COMMON STOCK PURCHASE WARRANT
THE
WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
DELIVERABLE UPON EXERCISE HEREUNDER, HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
WITHOUT REGISTRATION UNDER THE ACT UNLESS PURSUANT TO (A) AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) AN
EXEMPTION FROM REGISTRATION UNDER THE ACT IN RELIANCE UPON RULE 144 PROMULGATED
THEREUNDER.
Date:
February 22, 2007
|
No. W-3
|
100,000
Warrants
|
WARRANT
TO PURCHASE COMMON STOCK
OF
THIS
CERTIFIES THAT, for value received, CCG Elite Investor Relations (“Holder”), is
entitled, subject to the terms and conditions of this Common Stock Purchase
Warrant (this “Warrant”), at any time or from time to time after the date hereof
(the “Effective Date”), to purchase up to one hundred thousand (100,000) shares
(the “Warrant Shares”) of Common Stock (as defined below), from China Precision
Steel, Inc., a Colorado corporation (the “Company”), at an exercise price per
share equal to $3.60 (the “Purchase Price). This Warrant shall expire at 5:00
p.m. Eastern Time on that date which is thirty-six (36) months from the date
of
this Warrant (the “Expiration Date”). Both the number of shares of Common Stock
purchasable upon exercise of this Warrant and the Purchase Price are subject
to
adjustment and change as provided herein. This Warrant is issued in connection
with that certain Letter of Engagement, dated as of December 4, 2006 by and
between the Holder and Shanghai Chengtong Precision Strip Co., Ltd.
1. CERTAIN
DEFINITIONS. As used in this Warrant the following terms shall have the
following respective meanings:
“1933
Act” shall mean the Securities Act of 1933, as amended.
“Common
Stock” shall mean the common stock of the Company, par value $0.001 per share,
and any other securities at any time receivable or issuable upon exercise
of
this Warrant.
1
“Fair
Market Value” or “FMV” of a share of Common Stock as of a particular date shall
mean:
(a) If
traded
on a securities exchange, the Fair Market Value shall be deemed to be the
average of the closing prices of the Common Stock of the Company on such
exchange over the five (5) business days ending immediately prior to the
applicable date of valuation;
(b) If
actively traded over-the-counter, the Fair Market Value shall be deemed to
be
the average of the closing bid prices over the 30-day period ending immediately
prior to the applicable date of valuation; and
(c) 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.
“SEC”
shall mean the Securities and Exchange Commission.
“Trading
Day” means a day on which the Common Stock is listed or quoted for trading on
the date in question on The NASDAQ Capital Market, The NASDAQ National Market,
the OTC Bulletin Board or any other recognized exchange in the United
States.
2. EXERCISE
OF WARRANT
2.1
Exercise,
Payment.
Subject
to compliance with the terms and conditions of this Warrant and applicable
securities laws, this Warrant may be exercised, in whole or in part at any
time
or from time to time, on or before the Expiration Date by the delivery
(including, without limitation, delivery by facsimile) of the form of Notice
of
Exercise attached hereto as Exhibit 1 (the “Notice of Exercise”), duly executed
by the Holder, at the address of the Company as set forth herein, and as
soon as
practicable after such date,
(a) surrendering
this Warrant at the address of the Company, and
(b) providing
payment, by check or by wire transfer, of an amount equal to the product
obtained by multiplying the number of shares of Common Stock being purchased
upon such exercise by the then effective Purchase Price (the “Exercise Amount”),
or
(c) in
lieu
of tendering the Exercise Amount, the Warrants may be exercised by surrendering
this Certificate together with irrevocable instructions to the Company 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) tha 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”).
2.2 Common
Stock Certificates; Fractional Shares.
Following the Company’s receipt of a Notice of Exercise, the Company will use
commercially reasonable efforts to cause the delivery within three (3) Trading
Days of such receipt, to the person or persons entitled to receive the same,
a
certificate or certificates for the number of whole shares of Common Stock
issuable upon such exercise. The Company shall register the number of shares
of
Common Stock issuable upon exercise on the share register of the Company.
No
fractional shares or scrip representing fractional shares of Common Stock
shall
be issued upon an exercise of this Warrant.
2
2.3 Partial
Exercise: Effective Date of Exercise.
In case
of any partial exercise of this Warrant, the Holder and the Company shall
cancel
this Warrant upon surrender hereof and shall execute and deliver a new Common
Stock Purchase Warrant of like tenor and date for the balance of the shares
of
Common Stock purchasable hereunder. This Warrant shall be deemed to have
been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above. The Company acknowledges that the
person entitled to receive the shares of Common Stock issuable upon exercise
of
this Warrant shall be treated for all purposes as the holder of record of
such
shares as of the close of business on the date the Holder is deemed to have
exercised this Warrant.
