Company shall, as soon as practicable and in no event later
than one Trading Day after such exercise, update the Tranche Exercise Schedule
to reflect the revised number of Warrant Shares for which this Warrant is then
exercisable and deliver a copy of the updated Tranche Exercise Schedule to the
Holder. 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.
1.2 Adjustments
to Exercise Price and Number of Shares. In addition to other
adjustments specified herein, the Exercise Price of this Warrant and the number
of shares of Common Stock issuable upon exercise shall be adjusted as
follows:
1.2.1 Exercise
Price. The “Exercise Price” per share of Common Stock
underlying this Warrant, subject to further adjustment as provided herein, shall
be as follows: (i) with
respect to the portion of this Warrant issued on the Effective Date and until
the first Tranche Notice Date, the amount per Warrant Share set forth on the
face of this Warrant, which is equal to Closing Bid Price for the Common Stock
on the Trading Day prior to the Effective Date, and (ii) with respect to the
portion of this Warrant that becomes exercisable on any Tranche Notice Date
(including the first Tranche Notice Date), an amount per Warrant Share equal to
the Closing Bid Price of a share of Common Stock on such Tranche Notice
Date.
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1.2.2 Number of
Shares. The number of Warrant Shares underlying this Warrant
and each Warrant Tranche, subject to further adjustment as provided herein,
shall be as follows: (i) with respect to the portion of this Warrant issued on
the Effective Date and until the first Tranche Notice Date, the number of shares
set forth on the face of this Warrant, which is a number of shares of Common
Stock equal to the Maximum Placement multiplied by 135%, with the resulting sum
divided by the Closing Bid Price of a share of Common Stock on the Trading Day
prior to the Effective Date, and (ii) with respect to the portion of this
Warrant issued on any Tranche Notice Date including the first Tranche Notice
Date, a number of shares equal to the Tranche Purchase Price set forth in the
applicable Tranche Notice multiplied by 135%, with the resulting sum divided by
the Closing Bid Price of a share of Common Stock on the Tranche Notice
Date. For example, if the Tranche Purchase Price is $1,000,000 and
the Closing Bid Price is $0.50, then the number of Warrant Shares underlying
that Warrant Tranche shall be $1,000,000 x 135% = $1,350,000 divided by $0.50 =
2,700,000 shares of Common Stock. On each Tranche Notice Date, the
number of Warrant Shares underlying the related Warrant Tranche shall vest and
become exercisable, and the aggregate number of Warrant Shares underlying this
Warrant that are currently exercisable shall automatically adjust up or down to
account for the change in the number of Warrant Shares covered by the new
Warrant Tranche and for any Warrant Shares issued upon any prior or simultaneous
exercise of this Warrant. If at any time the Holder reasonably
believes that the number of Warrant Shares included in the Registration
Statement is not sufficient to cover all exercises under this Warrant, then the
Company shall amend such Registration Statement to include the additional number
of Warrant Shares that may be required to provide such coverage.
1.3 Cashless
Exercise. Notwithstanding anything contained herein to the
contrary, if at any time there is not a current, valid and effective
registration statement covering the Warrant Shares that are the subject of the
Exercise Notice (the “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 = (B-C) x
A
B
For
purposes of the foregoing formula:
A = the
total number of shares with respect to which this Warrant is then being
exercised.
B = the
average of the Closing Sale Prices 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 = the
Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.
1.4 Company’s
Failure to Timely Deliver Securities. If the Company shall
fail for any reason or for no reason to credit to the Holder’s balance account
with DTC, by 12:00 p.m. Eastern time on the Trading Day following the Exercise
Delivery Date, the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise of this Warrant, then, in addition to all
other remedies available to the Holder, the Company shall pay in cash to the
Holder on each day after such Trading Day that the issuance of such shares of
Common Stock is not timely effected an amount equal to 1.5% of the product of
(A) the sum of the number of shares of Common Stock not issued to the Holder on
a timely basis and to which the Holder is entitled and (B) the Closing Bid Price
of the shares of Common Stock on the Trading Day immediately preceding the last
possible date which the Company could have issued such shares of Common Stock to
the Holder without violating Section 1.1. In addition to the
foregoing, if after the Company’s receipt of an Exercise Notice the Company
shall fail to timely (pursuant to Section 1.1.3 hereof) 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 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, then the Company shall, within one Trading Day 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 credit such Holder’s balance
account with DTC for the number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise hereunder and to issue such Warrant Shares
shall terminate, or (ii) promptly honor its obligation to credit such Holder’s
balance account with DTC for the number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise hereunder 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 sold by Holder in satisfaction of its
obligations, times (B) the Closing Bid Price on the date of
exercise.
