Contract
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN ACQUIRED
FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE PLEDGED, TRANSFERRED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR DELIVERY OF AN OPINION
OF
COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE
ACT
OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.
Warrant
for the Purchase of Shares of Common Stock
|
No.
2008-[ ]
|
_________
Shares
|
FOR
VALUE
RECEIVED, CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC., a Delaware
corporation (the “Company”),
hereby certifies that [________________], its designee or its permitted assigns
is entitled to purchase from the Company, at any time or from time to time
commencing on June 11, 2008 (the “Issuance
Date”)
and
prior to 5:00 P.M., New York City time, on June 10, 2013 (the “Exercise
Period”),
[________________] fully paid and non-assessable shares of common stock, $0.001
par value per share, of the Company for a purchase price per share of $2.40.
Hereinafter, (i) said common stock, $0.001 par value per share, of the Company,
is referred to as the “Common
Stock”;
(ii)
the shares of the Common Stock (subject to adjustment as set forth herein)
purchasable hereunder or under any other Warrant (as hereinafter defined) are
referred to as the “Warrant
Shares”;
(iii)
the aggregate purchase price payable for the Warrant Shares purchasable
hereunder is referred to as the “Aggregate
Warrant Price”;
(iv)
the price payable (initially $2.40 per share subject to adjustment as set forth
herein) for each of the Warrant Shares hereunder is referred to as the
“Per
Share Warrant Price”;
(v)
this Warrant, all similar Warrants issued on the date hereof and all warrants
hereafter issued in exchange or substitution for this Warrant or such similar
Warrants are referred to as the “Warrants”;
(vi)
the holder of this Warrant is referred to as the “Holder”
and
the
holder of this Warrant and all other Warrants and Warrant Shares are referred
to
as the “Holders”
and
Holders of more than fifty percent (50%) of the Warrant Shares then issuable
upon exercise of then outstanding Warrants are referred to as the “Majority
of the Holders”)
and
(vii) the then Current Market Price per share of the Common Stock (the
“Current
Market Price”)
shall
be deemed to be the last reported sale price of the Common Stock (as reported
by
Bloomberg Financial Markets) on the Trading Day (as defined below) immediately
prior to such date or, in case no such reported sales take place on such day,
the average of the last reported bid and ask prices of the Common Stock on
such
day, in either case on the principal national securities exchange on which
the
Common Stock is admitted to trading or listed, including the Nasdaq Global
Select Market, the Nasdaq Global Market, and Nasdaq Capital Market (collectively
“NASDAQ”),
or
other similar organization, or, if the Common Stock is not reported on a
national securities exchange, the per share sale price for the Common Stock
in
the over-the-counter market as reported by the OTC Bulletin Board (the
“OTCBB”)
or
another over-the-counter market, or if not so available, the fair market value
of the Common Stock as determined in good faith by the Company’s Board of
Directors. A “Trading
Day”
shall
mean any day on which shares of the Company’s Common Stock are sold on the
respective exchanges listed above. The Aggregate Warrant Price is not subject
to
adjustment.
This
Warrant is one of the Warrants to purchase Common Stock issued pursuant to
a
Subscription Agreement (the “Subscription
Agreement”)
between the Company and the Subscriber named therein in connection with a
private placement by the Company of Units, each consisting on one share of
Series A Convertible Preferred Stock (the “Preferred
Stock”)
and
one Warrant, as further described in the Company’s Private Placement Memorandum
dated March 17, 2008, as amended on April 11, 2008, May 21, 2008 and May 28,
2008 and in the Consent to Modification and Amendment Agreement to the PPM
dated
as of the date hereof. By acceptance of this Warrant, the Holder agrees to
comply with all applicable provisions of the Subscription
Agreement.
|
1.
|
Exercise
of Warrant.