3. TAXES.
The Company shall pay all taxes and other governmental charges that may be
imposed in respect of the delivery of shares upon exercise of this Warrant;
provided, however, that the Company shall not be required to pay any tax
or
other charge imposed in connection with any transfer involved in the delivery
of
any certificate for shares of Common Stock in any name other than that of
the
Holder of this Warrant, and in such case the Company shall not be required
to
deliver any stock certificate until such tax or other charge has been paid,
or
it has been established to the Company’s reasonable satisfaction that no tax or
other charge is due.
4. ADJUSTMENT
OF PURCHASE PRICE AND NUMBER OF COMMON STOCK. The number of shares of Common
Stock deliverable upon exercise of this Warrant (or any shares of stock or
other
securities or property receivable upon exercise of this Warrant) and the
Purchase Price are subject to adjustment upon occurrence of the following
events:
4.1 Adjustment
for Stock Splits, Stock Subdivisions or Combinations of Shares of Common
Stock.
The
Purchase Price of this Warrant shall be proportionally decreased and the
number
of shares of Common Stock deliverable upon exercise of this Warrant (or any
shares of stock or other securities at the time deliverable upon exercise
of
this Warrant) shall be proportionally increased to reflect any stock split
or
subdivision of the Company’s Common Stock. The Purchase Price of this Warrant
shall be proportionally increased and the number of shares of Common Stock
deliverable upon exercise of this Warrant (or any shares of stock or other
securities at the time deliverable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Company’s Common
Stock.
4.2 Reclassification.
If the
Company, by reclassification of securities or otherwise, shall change any
of the
securities as to which purchase rights under this Warrant exist into the
same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with
respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change and the Purchase
Price therefore shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 4. No adjustment shall be made pursuant
to this Section 4.2 upon any conversion or redemption of the Common Stock
which
is the subject of Section 4.4.
3
4.3 Adjustment
for Capital Reorganization, Merger or Consolidation.
In case
of any capital reorganization of the capital stock of the Company (other
than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or any merger or consolidation of the Company with
or into
another corporation, or the sale of all or substantially all the assets of
the
Company then, and in each such case, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
Holder of this Warrant shall thereafter be entitled to receive upon exercise
of
this Warrant (in all cases without regard to any limitations on the exercise
of
this Warrant), during the period specified herein and upon payment of the
Purchase Price then in effect, the number of shares of stock or other securities
or property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a holder of the shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had
been
exercised immediately before such reorganization, merger, consolidation,
sale or
transfer, all subject to further adjustment as provided in this Section 4.
The
foregoing provisions of this Section 4.3 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the
stock
or securities of any other corporation that are at the time receivable upon
the
exercise of this Warrant. If the per-share consideration payable to the Holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration
shall
be determined in good faith by the Company’s Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company’s Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction,
to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
4.4 Conversion
of Common Stock.
If all
or any portion of the authorized and outstanding shares of Common Stock of
the
Company are redeemed or converted or reclassified into other securities or
property pursuant to the Company’s Articles of Incorporation or otherwise, or
the Common Stock otherwise ceases to exist, then, in such case, the Holder
of
this Warrant, upon exercise hereof at any time after the date on which the
Common Stock is so redeemed or converted, reclassified or ceases to exist
(the
“Termination Date”), shall receive, in lieu of the number of shares of Common
Stock that would have been deliverable upon such exercise immediately prior
to
the Termination Date, the securities or property that would have been received
if this Warrant had been exercised in full and the Common Stock received
thereupon had been simultaneously converted immediately prior to the Termination
Date, all subject to further adjustment as provided in this Warrant.
Additionally, the Purchase Price shall be immediately adjusted to equal the
quotient obtained by dividing (x) the aggregate Purchase Price of the maximum
number of shares of Common Stock for which this Warrant was exercisable
immediately prior to the Termination Date by (y) the number of shares of
Common
Stock of the Company for which this Warrant is exercisable immediately after
the
Termination Date, all subject to further adjustment as provided
herein.
5. LOSS
OR
MUTILATION. Upon receipt of evidence reasonably satisfactory the Company
of the
ownership of and the loss, theft, destruction or mutilation of this Warrant,
and
of indemnity reasonably satisfactory to it, and (in the case of mutilation)
upon
surrender and cancellation of this Warrant, the Company will cause to be
executed and delivered in lieu thereof a new Warrant of like tenor as the
lost,
stolen, destroyed or mutilated Warrant.
4
6. REPRESENTATION.
The Company hereby covenants that all shares issuable upon exercise of this
Warrant, when delivered upon such exercise, shall be free and clear of all
liens, security interests, charges and other encumbrances or restrictions
on
sale and free and clear of all preemptive rights, except encumbrances or
restrictions arising under federal or state securities laws. Further, the
Company hereby covenants to reserve such number of authorized but unissued
shares of Common Stock for issuance upon exercise of this Warrant.