1.5 Exercise
Limitation. Notwithstanding any other provision, at no time
may the Holder (a) exercise this Warrant such that the number of Warrant Shares
to be received pursuant to such exercise exceeds 135.0% of the aggregate of all
Tranche Purchase Prices under and in connection with all Tranche Notices
delivered pursuant to the Purchase Agreement prior to the date of exercise; or
(b) exercise this Warrant such that the number of Warrant Shares to be received
pursuant to such exercise, aggregated with all other shares of Common Stock then
owned by the Holder beneficially or deemed beneficially owned by the Holder,
would result in the Holder owning more than 4.99% of all of such Common Stock as
would be outstanding on the date of exercise, as determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. In addition, as of any date, the aggregate number of shares of
Common Stock into which this Warrant is exercisable within 61 days, together
with all other shares of Common Stock then beneficially owned (as such term is
defined in Rule 13(d) under the Exchange Act) by Holder and its affiliates,
shall not exceed 9.99% of the total outstanding shares of Common Stock as of
such date.
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1.6 Activity
Restrictions. For so long as Holder or any of its affiliates
holds this Warrant or any Warrant Shares, neither Holder nor any affiliate
will: (i) vote any shares of Common Stock owned or controlled by it,
solicit any proxies, or seek to advise or influence any Person with respect to
any voting securities of the Company; (ii) engage or participate in any actions,
plans or proposals which relate to or would result in (a) acquiring additional
securities of the Company, alone or together with any other Person, which would
result in beneficially owning or controlling more than 9.99% of the total
outstanding Common Stock or other voting securities of the Company, (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving Company or any of its subsidiaries, (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board, (e) any material
change in the present capitalization or dividend policy of the Company, (f) any
other material change in the Company’s business or corporate structure,
including but not limited to, if the Company is a registered closed-end
investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940, (g) changes in the Company’s charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any Person, (h) causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Act, or (j) any action, intention, plan or arrangement similar
to any of those enumerated above; or (iii) request the Company or its directors,
officers, employees, agents or representatives to amend or waive any provision
of this Section
1.6.
1.7 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.
1.8 Insufficient
Authorized Shares. If at any time while any portion of this
Warrant remains 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 this Warrant at least a number of shares
of Common Stock equal to 110% of the number of shares of Common Stock as shall
from time to time be necessary to effect the exercise of the portion of the
Warrant then outstanding (the “Required Reserve Amount”) (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 portion of
the Warrant 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 90 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.
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ARTICLE 2
ADJUSTMENT UPON SUBDIVISION
OR COMBINATION OF COMMON STOCK
If the
Company at any time on or after the Issuance 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 Issuance 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 ARTICLE 2 shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
ARTICLE 3
PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS
3.1 Purchase
Rights. In addition to any adjustments pursuant to ARTICLE 2
above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) immediately before
the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights.
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3.2 Subsequent
Equity Sales. In addition to any adjustments made pursuant to ARTICLE 2
above, if the Company or any Subsidiary thereof, as applicable, at any time
while this Warrant is outstanding, shall sell or grant any option to purchase,
or sell or grant any right to reprice, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other disposition)
any Common Stock or Common Stock Equivalents entitling any Person to acquire
shares of Common Stock, at an effective price per share less than the then
Exercise Price (such lower price, the “Base Share Price” and such issuances,
collectively, a “Dilutive Issuance”), then the Exercise Price shall be reduced
and only reduced to equal the Base Share Price and the number of Warrant Shares
issuable hereunder shall be increased such that the aggregate Exercise Price
payable hereunder, after taking into account the decrease in the Exercise Price,
shall be equal to the aggregate Exercise Price prior to such
adjustment. Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued. If the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to
receive shares of Common Stock at an effective price per share which is less
than the Exercise Price, such issuance shall be deemed to have occurred for less
than the Exercise Price on such date of the Dilutive
Issuance. Notwithstanding the foregoing, no adjustments shall be
made, paid or issued under this Section 3.2 in respect of an Exempt Issuance,
subject to adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that occur
after the date of the Purchase Agreement. The Company shall notify the Holder in
writing, no later than the Trading Day following the issuance of any Common
Stock or Common Stock Equivalents subject to this Section 3.2, indicating
therein the applicable issuance price, or applicable reset price, exchange
price, conversion price and other pricing terms (such notice the “Dilutive
Issuance Notice”). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3.2, upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise.