|
(a) Except
as
set forth in Section
1(d)
below,
this Warrant may be exercised in whole at any time, or in part from time to
time, by the Holder during the Exercise Period by the surrender of this Warrant
(with the exercise notice, in the form attached hereto (the “Exercise
Notice”),
duly
executed) at the address set forth in Section
10(a)
hereof,
together with proper payment of the Aggregate Warrant Price, or the
proportionate part thereof if this Warrant is exercised in part, with payment
for the Warrant Shares made by certified or official bank check payable to
the
order of, or wire transfer of immediately available funds to, the Company;
or
(b) If
this
Warrant is exercised in part, this Warrant must be exercised for a number of
whole shares of the Common Stock and the Holder is entitled to receive a new
Warrant covering the Warrant Shares that have not been exercised and setting
forth the proportionate part of the Aggregate Warrant Price applicable to such
Warrant Shares. Upon surrender of this Warrant in connection with the exercise
of this Warrant pursuant to the terms hereof, the Company will (i) issue a
certificate or certificates in the name of the Holder for the largest number
of
whole shares of the Common Stock to which the Holder shall be entitled upon
such
exercise and, if this Warrant is exercised in whole, no fractional shares of
Common Stock are to be issued, but rather the number of shares of Common Stock
to which the Holder shall be entitled shall be rounded up to the nearest whole
number, and (ii) deliver the other securities and properties receivable upon
the
exercise of this Warrant, or the proportionate part thereof, if this Warrant
is
exercised in part, pursuant to the provisions of this Warrant.
(c) Notwithstanding
anything contained herein to the contrary, the Holder may, in its sole
discretion, exercise this Warrant, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the
Aggregate Warrant Price, and elect instead to receive upon such exercise the
“Net
Number”
of
shares of Common Stock determined according to the following formula (a
“Cashless
Exercise”):
Net
Number = (A
x
B) - (A x C)
B
For
purposes of the foregoing formula:
|
A=
|
the
total number of shares with respect to which this Warrant is then
being
exercised.
|
|
B=
|
the
average of the Current Market Prices of the shares of Common Stock
for the
five Trading Days ending on the date immediately preceding the date
of the
written notice of exercise.
|
| C= |
the
Per Share Warrant Price then in effect for the applicable Warrant
Shares
at the time of such exercise.
|
(d) Notwithstanding
anything herein to the contrary, in no event shall the Holder have the right
or
be required to exercise this Warrant to the extent, and only to the extent,
that
as a result of such exercise, the aggregate number of shares of Common Stock
beneficially owned by the Holder, its affiliates and any “group” (as defined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
and the rules promulgated thereunder (the “Exchange
Act”))
of
which the Holder may be deemed to be a party (collectively the “Affiliates”)
would
exceed 9.99% of the outstanding shares of the Common Stock immediately after
giving effect to such exercise. For purposes of this Section, beneficial
ownership shall be calculated in accordance with Sections 13(d) and Section
16(a) of the Exchange Act. The provisions of this Section
1(d)
may be
waived by a Holder as to itself (and solely as to itself) upon not less than
sixty-five (65) days prior written notice to the Company. For purposes of this
Warrant, in determining the number of outstanding shares of Common Stock, the
Holder may rely upon the number of outstanding shares of Common Stock as
reflected in the Company’s most recent annual or quarterly report on Form 10-K
or Form 10-Q, respectively.