7. RESTRICTIONS
ON TRANSFER.
7.1 The
Holder, by acceptance hereof, agrees that, absent an effective registration
statement filed with the SEC under the 1933 Act, covering the disposition
or
sale of this Warrant or the Common Stock issued or issuable upon exercise
hereof
or the Common Stock issuable upon conversion thereof, as the case may be,
and
registration or qualification under applicable state securities laws, such
Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants
or Common Stock, as the case may be, unless either (i) the Company has received
an opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such registration under the 1933 Act is not required
in connection with such disposition or (ii) the sale of such securities is
made
pursuant to Rule 144 under the 1933 Act or pursuant to some other applicable
exemption from registration.
7.2 In
addition to the foregoing restrictions on transfer, this Warrant may not
be
transferred by the Holder without the prior written consent of the Company,
which consent may not be unreasonably withheld. In the event of a transfer
to
which the Company has previously consented in writing, this Warrant and all
rights hereunder may be transferred by the Holder upon delivery of the form
of
Assignment attached hereto as Exhibit 2 (the “Assignment”), duly executed by the
Holder, surrender of this Warrant properly endorsed at the address of the
Company set forth herein and payment of any necessary transfer tax or other
governmental charge imposed upon such transfer. Upon any partial transfer,
the
Holder and Company will cause to be issued and delivered to the Holder a
new
Warrant or Warrants with respect to the portion of this Warrant not so
transferred. Each taker and holder of this Warrant, by taking or holding
the
same, consents and agrees that when this Warrant shall have been so endorsed,
the person in possession of this Warrant may be treated by the Company, and
all
other persons dealing with this Warrant, as the absolute owner hereof for
any
purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding; provided, however that until
a
transfer of this Warrant is duly registered on the books of the Company,
the
Company may treat the Holder hereof as the owner for all purposes.
8. COMPLIANCE
WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby
represents, warrants and covenants that it is an “accredited investor” as that
term is defined under Rule 501 of Regulation D, that any shares of stock
purchased upon exercise of this Warrant or acquired upon conversion thereof
shall be acquired for investment only and not with a view to, or for sale
in
connection with, any distribution thereof, that the Holder has had such
opportunity as such Holder has deemed adequate to obtain from representatives
of
the Company such information as is necessary to permit the Holder to evaluate
the merits and risks of its investment in the Company; that the Holder is
able
to bear the economic risk of holding such shares as may be acquired pursuant
to
the exercise of this Warrant for an indefinite period; that the Holder
understands that the shares of stock acquired pursuant to the exercise of
this
Warrant or acquired upon conversion thereof may not be registered under the
1933
Act (unless otherwise required pursuant to exercise by the Holder of the
registration rights, if any, previously granted to the Holder) and will be
“restricted securities” within the meaning of Rule 144 under the 1933 Act and
that the exemption from registration under Rule 144 will not be available
for at
least one year from the date of exercise of this Warrant, and even then will
not
be available unless a public market then exists for the stock, adequate
information concerning the Company is then available to the public, and other
terms and conditions of Rule 144 are complied with; and that all stock
certificates representing shares of stock issued to the Holder upon exercise
of
this Warrant or upon conversion of such shares may have affixed thereto a
legend
substantially in the following form:
5
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
9. NO
RIGHTS
OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the Holder
to any
voting rights or other rights as a stockholder of the Company. In the absence
of
affirmative action by such Holder to purchase Common Stock by exercise of
this
Warrant, no provisions of this Warrant, and no enumeration herein of the
rights
or privileges of the Holder hereof shall cause such Holder hereof to be a
stockholder of the Company for any purpose.
10. NOTICES.
All notices and other communications required or permitted hereunder shall
be in
writing and shall be mailed by registered or certified mail, postage prepaid,
return receipt requested, or by telecopier, or by email or otherwise delivered
by hand or by messenger, addressed or telecopied to the person to whom such
notice or communication is being given at its address set forth after its
signature hereto. In order to be effective, a copy of any notice or
communication sent by telecopier or email must be sent by registered or
certified mail, postage prepaid, return receipt requested, or delivered
personally to the person to whom such notice or communication is being at
its
address set forth after its signature hereto. If notice is provided by mail,
notice shall be deemed to be given five (5) business days after proper deposit
with the United States mail or nationally recognized overnight courier, or
immediately upon personally delivery thereof, to person to whom such notice
or
communication is being at such address. If notice is provided by telecopier,
notice shall be deemed to be given upon confirmation by the telecopier machine
of the receipt of such notice at the telecopier number provided above. If
notice
is provided by email, notice shall be deemed to be given upon confirmation
by
the sender’s email program of the receipt of such notice at the email address
provided after the signature of the person to whom such notice or communication
is being. The addresses set forth after the signatures hereto may be changed
by
written notice complying with the terms of this Section 10.
