FORM OF COMMON STOCK PURCHASE WARRANT CHINA PRECISION STEEL, INC.
FORM
OF COMMON STOCK PURCHASE WARRANT
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CUSIP
No.
16941J
114
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Warrant
No.
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Warrant
Shares:
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Initial
Exercise Date: May 6, 2008
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Issue
Date: November 6, 2007
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THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, _____________ (the “Holder”)
is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after May 6, 2008 (the
“Initial
Exercise Date”)
and on
or prior to the close of business on the five year anniversary of the Initial
Exercise Date (the “Termination
Date”)
but
not thereafter, to subscribe for and purchase from China Precision Steel, Inc.,
a corporation (the “Company”),
up to
______ shares (the “Warrant
Shares”)
of
Common Stock. The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 2(b).
This
Warrant is issued pursuant to that certain Warrant Agreement dated as of
November 6, 2007 (the “Warrant Agreement”), between the Company and
Corporate Stock Transfer, Inc. as Warrant Agent (together with any successors
and assigns, the “Warrant Agent”).
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Subscription Agreement (the “Subscription
Agreement”),
dated
November 1, 2007, among the Company and the purchaser signatory
thereto.
Section
2. Exercise.
a) Exercise
of Warrant.
Exercise of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial Exercise Date
and
on or before the Termination Date by delivery to the Warrant Agent of a duly
executed facsimile copy of the Notice of Exercise Form annexed hereto (or such
other office or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of the Holder appearing on the books
of
the Company); and, within three (3) Trading Days of the date said Notice of
Exercise is delivered to the Warrant Agent, the Warrant Agent, for the account
of the Company, shall have received payment of the aggregate Exercise Price
of
the shares thereby purchased by wire transfer or cashier’s check drawn on a
United States bank. Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Warrant Agent
until the Holder has purchased all of the Warrant Shares available hereunder
and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Warrant Agent for cancellation within three (3)
Trading Days of the date the final Notice of Exercise is delivered to the
Warrant Agent. Partial exercises of this Warrant resulting in purchases of
a
portion of the total number of Warrant Shares available hereunder shall have
the
effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Warrant Agent shall maintain records showing
the
number of Warrant Shares purchased and the date of such purchases. The Company
shall deliver any objection to any Notice of Exercise Form within two (2)
Business Days of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Warrant Agent shall be controlling and
determinative in the absence of manifest error. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase
of a
portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated
on
the face hereof.
1
b) Exercise
Price.
The
exercise price per share of the Common Stock under this Warrant shall be
$8.45,
such price representing the closing price of the Common Stock on The NASDAQ
Capital Market on October 31, 2007, subject to adjustment hereunder (the
“Exercise
Price”).
c) Cashless
Exercise.
In lieu
of tendering the Exercise Amount, the Warrants may be exercised by surrendering
this Certificate together with irrevocable instructions to the Warrant Agent
to
issue in exchange for this Certificate the number of shares of Common Stock
equal to the product of (i) the number of shares as to which the Warrants are
being exercised multiplied by (ii) a fraction, the numerator of which is the
Fair Market Value of a share of Common Stock on the last business day
immediately preceding the exercise date less the Purchase Price therefore and
the denominator of which is such Fair Market Value (a “Cashless
Exercise”).
Fair
Market Value”
or
“FMV”
of
a
share of Common Stock as of a particular date shall mean: (i) if traded on
a
securities exchange or if actively traded over-the-counter, the Fair Market
Value shall be deemed to be the last reported sale price of the Common Stock
on
such exchange or over-the-counter on the last business day before the date
in
question; (ii) if actively traded over-the-counter, but no sale is made
on such day, the mean of the closing bid and asked prices such day on such
over-the-counter quotation; and (iii) if there is no active public market,
the
Fair Market Value shall be the value as determined in good faith by the
Company’s Board of Directors upon a review of relevant factors, including due
consideration of the Holders’ determination of the value of the
Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall
be
automatically exercised via cashless exercise pursuant to this Section
2(c).
2
d) Xxxxxx’s
Restrictions.