(e) Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
five (5) Trading Days after the date the Exercise Notice is delivered to the
Company (the “Exercise
Date”))
issue
or cause to be issued and cause to be delivered to or upon the written order
of
the Holder (together with such other transfer documentation as may be reasonably
requested by the Company) and in such name or names as the Holder may designate
(provided that, if the Registration Statement is not effective and the Holder
directs the Company to deliver a certificate for the Warrant Shares in a name
other than that of the Holder or an Affiliate of the Holder, it shall deliver
to
the Company on the Exercise Date an opinion of counsel reasonably satisfactory
to the Company to the effect that the issuance of such Warrant Shares in such
other name may be made pursuant to an available exemption from the registration
requirements of the Act and all applicable state securities or blue sky laws),
a
certificate for the Warrant Shares issuable upon such exercise, free of
restrictive legends, unless a registration statement covering the resale of
the
Warrant Shares and naming the Holder as a selling stockholder thereunder is
not
then effective or the Warrant Shares are not freely transferable without volume
restrictions pursuant to Rule 144(b) under the Act. The Holder, or any person
permissibly so designated by the Holder to receive Warrant Shares, shall be
deemed to have become the holder of record of such Warrant Shares as of the
Exercise Date. If the Warrant Shares are to be issued free of all restrictive
legends, the Company shall, upon the written request of the Holder, use its
best
efforts to deliver, or cause to be delivered, Warrant Shares hereunder
electronically through The Depository Trust Company or another established
clearing corporation performing similar functions, if available; provided,
that,
the Company may, but will not be required to, change its transfer agent if
its
current transfer agent cannot deliver Warrant Shares electronically through
such
a clearing corporation.
(f) If
by the
close of the fifth (5th)
Trading
Day after delivery of an Exercise Notice, the Company fails to deliver to the
Holder a certificate representing the required number of Warrant Shares in
the
manner required pursuant to Section
1,
and if
after such fifth Trading Day and prior to the receipt of such Warrant Shares,
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 the Warrant
Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”),
then
the Company shall, within three (3) Trading Days after the Holder’s request and
in the Holder’s sole discretion, either (1) pay in cash to the Holder an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such Warrant Shares) shall terminate or (2) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such Warrant
Shares and pay cash to the Holder in an amount equal to the excess (if any)
of
the Buy-In Price over the product of (A) such number of Warrant Shares, times
(B) the closing bid price of a share of Common Stock on the date of
exercise.
(g) To
the
extent permitted by law, the Company’s obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof. Nothing herein shall
limit the 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 Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise
of
this Warrant as required pursuant to the terms hereof.
|
2.
|
Reservation
of Warrant Shares; Listing.
The Company agrees that, prior to the expiration of this Warrant,
the
Company shall at all times (a) have authorized and in reserve, and
shall
keep available, solely for issuance and delivery upon the exercise
of this
Warrant, one hundred twenty (120%) percent of the shares of the Common
Stock receivable upon the exercise of this Warrant, free and clear
of all
restrictions on sale or transfer, other than under Federal or state
securities laws, and free and clear of all preemptive rights and
rights of
first refusal and (b) if the Company hereafter lists its Common Stock
on
any national securities exchange, including NASDAQ, use its commercially
reasonable efforts to keep the Warrant Shares authorized for listing
on
such exchange upon notice of issuance. The Company covenants that
all
Warrant Shares so issuable and deliverable shall, upon issuance and
the
payment of the applicable Per Share Warrant Price in accordance with
the
terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable. The Company will take all such action as may be necessary
to assure that such shares of Common Stock may be issued as provided
herein without violation of any applicable law or regulation, or
of any
requirements of any securities exchange or automated quotation system
upon
which the Common Shares may be listed. Pursuant to the terms of the
Subscription Agreement, the Company shall seek to have the Warrants
listed
on the OTCBB.
|
|
3.
|
Certain
Adjustments.
|
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding: (i) pays a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this
Warrant)(“Common
Stock Equivalents”),
(ii)
subdivides outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of reverse stock split) outstanding shares
of
Common Stock into a smaller number of shares, or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then
in each case the Per Share Warrant Price shall be multiplied by a fraction
the
numerator of which shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event and the number of shares issuable upon exercise
of
this Warrant shall be proportionately adjusted. Any adjustment made pursuant
to
this Section
3(a)
shall
become effective at the close of business on the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective at the close of business on the effective date in
the
case of a subdivision, combination or re-classification. Any adjustment in
the
Per Share Warrant Price in accordance with this Section
3(a)
shall
also effect a proportionate adjustment in the Threshold Price (defined
below).