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3.3 Fundamental
Transactions. The Company shall not enter into or be party to
a Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance with the
provisions of this Section 3.3 pursuant to written agreements in form and
substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements to deliver
to each Holder of this Warrant in exchange for such Warrant a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by
the terms of such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and satisfactory to the Required Holders. Upon the
occurrence of any Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of the Fundamental Transaction, the
Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon exercise of this Warrant at any time after the consummation of the
Fundamental Transaction, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property) purchasable upon the exercise of
this Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights) which the Holder would have been entitled
to receive upon the happening of such Fundamental Transaction had this Warrant
been converted immediately prior to such Fundamental Transaction, as adjusted in
accordance with the provisions of this Warrant. In addition to and
not in substitution for any other rights hereunder, prior to the consummation of
any Fundamental Transaction pursuant to which holders of shares of Common Stock
are entitled to receive securities or other assets with respect to or in
exchange for shares of Common Stock (a “Corporate Event”), the Company shall
make appropriate provision to insure that the Holder will thereafter have the
right to receive upon an exercise of this Warrant at any time after the
consummation of the Fundamental Transaction, in lieu of the shares of the Common
Stock (or other securities, cash, assets or other property) purchasable upon the
exercise of this Warrant prior to such Fundamental Transaction, such shares of
stock, securities, cash, assets or any other property whatsoever (including
warrants or other purchase or subscription rights) which the Holder would have
been entitled to receive upon the happening of such Fundamental Transaction had
this Warrant been exercised immediately prior to such Fundamental Transaction;
provided, however, that in the event the Fundamental Transaction involves the
issuance of cash or freely tradable securities by an issuer listed on the New
York Stock Exchange or the Nasdaq Stock Market, then the ability to exercise
this Warrant shall expire on the consummation of that Fundamental
Transaction. Provision made pursuant to the preceding sentence shall
be in a form and substance reasonably satisfactory to the Required
Holders. The provisions of this Section 3.3 shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the exercise of
this Warrant.
3.4 Notwithstanding
the foregoing Section 3.3, in the event of a Fundamental Transaction other than
one in which the Successor Entity is a Public Successor Entity that assumes this
Warrant such that this Warrant shall be exercisable for the publicly traded
common stock of such Public Successor Entity, at the request of the Holder
delivered before the 90th day after the effective date of such Fundamental
Transaction, the Company (or the Successor Entity) shall purchase this Warrant
from the Holder by paying to the Holder, within five (5) Trading Days after such
request (or, if later, on the effective date of the Fundamental Transaction),
cash in an amount equal to the value of the remaining unexercised portion of
this Warrant on the date of such consummation, which value shall be determined
by use of the Black Scholes Option Pricing Model using a volatility equal to the
100 day average historical price volatility prior to the date of the public
announcement of such Fundamental Transaction.
9
ARTICLE 4
NONCIRCUMVENTION
The
Company hereby covenants and agrees that the Company will not, by amendment of
its certificate or articles of incorporation, articles of association, bylaws,
or any other organization documents, or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all
action as may be required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the Company
(i) shall not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, (ii)
shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any
portion of this Warrant remains outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued shares of Common
Stock, solely for the purpose of effecting the exercise of this Warrant, 110% of
the number of shares of Common Stock as shall from time to time be necessary to
effect the exercise of this Warrant then outstanding (without regard to any
limitations on exercise).
