THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT ONE OF THE FOLLOWING (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN...
THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT ONE OF THE FOLLOWING (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY
TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED,
(iii)
RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL
AUTHORITIES,
OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS
WARRANT.
WARRANT
TO PURCHASE 12,500 SHARES
OF
COMMON STOCK
WARRANT
NO. W-8
THIS
CERTIFIES THAT, once this warrant becomes effective, for value received, Equity
11, Ltd. and its assigns are entitled to subscribe for and purchase 12,500
shares common stock (as adjusted pursuant to Section 4 hereof, the "SHARES") of the fully paid
and nonassessable common stock, par value $0.001 per share ("COMMON STOCK"), of Ecology
Coatings, Inc., a Nevada corporation (the "COMPANY"), at the price of
$0.75 per share (such price and such other price as shall result, from time to
time, from the adjustments specified in Section 4 hereof is herein referred to
as the "WARRANT
PRICE"), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term "DATE OF GRANT" means August
28, 2008, and (b) the term "OTHER WARRANTS" means any
other warrants issued by the
Company in connection with the transaction with respect to which this
Warrant was issued, and any warrant issued upon transfer or partial exercise of
this Warrant. This Warrant shall become effective upon Equity 11, Ltd.’s
acquisition of an additional 30 Convertible Preferred Shares under the
Securities Purchase Agreement bringing its total acquisition of Convertible
Preferred Shares to 2183. The term "Warrant" as used herein
shall be deemed to include Other Warrants unless the context clearly requires
otherwise.
1. Term.
The purchase right represented by this Warrant is exercisable, in whole or in
part, at any time and from time to time from the Date of Grant through five (5)
years after the Date of Grant.
2. Method
of Exercise; Payment; Issuance of New Warrant. Subject to Section 1 and 4
hereof, the purchase right represented by this Warrant may be exercised by the
holder hereof, in whole or in part and from time to time, at the election of the
holder hereof, by (a) the surrender of this Warrant (with the notice of exercise
substantially in the form attached hereto as Exhibit A-1 duly completed and
executed) at the principal office of the Company and
by the payment to the
Company, by certified or bank check, or by wire transfer to an account
designated by the Company
(a "WIRE TRANSFER") of
an amount that is $.75 multiplied by the number of Shares then being purchased,
or (b) if in connection with a registered public offering of the Company's
securities, the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A-2 duly completed and executed) at the principal
office of the Company together with notice of arrangements reasonably satisfactory to
the Company for payment to
the Company either by
certified or bank check or by Wire Transfer from the proceeds of the sale of
shares to be sold by the holder in such public offering of an amount equal to
the then applicable Warrant Price per share multiplied by the number of Shares
then being purchased, or (c) exercise of the "net issuance" right provided
for in Section 10.2 hereof. The person or persons in whose name(s) any
certificate(s) representing the Shares shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the shares
represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the holder hereof as soon as practicable and, if requested by the
holder of this Warrant, the
Company shall cause its transfer agent to deliver the certificate
representing Shares issued upon exercise of this Warrant to a broker or other
person (as directed by the holder exercising this Warrant) within the time
period required to settle any trade made by the holder after exercise of this
Warrant.
3. Stock
Fully Paid; Reservation of Shares. All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant
to the terms and conditions herein, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue
thereof. During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times
have authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.
4.
Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a)
Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the Company, or
such successor or purchasing corporation, as the case may be, shall duly execute
and deliver to the holder of this Warrant a new Warrant (in form and
substance satisfactory to the holder of this Warrant), or the Company shall make
appropriate provision without the issuance of a new Warrant, so that the holder
of this Warrant shall have the right to receive upon exercise of this Warrant,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the shares of
Common
Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of the number of shares of Common
Stock then purchasable under this Warrant. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications, changes, mergers and
transfers.
(b)
Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its
outstanding shares of Common Stock, the Warrant Price shall be proportionately
decreased and the number of Shares issuable hereunder shall
be proportionately increased in the case of a subdivision or the
Warrant Price shall be proportionately increased and the number of Shares
issuable hereunder shall be proportionately decreased in the case of a
combination.
(c) Stock
Dividends and Other Distributions. If the Company at any time while
this Warrant is outstanding and unexpired shall (i) pay a dividend with respect
to its Common Stock payable in Common Stock, then the Warrant Price shall be
adjusted, from and after the date of determination of stockholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of determination by a
fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(B) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; or (ii) make any
other distribution with respect to Common Stock (except any distribution
specifically provided for in Sections 4(a) and 4(b)), then, in each such case,
provision shall be made by
the Company such
that the holder of this Warrant shall receive upon exercise of this Warrant a
proportionate share of any such dividend or distribution as though it were the
holder of the Shares as of the record date fixed for the determination of the
shareholders of the Company entitled to receive
such dividend or distribution.
(d)
Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the
number of Shares purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and the denominator of which shall be the Warrant Price immediately
thereafter.