6
11. HEADINGS.
The headings in this Warrant are for purposes of convenience in reference
only,
and shall not be deemed to constitute a part hereof.
12. GOVERNING
LAW. This Warrant shall be construed and enforced in accordance with, and
governed by, the laws of the State of New York.
13. NOTICES
OF RECORD DATE. In case the Company shall take a record of the holders of
its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant), for the purpose:
(a) of
any
consolidation or merger of the Company with or into another corporation,
any
capital reorganization of the Company, any reclassification of the capital
stock
of the Company, or any conveyance of all or substantially all of the assets
of
the Company to another corporation in which holders of the Company’s stock are
to receive stock, securities or property of another corporation; or
(b) of
any
voluntary dissolution, liquidation or winding-up of the Company; or
(c) of
any
redemption of any outstanding capital stock of the Company; then, and in
each
such case,
the
Company will mail or cause to be mailed to the Holder of this Warrant a notice
specifying, as the case may be, the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is to take place, and the time, if any
is
to be fixed, as of which the holders of record of Common Stock (or such stock
or
securities as at the time are receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other
stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at
least
thirty (30) days prior to the date of the proposed action therein
specified.
14. SEVERABILITY.
If any term, provision, covenant or restriction of this Warrant is held by
a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Warrant
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
15. SATURDAYS,
SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday, Sunday
or
legal holiday, the Expiration Date shall automatically be extended until
5:00
p.m. on the next business day.
16. REMEDIES.
In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, the Holder and the Company will be
entitled to specific performance hereunder. The parties agree that monetary
damages alone may not be adequate compensation for any loss incurred by reason
of any breach of obligations hereunder and agrees to waive in any action
for
specific performance of any such obligation the defense that remedy at law
would
be adequate.
[SIGNATURE
PAGE FOLLOWS]
7
IN
WITNESS WHEREOF, the parties hereto have executed this Warrant as of
this 22nd
day of
February, 2007.
By:
/s/ Wo Xxxx
Xx
Name:
Wo
Xxxx Xx
Title:
President
Address
for Notices:
To
the
Issuer:
8th
Floor,
Teda Building
00
Xxxx
Xxx Xxxxxx
Xxxxxx
Xxx, Hong Kong
Facsimile:
x0-00-00-0000-0000
To
the
Holder:
Room
1308, 13th
Floor
0
Xxxxx’x
Xxxx Xxxxxxx, Xxxx Xxxx
[SIGNATURE
PAGE TO WARRANT]
8
EXHIBIT
1
NOTICE
OF
EXERCISE
(To
be
executed upon exercise of Warrant)
WARRANT
NO. ___
The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
securities of China Precision Steel, Inc., as provided for therein, and (check
the applicable box):
□
Tenders
herewith payment of the exercise price in full in the form of cash, a certified
or official bank check in same-day funds, or electronic funds transfer in
the
amount of $ for such securities.
□
Pursuant
to the Cashless Exercise feature set forth in Section 2.1(c).
Please
issue a certificate or certificates for such securities in the name of, and
pay
any cash for any fractional share to (please print name, address and social
security number):
Name:
Address:
Signature:
Note:
The
above signature should correspond exactly with the name on the first page
of
this Warrant Certificate or with the name of the assignee appearing in the
assignment form below.
If
said
number of shares shall not be all the shares purchasable under the within
Warrant Certificate, a new Warrant Certificate is to be issued in the name
of
said undersigned for the balance remaining of the shares purchasable thereunder
rounded up to the next higher whole number of shares.
9
EXHIBIT
2
ASSIGNMENT
(TO
BE
EXECUTED ONLY UPON ASSIGNMENT OF WARRANT CERTIFICATE)
WARRANT
NO.-___
For
value
received, hereby sells, assigns and transfers unto ______________ the within
Warrant Certificate, together with all right, title and interest therein,
and
does hereby irrevocably constitute and appoint ______________ attorney, to
transfer said Warrant Certificate on the books of the within-named Company
with
respect to the number of Warrants set forth below, with full power of
substitution in the premises:
|
NAME(S)
OF ASSIGNEE(S)
|
ADDRESS(ES)
OF ASSIGNEE(S)
|
#
OR WARRANTS
|
|
________________________
|
________________________
|
________________________
|
|
________________________
|
________________________
|
________________________
|
|
________________________
|
________________________
|
________________________
|
And
if
said number of Warrants shall not be all the Warrants represented by the
Warrant
Certificate, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the Warrants registered by said
Warrant
Certificate.
Dated:
_______________, 200_
Signature:________________________________
Notice:
The signature to the foregoing Assignment must correspond to the name as
written
upon the face of this security in every particular, without alteration or
any
change whatsoever; signature(s) must be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program)
pursuant to Securities and Exchange Commission Rule l7Ad-15.
10