The
Warrant Agent and the Company shall not effect any exercise of this Warrant,
and
a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect
to
such issuance after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any other person or
entity acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being
made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (A) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (B) exercise
or
conversion of the unexercised or nonconverted portion of any other securities
of
the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its
affiliates. Except
as set forth in the preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with Section 13(d)
of the
Exchange Act and the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to the Holder
that such calculation is in compliance with Section 13(d) of the Exchange
Act
and the Holder is solely responsible for any schedules required to be filed
in
accordance therewith. To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be
in the
sole discretion of the Holder, and the submission of a Notice of Exercise
shall
be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together
with
any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject to the Beneficial Ownership Limitation, and the Company shall
have
no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall
be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 2(d),
in
determining the number of outstanding shares of Common Stock, a Holder may
rely
on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent periodic or annual report, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the
Company
or the Company’s Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of a Holder, the
Company shall within two Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as
of
which such number of outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation”
shall
be 4.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice
to the Company and the Warrant Agent, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 2(d), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to
the
issuance of shares of Common Stock upon exercise of this Warrant held by
the
Holder and the provisions of this Section 2(d) shall continue to apply. Any
such
increase or decrease will not be effective until the 61st
day
after such notice is delivered to the Company and the Warrant Agent. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(d) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give
effect
to such limitation. The limitations contained in this paragraph shall apply
to a
successor holder of this Warrant.
3
e) Mechanics
of Exercise.
i. Delivery
of Certificates Upon Exercise.
Certificates for shares purchased hereunder shall be transmitted by the Warrant
Agent to the Holder by crediting the account of the Holder’s prime broker with
the Depository Trust Company through its Deposit Withdrawal Agent Commission
(“DWAC”)
system
if the Company is a participant in such system and there is an effective
Registration Statement permitting the resale of the Warrant Shares by the
Holder, and otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise within three (3) Trading Days from the delivery
to the Warrant Agent of the Notice of Exercise Form, surrender of this Warrant
(if required) and payment of the aggregate Exercise Price as set forth above
(“Warrant
Share Delivery Date”).
This
Warrant shall be deemed to have been exercised on the date the Exercise Price
is
received by the Warrant Agent, for the account of the Company. The Warrant
Shares shall be deemed to have been issued, and Holder or any other person
so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the Warrant has been exercised
by payment to the Warrant Agent, for the account of the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be
paid
by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of
such shares, have been paid.
ii. Delivery
of New Warrants Upon Exercise.
If this
Warrant shall have been exercised in part, the Warrant Agent shall, at the
request of a Holder and upon surrender of this Warrant certificate, at the
time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase
the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iii. Rescission
Rights.
If the
Company fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares pursuant to this
Section 2(e)(i) by the Warrant Share Delivery Date, then the Holder will have
the right to rescind such exercise.
4
iv. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise.
In
addition to any other rights available to the Holder, if the Company fails
to
cause the Warrant Agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to an exercise on or before the Warrant
Share Delivery Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, 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 (1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required
to
deliver to the Holder in connection with the exercise at issue times (B) the
price at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the portion
of
the Warrant and equivalent number of Warrant Shares for which such exercise
was
not honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect
to
an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In and, upon request of
the
Company, evidence of the amount of such loss. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant
as
required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which Holder would
otherwise be entitled to purchase upon such exercise, the Company shall at
its
election, either pay a cash adjustment in respect of such final fraction in
an
amount equal to such fraction multiplied by the Exercise Price or round up
to
the next whole share.
5
vi. Charges,
Taxes and Expenses.
Issuance of certificates for Warrant Shares shall be made without charge to
the
Holder for any issue or transfer tax or other incidental expense in respect
of
the issuance of such certificate, all of which taxes and expenses shall be
paid
by the Company, and such certificates shall be issued in the name of the Holder
or in such name or names as may be directed by the Holder; provided,
however,
that in
the event certificates for Warrant Shares are to be issued in a name other
than
the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
vii. Closing
of Books.
The
Company will not close its stockholder books or records in any manner designed
to prevent the timely exercise of this Warrant, pursuant to the terms hereof.
The Company may close its books as it deems necessary and appropriate from
time
to time in accordance with its business and its disclosure and reporting
requirements.
Section
3. Certain
Adjustments.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding: (A) 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),
(B)
subdivides outstanding shares of Common Stock into a larger number of shares,
(C) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then
in each case the Exercise Price shall be multiplied by a fraction of which
the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding immediately before such event and of which the
denominator 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 such that the aggregate Exercise
Price of this Warrant shall remain unchanged. Any adjustment made pursuant
to
this Section 3(a) shall become effective immediately after the record date
for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date
in
the case of a subdivision, combination or re-classification.