ARTICLE 5
WARRANT HOLDER NOT DEEMED A
STOCKHOLDER
Except as
otherwise specifically provided herein, the Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on the Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this ARTICLE 5, the Company shall provide
the Holder with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
ARTICLE 6
REISSUANCE OF
WARRANTS
6.1 Transfer
of Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 6.4), registered as the Holder may request, representing
the right to purchase the number of Warrant Shares being transferred by the
Holder and, if less then the total number of Warrant Shares then underlying this
Warrant is being transferred, a new Warrant (in accordance with Section 6.4) to
the Holder representing the right to purchase the number of Warrant Shares not
being transferred.
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6.2 Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in
accordance with Section 6.4) representing the right to purchase the Warrant
Shares then underlying this Warrant.
6.3 Exchangeable
for Multiple Warrant. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 6.4) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, that no Warrant for fractional shares of
Common Stock shall be given.
6.4 Issuance
of New Warrant. Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be
of like tenor with this Warrant, (ii) shall represent, as indicated on the face
of such new Warrant, the right to purchase the Warrant Shares then underlying
this Warrant (or in the case of a new Warrant being issued pursuant to Section
6.1 or Section 6.3, the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrant
issued in connection with such issuance, does not exceed the number of Warrant
Shares then underlying this Warrant), (iii) shall have an issuance date, as
indicated on the face of such new Warrant which is the same as the Issuance
Date, and (iv) shall have the same rights and conditions as this
Warrant.
ARTICLE 7
NOTICES
Whenever
notice is required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with Section 6.2 of the
Purchase Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant, including in
reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the
Company will give written notice to the Holder (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least fifteen days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the shares of Common Stock,
(B) with respect to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
to holders of shares of Common Stock as such or (C) for determining rights to
vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the
Holder.
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ARTICLE 8
AMENDMENT AND
WAIVER
Except as
otherwise provided herein, the provisions of this Warrant may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the Required Holders; provided that except as set forth in this
Warrant no such action may increase the exercise price of any Warrant or
decrease the number of shares or class of stock obtainable upon exercise of any
Warrant without the written consent of the Holder. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of this Warrant.
ARTICLE 9
GOVERNING
LAW
This
Warrant shall be governed by and construed and enforced in accordance with, and
all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.
ARTICLE 10
CONSTRUCTION;
HEADINGS
This
Warrant shall be deemed to be jointly drafted by the Company and the Holder and
shall not be construed against any person as the drafter hereof. The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.
ARTICLE 11
DISPUTE
RESOLUTION
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 submit the
disputed determinations or arithmetic calculations via facsimile within 2
Trading Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder. If the Holder and the Company are
unable to agree upon such determination or calculation of the Exercise Price or
the Warrant Shares within three Trading Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within 2 Trading Days submit via facsimile (a) the disputed determination of the
Exercise Price or arithmetic calculation to an independent, reputable investment
bank or independent registered public accounting firm selected by Holder subject
to Company’s approval, which may not be unreasonably withheld or delayed, or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s
independent registered public accounting firm. The Company shall
cause at its expense the investment bank or the accountant, as the case may be,
to perform the determinations or calculations and notify the Company and the
Holder of the results no later than 3 Trading Days from the time it receives the
disputed determinations or calculations. Such investment bank’s or
accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.
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ARTICLE 12
REMEDIES, OTHER OBLIGATIONS,
BREACHES AND INJUNCTIVE RELIEF
The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder right to pursue actual damages for
any failure by the Company to comply with the terms of this
Warrant. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company
therefore agrees that, in the event of any such breach or threatened breach, the
holder of this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being
required.
ARTICLE 13
DEFINITIONS
For
purposes of this Warrant, in addition to the terms defined elsewhere herein, the
following terms shall have the following meanings:
13.1 “Bloomberg” means
Bloomberg Financial Markets.