(b) Subsequent
Equity Sales.
If the
Company, at any time while this Warrant is outstanding, shall sell or grant
any
option to purchase or sell or grant any right to reprice its securities, 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 $2.00 (the “Threshold
Price”)
(provided that in the event the Company issues any warrants entitling any Person
to acquire shares of Common Stock, the Threshold Price with respect to such
warrants shall equal $2.40) per share of Common Stock (such lower price, the
“Base
Share Price”
and
such issuances collectively, a “Dilutive
Issuance”)
(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 Threshold Price, such issuance shall be deemed
to have occurred for less than the Threshold Price on such date of the Dilutive
Issuance), then the Per Share Warrant 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 Per Share Warrant Price payable
hereunder, after taking into account the decrease in the Per Share Warrant
Price, shall be equal to the aggregate Per Share Warrant Price prior to such
adjustment. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments
shall be made, paid or issued under this Section
3(b)
in
respect of an Exempt Issuance. 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(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms in accordance with
Section
3(e)
below
(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(b),
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. As used herein, the term
“Exempt
Issuance”
shall
mean (i) any issuance, sale, grant or award of any Common Stock, option or
right
to purchase Common Stock, or any security convertible into or exchangeable
for
Common Stock issued or issuable to any officer, director, employee, consultant
or advisor of the Company pursuant to a bona fide option or equity incentive
plan or other agreement or arrangement duly adopted by the Company, in
consideration for services rendered or to be rendered to the Company by such
officer, director, employee, consultant or advisor and (ii) any issuance of
Preferred Stock or of Common Stock underlying the Preferred Stock and
Warrants.
(c) In
case
of any capital reorganization or reclassification, or any consolidation or
merger to which the Company is a party other than a merger or consolidation
in
which the Company is the continuing corporation, or in case of any sale or
conveyance to another entity of all or substantially all of the assets of the
Company, or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of
a
third corporation into the Company but excluding any exchange of securities
or
merger with another corporation in which the Company is a continuing corporation
and that does not result in any reclassification of or similar change in the
Common Stock), the Holder of this Warrant shall have the right thereafter to
receive on the exercise of this Warrant the kind and amount of securities,
cash
or other property which the Holder would have owned or have been entitled to
receive immediately after such reorganization, reclassification, consolidation,
merger, statutory exchange, sale or conveyance had this Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
and in any such case, if necessary, appropriate adjustment shall be made in
the
application of the provisions set forth in this Section
3
with
respect to the rights and interests thereafter of the Holder of this Warrant
to
the end that the provisions set forth in this Section
3
shall
thereafter correspondingly be made applicable, as nearly as may reasonably
be,
in relation to any shares of stock or other securities or property thereafter
deliverable on the exercise of this Warrant. The above provisions of this
Section
3(c)
shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, statutory exchanges, sales or conveyances. The Company
shall require the issuer of any shares of stock or other securities or property
thereafter deliverable on the exercise of this Warrant to be responsible for
all
of the agreements and obligations of the Company hereunder. Notice of any such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance and of said provisions so proposed to be made, shall be
mailed to the Holders of the Warrants not less than twenty (20) days prior
to
such event. A sale of all or substantially all of the assets of the Company
for
a consideration consisting primarily of securities shall be deemed a
consolidation or merger for the foregoing purposes.
(d) No
adjustment in the Per Share Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least $0.01 per share
of
Common Stock; provided,
however,
that
any adjustments which by reason of this Section
3(d)
are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment; provided,
further,
however, that adjustments shall be required and made in accordance with the
provisions of this Section
3
(other
than this Section
3(d))
not
later than such time as may be required in order to preserve the tax-free nature
of a distribution, if any, to the Holder of this Warrant or Common Stock
issuable upon the exercise hereof. All calculations under this Section
3
shall be
made to the nearest cent or to the nearest 1/100th of a share, as the case
may
be. Anything in this Section
3
to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Per Share Warrant Price, in addition to those required by this
Section
3,
as it
in its discretion shall deem to be advisable in order that any stock dividend,
subdivision of shares or distribution of rights to purchase stock or securities
convertible or exchangeable for stock hereafter made by the Company to its
stockholders shall not be taxable.