(b) Subsequent
Rights Offerings.
If the
Company, at any time while the Warrant is outstanding, shall issue rights,
options or warrants to all holders of Common Stock (and not to Holders)
entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the FMV at the record date mentioned below, then the
Exercise Price shall be multiplied by a fraction, of which the denominator
shall
be the number of shares of the Common Stock outstanding on the date of issuance
of such rights or warrants plus the number of additional shares of Common Stock
offered for subscription or purchase, and of which the numerator shall be the
number of shares of the Common Stock outstanding on the date of issuance of
such
rights or warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered (assuming receipt by the Company in
full of all consideration payable upon exercise of such rights, options or
warrants) would purchase at such FMV. Such adjustment shall be made whenever
such rights or warrants are issued, and shall become effective immediately
after
the record date for the determination of stockholders entitled to receive such
rights, options or warrants.
6
(c) Pro
Rata Distributions.
If the
Company, at any time while this Warrant is outstanding, shall distribute to
all
holders of Common Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock), then
in
each such case the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date fixed for determination
of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the FMV determined as of the record date mentioned above,
and of which the numerator shall be such FMV on such record date less the then
per share fair market value at such record date of the portion of such assets
or
evidence of indebtedness so distributed applicable to one outstanding share
of
the Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to the
Holder of the portion of assets or evidences of indebtedness so distributed
or
such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.
(d) Fundamental
Transaction.
If, at
any time while this Warrant is outstanding, (A) the Company effects any merger
or consolidation of the Company with or into another Person, (B) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (D) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(each “Fundamental
Transaction”),
then,
upon any subsequent exercise of this Warrant, the Holder shall have the right
to
receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, the number
of shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate
Consideration”)
receivable as a result of such merger, consolidation or disposition of assets
by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. For purposes of any such exercise,
the determination of the Exercise Price shall be appropriately adjusted to
apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value
of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice
as
to the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Company or surviving entity
in
such Fundamental Transaction shall issue to the Holder a new warrant consistent
with the foregoing provisions and evidencing the Holder’s right to exercise such
warrant into Alternate Consideration. The terms of any agreement pursuant to
which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this Section
3(e) and insuring that this Warrant (or any such replacement security) will
be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934,
as amended, or (3) a Fundamental Transaction involving a person or entity not
traded on a national securities exchange, the Nasdaq Global Select Market,
the
Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor
entity shall pay at the Holder’s option, exercisable at any time concurrently
with or within 30 days after the consummation of the Fundamental Transaction,
an
amount of cash equal to the value of this Warrant as determined in accordance
with the Black Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg L.P. using (i) a price per share of Common Stock equal to the FMV
of
the Common Stock for the Trading Day immediately preceding the date of
consummation of the applicable Fundamental Transaction, (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to
the
remaining term of this Warrant as of the date of consummation of the applicable
Fundamental Transaction and (iii) an expected volatility equal to the 100 day
volatility obtained from the “HVT” function on Bloomberg L.P. determined as of
the Trading Day immediately following the public announcement of the applicable
Fundamental Transaction.
7
(e) Calculations.
All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section
3,
the number of shares of Common Stock deemed to be issued and outstanding as
of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
(d) Notice
to Holder;
(i) Adjustment
to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this
Section 3, the Company shall promptly mail to the Holder a notice setting forth
the Exercise Price after such adjustment and setting forth a brief statement
of
the facts requiring such adjustment.
(ii) Notice
to Allow Exercise by Xxxxxx.
The
Company shall give the Holder prompt notice if (A) the Company shall declare
a
dividend (or any other distribution in whatever form) on the Common Stock;
(B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) the Company shall authorize the granting
to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights; (D) the approval
of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which
the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common
Stock
is converted into other securities, cash or property; and
(E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company. For purposes of this
subsection, any filing with the Securities and Exchange Commission disclosing
such event shall
satisfy the Company’s notice requirement pursuant to this subsection.
The
Holder is entitled to exercise this Warrant during the period commencing on
the
date of such notice to the effective date of the event triggering such notice;
provided such period is after the Initial Exercise Date.
8
Section
4. Transfer
of Warrant.
a) Transferability.
This
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender
of
this Warrant at the principal office of the Warrant Agent or the Company’s other
designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment,
the Warrant Agent shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor
a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having
a
new Warrant issued.
b) New
Warrants.
