EXHIBIT 10.1
FORM OF DEBENTURE
THE
SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) OR APPLICABLE STATE SECURITIES LAWS (THE
“STATE ACTS”), AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR
OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT
UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE OPINION OF ITS COUNSEL OR
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
COUNSEL FOR THE COMPANY, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN
VIOLATION OF THE ACT AND THE STATE ACTS.
ENERGY
COMPOSITES CORPORATION
A
Nevada Corporation
CONVERTIBLE
DEBENTURE
_____________
__, 2008
NO.
_____
ENERGY COMPOSITES CORPORATION., a
Nevada corporation (the “
Company
”), is
indebted and, for value received, promises to pay to the order of
______________
on
___________________ __, 2011 (the “
Maturity Date
”),
(unless this Debenture shall have been sooner called for prepayment as herein
provided), upon presentation of this Debenture,
___________________________________
Dollars
($______________
) (the “
Principal Amount
”)
and to pay interest on the Principal Amount at a rate equal to Six Percent (6%)
per annum.
The Company covenants, promises and
agrees as follows:
1.
Interest.
Interest which
shall accrue on the Principal Amount shall be payable in cash or in shares of
the Company’s common stock, $0.001 par value (the “
Common Stock
”),
valued at Two Dollars and Fifty Cents ($2.50) (the “
Conversion Price
”)
per share, in twelve (12) quarterly installments on April 1, July 1, October 1,
and January 1 in each and every calendar year until the Principal Amount and all
accrued and unpaid interest shall have been paid in full. If this Debenture
shall be issued on a date other than the first day of a quarter, the interest
payable shall be prorated upon the number of days of such quarterly period
during which this Debenture shall have been issued and outstanding. All accrued
and unpaid interest shall be payable on the Maturity Date. The first payment of
interest shall be made on January 1, 2008.
2.
Prepayment.
2.1.
Conditions to be
Satisfied.
This Debenture is subject to prepayment at the
option of the Company in whole or in part after the one year anniversary of the
date of this Debenture but prior to the Maturity Date at any time and from time
to time without penalty or premium, so long as all of the following conditions
(the “
Prepayment
Conditions
”) have been met:
Page 1 of 7
(a)
The
Company’s Common Stock has traded above the Conversion Price per share for at
least twenty (20) consecutive trading days immediately preceding the Prepayment
Notice (defined below);
(b)
The
average trading volume shall be at least one hundred thousand (100,000) shares
per day during such twenty (20)-consecutive day trading period; and
(c)
The
shares of Common Stock issuable upon conversion of this Debenture shall be
eligible for resale pursuant to Rule 144 under the Securities Act of
1933.
2.2.
Notice of
Prepayment.
The Company may exercise its right to prepay this
Debenture by giving notice (the “
Prepayment Notice
”)
thereof to the holder of this Debenture as it appears on the books of the
Company, which notice shall specify the terms of prepayment, the principal
amount of the Debenture to be prepaid (the “
Prepayment Amount
”)
and shall fix a date for prepayment (the “
Prepayment Date
”),
which date shall not be less than thirty (30) days nor more than forty-five (45)
days after the date of the Prepayment Notice.
2.3.
Amounts to be
Paid.
On the Prepayment Date, the Company shall pay all
accrued and unpaid interest on the Debenture up to and including the Prepayment
Date and shall pay to the holder hereof a dollar amount equal to the Prepayment
Amount.
3.
Conversion.
3.1.
Holder’s Right to
Convert.
The holder of this Debenture shall have the right, at
such holder’s option, at any time, to convert all or any portion of this
Debenture into such number of fully paid and nonassessable shares of Common
Stock of the Company as shall be provided herein.
3.2.
Notice of
Conversion.
The holder of this Debenture may exercise the
conversion right provided in this Section 3 by giving written notice (the “
Conversion Notice
”)
to the Company of the exercise of such right and stating the name or names in
which the stock certificate or stock certificates for the shares of Common Stock
are to be issued and the address to which such certificates shall be delivered.
The Conversion Notice shall be accompanied by the Debenture. The number of
shares of Common Stock that shall be issuable upon conversion of the Debenture
shall equal the Principal Amount to be converted divided by the Conversion
Price, rounded to the nearest whole share.