(e) Whenever
the Per Share Warrant Price or the number of Warrant Shares is adjusted as
provided in this Section
3
and upon
any modification of the rights of a Holder of Warrants in accordance with this
Section
3,
the
Company shall promptly prepare a brief statement of the facts requiring such
adjustment or modification and the manner of computing the same and cause copies
of such certificate to be mailed to the Holders of the Warrants. The Company
may, but shall not be obligated to unless requested by a Majority of the
Holders, obtain, at its expense, a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors (who
may
be the regular auditors of the Company) setting forth the Per Share Warrant
Price and the number of Warrant Shares in effect after such adjustment or the
effect of such modification, a brief statement of the facts requiring such
adjustment or modification and the manner of computing the same and cause copies
of such certificate to be mailed to the Holders of the Warrants.
(f) If
the
Board of Directors of the Company shall declare any dividend or other
distribution with respect to the Common Stock other than a cash distribution
out
of earned surplus, the Company shall mail notice thereof to the Holders of
the
Warrants not less than ten (10) days prior to the record date fixed for
determining stockholders entitled to participate in such dividend or other
distribution.
(g) If,
as a
result of an adjustment made pursuant to this Section
3,
the
Holder of any Warrant thereafter surrendered for exercise shall become entitled
to receive shares of two or more classes of capital stock or shares of Common
Stock and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice
to
the Holder of any Warrant promptly after such adjustment) shall determine,
in
good faith, the allocation of the adjusted Per Share Warrant Price between
or
among shares or such classes of capital stock or shares of Common Stock and
other capital stock.
(h) Upon
the
expiration of any rights, options, warrants or conversion privileges with
respect to the issuance of which an adjustment to the Per Share Warrant Price
had been made, if such option, right, warrant or conversion shall not have
been
exercised, the number of Warrant Shares purchasable upon exercise of this
Warrant, to the extent this Warrant has not then been exercised, shall, upon
such expiration, be readjusted and shall thereafter be such as they would have
been had they been originally adjusted (or had the original adjustment not
been
required, as the case may be) on the basis of (A) the fact that Common Stock,
if
any, actually issued or sold upon the exercise of such rights, options, warrants
or conversion privileges, and (B) the fact that such shares of Common Stock,
if
any, were issued or sold for the consideration actually received by the Company
upon such exercise plus the consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants
or
conversion privileges whether or not exercised; provided,
however,
that no
such readjustment shall have the effect of decreasing the number of Warrant
Shares purchasable upon exercise of this Warrant by an amount in excess of
the
amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options, warrants or conversion privileges.
(i) In
case
any event shall occur as to which the other provisions of this Section
3
are not
strictly applicable but as to which the failure to make any adjustment would
not
fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principles of the adjustments set forth in this
Section
3
then, in
each such case, the Board of Directors of the Company shall in good faith
determine the adjustment, if any, on a basis consistent with the essential
intent and principles established herein, necessary to preserve the purchase
rights represented by the Warrants. Upon such determination, the Company will
promptly mail a copy thereof to the Holder of this Warrant and shall make the
adjustments described therein.
|
4.
|
Fully
Paid Stock; Taxes.
The shares of the Common Stock represented by each and every certificate
for Warrant Shares delivered on the exercise of this Warrant shall,
subject to compliance by the Holder with the terms hereof, at the
time of
such delivery, be duly authorized, validly issued and outstanding,
fully
paid and nonassessable, and not subject to preemptive rights or rights
of
first refusal imposed by any agreement to which the Company is a
party,
and the Company will take all such actions as may be necessary to
assure
that the par value, if any, per share of the Common Stock is at all
times
equal to or less than the then Per Share Warrant Price. The Company
shall
pay, when due and payable, any and all Federal and state stamp, original
issue or similar taxes which may be payable in respect of the issue
of any
Warrant Share or any certificate thereof to the extent required because
of
the issuance by the Company of such
security.
|
|
5.
|
Registration
Under Act.