This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Warrant Agent, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 4(a), as to any transfer which may be involved in such division or
combination, the Warrant Agent shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined
in
accordance with such notice. All Warrants issued on transfers or exchanges
shall
be dated the original Issue Date and shall be identical with this Warrant except
as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof for
the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
9
Section
5. Miscellaneous.
a) No
Rights as Shareholder Until Exercise.
This
Warrant does not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company prior to the exercise hereof as set forth in Section
2(e)(i).
b) Loss,
Theft, Destruction or Mutilation of Warrant.
The
Warrant Agent covenants that upon receipt by the Warrant Agent of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation
of
this Warrant or any stock certificate relating to the Warrant Shares, and in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Warrant Agent will make and deliver a
new
Warrant or stock certificate of like tenor and dated as of such cancellation,
in
lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc.
If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then such action
may be taken or such right may be exercised on the next succeeding Business
Day.
d) Authorized
Shares.
The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise
of
any purchase rights under this Warrant. The Company further covenants that
its
issuance of this Warrant shall constitute full authority to its officers who
are
charged with the duty of executing stock certificates to execute and issue
the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action
as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.
The Company covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
created by the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall
not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, 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, but will at all times in good faith assist in the carrying out of
all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value,
(b)
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant, and (c) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
10
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
The
Company shall provide prompt notice to the Holder in
the event that the Registration Statement on Form S-3 relating to the shares
of
Common Stock underlying the Warrants (or
any
other registration statement registering such shares, if applicable)
become deregistered with the Securities and Exchange Commission. If
the
Holder exercises its rights under this Warrant via
cash
exercise with
respect to any Warrant Shares during to time such Registration Statement is
no
longer effective, and
prior
to such exercise the Holder was not notified in writing that such registration
statement was no longer available, then
the Holder will have the right to rescind such cash
exercise and either hold the Warrant for future exercise or resubmit the
exercise via cashless exercise assuming for such purposes the FMV on the date
of
the initial exercise.
e) Jurisdiction.
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Subscription Agreement.
f) Nonwaiver.
No
course of dealing or any delay or failure to exercise any right hereunder on
the
part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date.
g) Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Subscription Agreement. Notices to the Warrant Agent shall
be
sent to the following address or to such other address, as the Warrant Agent
shall indicate in a notice to the Company and the holder:
|
Corporate
Stock Transfer, Inc.
|
|
0000
Xxxxxx Xxxxx Xxxxx Xxxxx
|
|
Denver,
Colorado 80209
|
h) Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
or privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
11
i) Remedies.
Holder
and the Company, in addition to being entitled to exercise all rights granted
by
law, including recovery of damages, will be entitled to specific performance
of
its rights under this Warrant. The parties hereto agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by either party of the provisions of this Warrant and hereby agree to waive
and
not to assert the defense in any action for specific performance that a remedy
at law would be adequate.
j) Successors
and Assigns.
Subject
to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by the Holder or
holder of Warrant Shares.
k) Amendment.
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
l) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
m) Headings.
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
n) Warrant
Agreement.
This
Warrant is governed by and subject to the terms and conditions contained in
the
Warrant Agreement. In the event of a conflict between the provisions of the
Warrant Agreement and this Warrant, the provisions of the Warrant Agreement
shall govern. A copy of the Warrant Agreement may be obtained at no cost upon
request from the Company at its principal office or from the Warrant Agent.
********************
12
IN
WITNESS WHEREOF, the Company and the Warrant Agent have caused this Warrant
to
be executed by their respective officer thereunto duly authorized as of the
date
first above indicated.
| CHINA PRECISION STEEL, INC. | ||
| |
|
|
| By: | ||
|
Name:
|
||
|
Title:
|
||
|
CORPORATE
STOCK TRANSFER, INC.
|
||
| |
|
|
| By: | ||
|
Print Name: |
||
| Title; | ||
13
NOTICE
OF EXERCISE
TO: [_______________________
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full),
and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
o
in lawful money of the
United States; or
o
[if permitted] the cancellation of such
number of Warrant Shares as is necessary, in accordance with the formula set
forth in subsection 2(c), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of
Investing Entity:
________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_________________________________________________
Name
of
Authorized Signatory:
___________________________________________________________________
Title
of
Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
14
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
| Holder’s Signature: | |
| Holder’s Address: | |
Signature
Guaranteed: ___________________________________________
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
15