13.2 “Closing Bid Price”
and “Closing Sale Price” means, for any security as of any date, the last
closing bid price and last closing trade price, respectively, for such security
on the Trading Market, as reported by Bloomberg, or, if the Trading Market
begins to operate on an extended hours basis and does not designate the closing
bid price or the closing trade price, as the case may be, then the last bid
price or last trade price, respectively, of such security prior to 4:00 p.m.,
Eastern time, as reported by Bloomberg, or, if the Trading Market is not the
principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid
prices, or the ask prices, respectively, of any market makers for such security
as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale
Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case
may be, of such security on such date shall be the fair market value as mutually
determined by the Company and Holder. If the Company and Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to ARTICLE
11. All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period.
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13.3 “Common Stock” means
(i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii)
any share capital into which such Common Stock shall have been changed or any
share capital resulting from a reclassification of such Common
Stock.
13.4 “Common Stock Deemed
Outstanding” means, at any given time, the number of shares of Common
Stock actually outstanding at such time, plus the number of shares of Common
Stock deemed to be outstanding pursuant to Section 3.1 hereof regardless of
whether the Options or Convertible Securities are actually exercisable at such
time, but excluding any shares of Common Stock owned or held by or for the
account of the Company or issuable upon exercise of this Warrant.
13.5 “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
13.6 “Convertible
Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for shares of
Common Stock.
13.7 “DWAC Shares” means
all Warrant Shares issued or issuable to Holder or any Affiliate, successor or
assign of Holder pursuant to this Warrant, all of which shall be (a) issued in
electronic form, (b) freely tradable and without restriction on resale, and (c)
timely credited by Company to the specified Deposit/Withdrawal at Custodian
(DWAC) account with DTC under its Fast Automated Securities Transfer (FAST)
Program or any similar program hereafter adopted by DTC performing substantially
the same function, in accordance with instructions issued to and countersigned
by the Transfer Agent of the Company.
13.8 “Eligible Market”
means the Trading Market, The New York Stock Exchange, Inc., The NASDAQ Global
Select Market, The NASDAQ Global Market, The NASDAQ Capital Market, the NYSE
Amex or the OTC Bulletin Board, but does not include the Pink
Sheets.
13.9 “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities (except as a result of
anti-dilution provisions therein), and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equity holders of a Person) which is, itself or
through its subsidiaries, an operating company or an asset in a business
synergistic with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not
include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is
investing in securities.
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13.10 “Fundamental
Transaction” has the meaning set forth in the Purchase
Agreement.
13.11 “Maximum Placement”
has the meaning set forth in the Purchase Agreement.
13.12 “Options” means any
rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.
13.13 “Parent Entity” of a
Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted or listed
on an Eligible Market, or, if there is more than one such Person or Parent
Entity, the Person or Parent Entity with the largest public market
capitalization as of the date of consummation of the Fundamental
Transaction.
13.14 “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.
13.15 “Public Successor
Entity” means a Successor Entity that is a publicly traded corporation
whose stock is quoted or listed for trading on an Eligible Market.
13.16 “Required Holders”
means the Holders of this Warrant representing at least a majority of shares of
Common Stock underlying this Warrant as then outstanding.
13.17 “Successor Entity”
means the Person (or, if so elected by the Required Holders, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or the Person
(or, if so elected by the Required Holders, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
13.18 “Trading Day” means
any day on which the Common Stock is traded on an Eligible Market; provided that
it shall not include any day on which the Common Stock (a) is suspended from
trading, or (b) is scheduled to trade on such exchange or market for less than 5
hours.
13.19 “Trading Market” means
the OTC Bulletin Board, the NASDAQ Capital Market, the NASDAQ Global Market, the
NASDAQ Global Select Market, the NYSE Amex, or the New York Stock Exchange,
whichever is at the time the principal trading exchange or market for the Common
Stock, but does not include the Pink Sheets inter-dealer electronic quotation
and trading system.
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13.20 “Tranche Closing Date”
has the meaning set forth in the Purchase Agreement.
13.21 “Tranche Notice” has
the meaning set forth in the Purchase Agreement.
13.22 “Tranche Notice Date”
has the meaning set forth in the Purchase Agreement.
13.23 “Tranche Purchase
Price” has the meaning set forth in the Purchase Agreement.
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IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to
be duly executed as of the Issuance Date set out above.
YASHENG
ECO-TRADE CORPORATION
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By:
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/s/Yossi
Attia
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Name:
Yossi Attia
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Title: CEO
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