The Holder shall have the right to participate in the registration
rights
granted to purchasers of the Units (as defined in the Subscription
Agreement) pursuant to Article VII of the Subscription Agreement.
By
acceptance of this Warrant, the Holder agrees to comply with the
provisions in Article VII of the Subscription
Agreement.
|
|
6.
|
Investment
Intent; Limited Transferability.
|
(a) By
accepting this Warrant, the Holder represents to the Company that it understands
that this Warrant and any securities obtainable upon exercise of this Warrant
have not been registered for sale under Federal or state securities laws and
are
being offered and sold to the Holder pursuant to one or more exemptions from
the
registration requirements of such securities laws. In the absence of an
effective registration of such securities or an exemption therefrom, any
certificates for such securities shall bear the legend set forth on the first
page hereof. The Holder understands that it must bear the economic risk of
its
investment in this Warrant and hold any securities obtainable upon exercise
of
this Warrant for an indefinite period of time, as this Warrant and such
securities have not been registered under Federal or state securities laws
and
therefore cannot be sold unless subsequently registered under such laws, unless
an exemption from such registration is available. The Holder further represents
to the Company, by accepting this Warrant, that it has full power and authority
to accept this Warrant and make the representations set forth
herein.
(b) The
Holder, by its acceptance of this Warrant, represents to the Company that it
is
acquiring this Warrant and will acquire any securities obtainable upon exercise
of this Warrant for its own account for investment and not with a view to,
or
for sale in connection with, any distribution thereof in violation of the Act.
The Holder agrees, by acceptance of this Warrant, that this Warrant and any
such
securities will not be sold or otherwise transferred unless (i) a registration
statement with respect to such transfer is effective under the Act and any
applicable state securities laws or (ii) such sale or transfer is made pursuant
to one or more exemptions from the Act.
(c) In
addition to the limitations set forth in Section
1
and in
accordance with the legend on the first page hereof, this Warrant may not be
sold, transferred, assigned or hypothecated by the Holder except in compliance
with the provisions of the Act and the applicable state securities “blue sky”
laws, and is so transferable only upon the books of the Company which it shall
cause to be maintained for such purpose. The Company may treat the registered
Holder of this Warrant as it appears on the Company’s books at any time as the
Holder for all purposes. The Company shall permit any Holder of a Warrant or
its
duly authorized attorney, upon written request during ordinary business hours,
to inspect and copy or make extracts from its books showing the registered
Holders of Warrant. All Warrants issued upon the transfer or assignment of
this
Warrant will be dated the same date as this Warrant, and all rights of the
holder thereof shall be identical to those of the Holder unless, in each case,
otherwise prohibited by applicable law.
(d) The
Holder has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the Warrants or the exercise of the
Warrants; and (ii) the opportunity to request such additional information which
the Company possesses or can acquire without unreasonable effort or
expense.
(e) The
Holder did not (i) receive or review any advertisement, article, notice or
other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or
(ii) attend any seminar, meeting or investor or other conference whose attendees
were, to such Holder’s knowledge, invited by any general solicitation or general
advertising.
(f) The
Holder is an “accredited investor” within the meaning of Regulation D under the
Act. Such Holder is acquiring the Warrants for its own account and not with
a
present view to, or for sale in connection with, any distribution thereof in
violation of the registration requirements of the Act, without prejudice,
however, to such Holder’s right, subject to the provisions of the Subscription
Agreement and this Warrant, at all times to sell or otherwise dispose of all
or
any part of such Warrants and Warrant Shares.