5. Notice
of Adjustments. Except for the circumstances of Section 4(a), whenever the
Warrant Price or the number of Shares purchasable hereunder shall be adjusted
pursuant to Section 4 hereof, the Company shall make a certificate signed by its
chief executive officer, chief financial officer or any vice president setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant at such holder's last known address.
6.
Fractional Shares. No fractional shares of Common Stock will be
issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash
payment therefore based on the fair market value of the Common Stock on the date
of exercise as reasonably determined in good faith by the Company's Board of Directors.
7.
Compliance with Securities Act; Disposition of Warrant or Shares of Common
Stock.
(a)
Compliance with Securities Act. The holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the Shares to be issued upon exercise
hereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant, or any Shares except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "ACT") or any applicable
state securities laws. Upon exercise of this Warrant, unless the Shares being
acquired are registered under the Act and any applicable state securities laws
or an exemption from such registration is available, the holder hereof shall
confirm in writing that the Shares so purchased are being acquired for
investment and not with a view toward distribution or resale in violation of the
Act and shall confirm such other matters related thereto as may be reasonably
requested by the
Company. This
Warrant and all Shares issued upon exercise of this Warrant (unless registered
under the Act and any applicable state securities laws) shall be stamped or
imprinted with a legend in substantially the following form:
"THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO
SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT ONE OF THE FOLLOWING (i) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER
EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY, THAT
SUCH
REGISTRATIONS
ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING
WITH
THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE
SECURITIES
WERE ISSUED, DIRECTLY OR INDIRECTLY."
This
legend shall be removed by
the Company, upon
the request of a holder, at such time as the restrictions on the transfer of the
applicable security shall have terminated. In addition, in connection with the
issuance of this Warrant, the holder specifically represents to the Company by acceptance of this
Warrant as follows:
(1) The
holder is aware of the
Company's business
affairs and financial condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof in
violation of the Act.
(2) The
holder understands that this Warrant has not been registered under the Act in
reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of the holder's investment intent as
expressed herein.
(3) The
holder further understands that this Warrant must be held indefinitely unless
subsequently registered under the Act and qualified under any applicable state
securities laws, or unless exemptions from registration and qualification are
otherwise available. The holder is aware of the provisions of Rule 144,
promulgated under the Act.
(4) The
holder is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated
under the Act.
(b)
Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares acquired pursuant to the exercise of
this Warrant prior to registration of such Warrant or Shares, the holder hereof
agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of such
holder's counsel, or other evidence satisfactory to the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state securities law then in
effect) of this Warrant or the Shares and indicating whether or not under the
Act certificates for this Warrant or the Shares to be sold or otherwise disposed
of require any restrictive legend as to applicable restrictions on
transferability in order to ensure compliance with such law. Upon receiving such
written notice and reasonably satisfactory opinion or other evidence, the Company, as promptly as
practicable but no later than fifteen (15)days after receipt of the written
notice, shall notify such holder that such holder may sell or otherwise dispose
of this Warrant or such Shares, all in accordance with the terms of the notice
delivered to the
Company. If a
determination has been made pursuant to this Section 7(b) that the opinion of
counsel for the holder or other evidence is not reasonably satisfactory to the
Company,
the Company shall
so notify the holder promptly with details thereof after such determination has
been made. Notwithstanding the foregoing, this Warrant or such Shares may, as to
such federal laws, be offered, sold or otherwise disposed of in accordance with
Rule 144 or 144A under the Act, provided that the Company shall have been
furnished with such information as the Company may reasonably request to provide
a reasonable assurance that the provisions of Rule 144 or 144A have been
satisfied. Each certificate representing this Warrant or the Shares thus
transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend
as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop
transfer instructions to its transfer agent in connection with such
restriction.
(c)
Applicability of Restrictions. The restrictive legend described in this Warrant
and the requirements of Section 7(b) above shall apply to any transfer or grant
of a security interest in this Warrant (or the Common Stock obtainable upon
exercise thereof) or any part hereof (i) to a partner of the holder if the
holder is a partnership or to a member of the holder if the holder is a limited
liability company, (ii) to a partnership of which the holder is a partner or a
limited liability company of which the holder is a member, or (iii) to any
affiliate of the holder if the holder is a corporation; provided, however, in
any such transfer, if applicable, the transferee shall on the Company's request agree in writing to
be bound by the terms of this Warrant as if an original holder
hereof.
8. Rights
as Shareholders; Information. No holder of this Warrant, as
such,
shall be entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other securities which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until this Warrant shall
have been exercised and the Shares purchasable upon the exercise hereof shall
have become deliverable, as provided herein. Notwithstanding the foregoing, the
Company will transmit to the holder of this Warrant such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with
the distribution thereof to the shareholders.
9.
Additional Rights. The
Company shall
provide the holder of this Warrant with at least twenty (20) days' written
notice prior to the closing thereof of the terms and conditions of any of the
following transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the
Company), or (iii) any transaction (including a merger or other
reorganization) or series of related transactions, in which more than 50% of the
voting power of the
Company is disposed of.
10.