(g) Either
by
reason of such Holder’s business or financial experience or the business or
financial experience of its professional advisors (who are unaffiliated with
and
who are not compensated by the Company or any affiliate, finder or selling
agent
of the Company, directly or indirectly), such Holder has the capacity to protect
such Holder’s interests in connection with the transactions contemplated by this
Warrant and the Subscription Agreement. The Holder, by its acceptance of this
Warrant, represents to the Company that it is able to fend for itself, can
bear
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in this Warrant. Holder also represents it has not
been
organized for the purpose of acquiring this Warrant.
|
7.
|
Optional Redemption.
|
(a) In
the
event that the Current Market Price of the Common Stock for any twenty (20)
of
the last thirty (30) consecutive Trading Days on the principal national
securities exchange on which the Common Stock is admitted to trading or listed,
including the NASDAQ, or other similar organization, or, if the Common Stock
is
not reported on a national securities exchange, the per share sale price for
the
Common Stock in the over-the-counter market as reported by the OTCBB or another
over-the-counter market is at least $5.00 per share (subject to adjustment
for
any stock splits, combinations, or similar events with respect to the Common
Stock after the original issuance date of this Warrant) (the “Redemption
Price”)
and the
average daily trading volume of the Common Stock is no less than 100,000 shares
per day during such 30-day period,
the
Company shall be entitled to redeem all, but not less than all, of the Warrant
Shares at a per Warrant Share redemption price of $0.01, at any time after
the
completion of such thirty (30) consecutive trading day period by providing
thirty (30) business days’ written notice to the Holders. The Holder agrees to
return the certificate representing the redeemed Warrants to the Company upon
their redemption (or evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant in accordance with
Section
8
hereof).
(b) Notwithstanding
Section
7(a)
hereof,
for so long as any Warrant Shares are not subject to a registration statement
declared effective by the SEC or are not otherwise permitted to be immediately
sold, in whole, pursuant to an exemption to registration for such resale,
including pursuant to Rule 144(b) of the Act, the Company shall not be entitled
to exercise its redemption rights pursuant to Section
7(a)
above.
|
8.
|
Loss,
etc., of Warrant.
Upon receipt of evidence reasonably satisfactory to the Company of
the
loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed,
and
upon surrender and cancellation of this Warrant, if mutilated, the
Company
shall execute and deliver to the Holder a new Warrant of like date,
tenor
and denomination.
|
|
9.
|
Warrant
Holder Not Stockholder.
This Warrant does not confer upon the Holder any right to vote on
or
receive dividends or consent to or receive notice as a stockholder
of the
Company, as such, in respect of any matters whatsoever, nor any other
rights or liabilities as a stockholder, prior to the exercise hereof;
this
Warrant does, however, require certain notices to Holders as set
forth
herein.
|
|
10.
|
Communication.
No notice or other communication under this Warrant shall be effective
or
deemed to have been given unless, the same is in writing and is mailed
by
first-class mail, postage prepaid, or via recognized overnight courier
with confirmed receipt, addressed
to:
|
(a) the
Company at China Advanced Construction Materials Group, Inc., Xxxxx
Xxxxx, 0
Xxxxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx
Xxxxxxxx,
Xxxxxxx
100080 PRC, Attention: Chief Executive Officer, or other such address as the
Company has designated in writing to the Holder; or
(b) the
Holder at the address last furnished to the Company in writing by the
Holder.
|
11.
|
Headings.
The headings of this Warrant have been inserted as a matter of convenience
and shall not affect the construction
hereof.
|
|
12.
|
Applicable
Law.
This Warrant will be governed by and interpreted in accordance with
the
laws of the State of Delaware without regard to the principles of
conflict
of laws. The Holder hereby submit to the exclusive jurisdiction of
the
United States federal and state courts located in the State of New
York
with respect to any dispute arising under this Agreement or the
transactions contemplated hereby or
thereby.
|
|
13.
|
Amendment,
Waiver, etc.
Except as expressly provided herein, neither this Warrant nor any
term
hereof may be amended, waived, discharged or terminated other than
by a
written instrument signed by the party against whom enforcement of
any
such amendment, waiver, discharge or termination is sought; provided,
however, that any provision hereof may be amended, waived, discharged
or
terminated upon the written consent of the Company and the Majority
of the
Holders and such amendment, waiver, discharge or termination shall
be
effective with respect to the Company and all
Holders.
|
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be signed by the undersigned duly authorized
officer, this 11th
day of
June, 2008.
|
CHINA
ADVANCED CONSTRUCTION
MATERIALS
GROUP, INC.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
Chief Executive Officer
|
|
FORM
OF EXERCISE NOTICE
(To
be executed by the Holder to exercise the right to
purchase
shares of Common Stock under the foregoing Warrant)
Ladies
and Gentlemen:
|
(1)
|
The
undersigned is the Holder of Warrant No. __________ (the “Warrant”)
issued by China Advanced Construction Materials Group, Inc., a Delaware
corporation (the “Company”).
Capitalized terms used herein and not otherwise defined herein have
the
respective meanings set forth in the Warrant.
|
|
(2)
|
The
undersigned hereby exercises its right to purchase __________ Warrant
Shares pursuant to the Warrant.
|
|
(3)
|
The
Holder intends that payment of the Exercise Price shall be made as
(check
one):
|
|
o
|
Cash
Exercise
|
|
o
|
“Cashless
Exercise” under Section
1(c)
in
accordance with the terms of the
Warrant.
|
|
(4)
|
If
the Holder has elected a Cash Exercise, the Holder shall pay the
sum of
$_______ to the Company in accordance with the terms of the
Warrant.
|
|
(5)
|
Pursuant
to this Exercise Notice, the Company shall deliver to the Holder
_____________ Warrant Shares in accordance with the terms of the
Warrant.
|
Dated:_______________,
_____
Name
of
Holder: ___________________________
By:__________________________________
Name:
_______________________________
Title:
_______________________________
(Signature
must conform
in
all respects to name of Holder as specified on the face of the
Warrant)
ASSIGNMENT
FOR
VALUE
RECEIVED _______________ (“Assignor”)
hereby
sells, assigns and transfers unto ____________________ (“Transferee”)
the
foregoing Warrant and all rights evidenced thereby, and does irrevocably
constitute and appoint _____________________, attorney, to transfer said Warrant
on the books of China Advanced Construction Materials Group, Inc. By acceptance
of the foregoing Warrant, Transferee shall become a Holder under said Warrant
and subject to the rights, obligations and representations of Holder set forth
in said Warrant.
|
ASSIGNOR:
|
|
|
Dated:_______________________
|
Signature:____________________________
|
|
Address:_____________________________
|
|
|
TRANSFEREE:
|
|
|
Dated:_______________________
|
Signature:____________________________
|
|
Address:_____________________________
|
PARTIAL
ASSIGNMENT
FOR
VALUE
RECEIVED _______________ (“Assignor”)
hereby
assigns and transfers unto ____________________ (“Transferee”)
the
right to purchase _______ shares of Common Stock, par value $0.001 per share,
of
China Advanced Construction Materials Group, Inc. covered by the foregoing
Warrant, and a proportionate part of said Warrant and the rights evidenced
thereby, and does irrevocably constitute and appoint ____________________,
attorney, to transfer such part of said Warrant on the books of China Advanced
Construction Materials Group, Inc. By acceptance of the proportionate part
of
foregoing Warrant, Transferee shall become a Holder under said proportionate
part of said Warrant and subject to the rights, obligations and representations
of Holder set forth in said Warrant.
|
ASSIGNOR:
|
|
|
Dated:_______________________
|
Signature:____________________________
|
|
Address:_____________________________
|
|
|
TRANSFEREE:
|
|
|
Dated:_______________________
|
Signature:____________________________
|
|
Address:_____________________________
|