Representations and Warranties. The Company represents and warrants to
the holder of this Warrant as follows:
(a) This
Warrant has been duly authorized and executed by the Company and is a valid and
binding obligation of the
Company enforceable
in accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency, moratorium, reorganization and the relief of debtors and
the rules of law or principles at equity governing specific performance,
injunctive relief and other equitable remedies (regardless of whether
enforcement is sought in equity or at law);
(b) The
Shares have been duly authorized and reserved for issuance by the Company and, when issued in
accordance with the terms hereof will be validly issued, fully paid and
non-assessable;
(c) The
execution and delivery of this Warrant are not, and the issuance of the Shares
upon exercise of this Warrant in accordance with the terms hereof will not be,
inconsistent with the
Company's
certificate of incorporation or by-laws, do not and will not contravene
any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
material indenture,
mortgage, contract or
other instrument of which the
Company is a party or by which it is bound or require the consent or
approval of, the giving of notice to, the registration or filing with or the
taking of any action in respect of or by, any Federal, state or local government
authority or agency or other person, except for the filing of notices pursuant
to federal and state securities laws, which filings will be effected by the time
required thereby; and
(d) There
are no actions, suits, audits, investigations or proceedings pending or, to the
knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.
11.
Modification and Waiver. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the same is sought.
12.
Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the Company at the address indicated
therefore on the signature page of this Warrant.
13.
Binding Effect on Successors. This Warrant shall be binding upon any corporation
succeeding the Company by
merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the
obligations of the Company
relating to the Shares issuable upon the exercise or conversion of this Warrant
shall survive the exercise, conversion and termination of this Warrant and all
of the covenants and agreements of the Company shall inure to the
benefit of the successors and assigns of the holder hereof.
14. Lost
Warrants or Stock Certificates. The Company covenants to the holder
hereof that, upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such Warrant or stock certificate,
the Company will make and deliver a
new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
15.
Descriptive Headings. The descriptive headings of the several paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant. The language in this Warrant shall be construed as to its fair meaning
without regard to which party drafted this Warrant.
16.
Governing Law. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Michigan.
17.
Survival of Representations, Warranties and Agreements. All representations and
warranties of the
Company and
the holder hereof contained herein shall survive the Date of Grant, the exercise
or conversion of this Warrant (or any part hereof) or the termination or
expiration of rights hereunder. All agreements of the Company and the holder
hereof contained herein shall survive indefinitely until, by their respective
terms, they are no longer operative.
18.
Remedies. In case any one or more of the covenants and agreements contained in
this Warrant shall have been breached, the holders hereof (in
the case of a breach by the Company), or the Company (in the case of a
breach by a holder), may proceed to protect and enforce their or its rights
either by suit in equity and/or by action at law, including, but not
limited to, an action for damages as a result of any such breach and/or an
action for specific performance of any such covenant or agreement contained in
this Warrant.
19. No
Impairment of Rights. The
Company will not, by amendment of its certificate of incorporation or
through any other means, 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 action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.
20.
Severability. Whenever possible, each provision of this Warrant shall be
interpreted in such a manner as to be valid, legal and enforceable under all
applicable laws and regulations. If, however, any provision of this Warrant
shall be invalid, illegal or unenforceable under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed to be so modified, it shall be invalid, illegal or
unenforceable only to the extent of such invalidity, illegality or limitation on
enforceability without affecting the remaining provisions of this Warrant or the
validity, legality or enforceability of such provision in any other
jurisdiction.
21.
Entire Agreement; Modification. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.
By:
/s/ Xxxxxx X.
Xxxxxxxx
Xxxxxx X.
Xxxxxxx
Title: CEO
EXHIBIT
A-1
NOTICE
OF EXERCISE
TO: ECOLOGY
COATINGS, INC. (THE "COMPANY")
1. The
undersigned hereby:
[ ] elects to purchase _____
shares of Common Stock of the Company pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name or names as are specified below:
--------------------------------------------
(Name)
--------------------------------------------
--------------------------------------------
(Address)
3. The
undersigned represents that the aforesaid shares are being acquired for the
account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the undersigned
has no present intention of distributing or reselling such shares, all except as
in compliance with applicable securities laws.
--------------------------------------------
(Signature)
------------------------
(Date)
EXHIBIT
A-2
NOTICE
OF EXERCISE
TO: ECOLOGY
COATINGS, INC. (THE "COMPANY")
1.
Contingent upon and effective immediately prior to the closing (the "Closing") of the Company's public offering
contemplated by the Registration Statement on Form S_, filed, _____________,
200__, the undersigned hereby:
[ ]
elects to purchase _____ shares of Common Stock of the Company or such lesser
number of shares as may be sold on behalf of the undersigned at the Closing)
pursuant to the terms of the attached Warrant.
2. Please
deliver to the custodian for the selling shareholders a stock certificate
representing such _____________ shares.
3. The
undersigned has instructed the custodian for the selling shareholders to deliver
to the Company $_____ or,
if less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering. If such net proceeds are less than the purchase price
for such shares, the undersigned agrees to deliver the difference to the Company prior to the
Closing.
--------------------------------------------
(Name)
--------------------------------------------
--------------------------------------------
(Address)
-------------------------
(Date)