3.3.
Conversion
Procedure
. Conversion shall be deemed to have been effected on
the date the Conversion Notice is given (the “
Conversion Date
”).
Within ten (10) business days after receipt of the Conversion Notice, the
Company shall issue and deliver by hand against a signed receipt therefor or by
United States registered mail, return receipt requested, to the address
designated by the holder of this Debenture in the Conversion Notice, a stock
certificate or stock certificates of the Company representing the number of
shares of Common Stock to which such holder is entitled and a check or cash in
payment of all interest accrued and unpaid on the Debenture up to and including
the Conversion Date.
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3.4.
Company’s Right to
Convert.
This Debenture may be converted at the option of the
Company in whole or in part at any time and from time to time without penalty or
premium, so long as all of the Prepayment Conditions have been
met. The Company may exercise its right to convert this Debenture by
giving notice thereof to the holder of this Debenture as it appears on the books
of the Company, which notice shall specify the principal amount of the Debenture
to be converted and shall fix a date for conversion, which date shall not be
less than thirty (30) days nor more than forty-five (45) days after the date of
the Conversion Notice.
3.5.
Taxes.
The Company shall pay
all documentary, stamp or other transactional taxes and charges attributable to
the issuance or delivery of shares of stock of the Company upon conversion;
provided, however, that the Company shall not be required to pay any taxes which
may be payable in respect of any transfer involved in the issuance or delivery
of any certificate for such shares in a name other than that of the record
holder of this Debenture.
3.6.
Reservation of Shares.
The
Company shall at all times reserve and keep available, free from preemptive
rights, unissued or treasury shares of Common Stock sufficient to effect the
conversion of this Debenture.
4.
Adjustment of Conversion Price.
The number of shares of Common Stock issuable upon the conversion of this
Debenture and the Conversion Price shall be subject to adjustment as
follows:
4.1.
Triggering Events for
Adjustment.
In the case the Company shall
(a) pay
a dividend on the Common Stock in Common Stock or securities convertible into,
exchangeable for or otherwise entitling a holder thereof to receive Common
Stock,
(b) declare
a dividend payable in cash on its Common Stock and at substantially the same
time offer its
shareholders
a right to
purchase new common stock (or securities convertible into, exchangeable for or
otherwise entitling a holder thereof to receive Common Stock) from proceeds of
such dividend (all Common Stock so issued shall be deemed to have been issued as
a stock dividend),
(c) subdivide
its outstanding shares of Common Stock into a greater number of shares of Common
Stock,
(d) combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or
(e) issue
by reclassification of its Common Stock of the Company,
the
number of shares of Common Stock issuable upon conversion of this Debenture
immediately prior thereto shall be adjusted so that the holder of this Debenture
shall be entitled to receive after the happening of any of the events described
above that number and kind of shares as the holders would have received had such
Debenture been converted immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant
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of 7
to this
subdivision shall become effective immediately after the close of business on
the record date in the case of a stock dividend and shall become effective
immediately after the close of business on the record date in the case of a
stock split, subdivision, combination or reclassification.
4.3.
Threshold for
Adjustment.
Any adjustment in the numbers of shares of Common
Stock issuable hereunder otherwise required to be made by this Section will not
have to be made if such adjustment would not require an increase or decrease in
one (1%) percent or more in the number of shares of Common Stock issuable upon
conversion of this Debenture.
4.4.
Manner of
Adjustment.
Whenever the number of shares of Common Stock
issuable upon the conversion of this Debenture is adjusted, as herein provided,
the Conversion Price shall be adjusted (to the nearest cent) by multiplying such
Conversion Price immediately prior to such adjustment by a fraction of which the
numerator shall be the number of shares of Common Stock issuable upon the
conversion of this Debenture immediately prior to such adjustment, and of which
the denominator shall be the number of shares of Common Stock issuable
immediately thereafter.
4.5.
Reorganization, Reclassification,
Consolidation, Merger or Sale
. In case of any
reclassification, capital reorganization, consolidation, merger, sale of all or
substantially all of the Company’s assets to another Person or any other
change in the Common Stock of the Company, other than as a result of a
subdivision, combination, or stock dividend provided for in Section 4.1
above (any of which, a “
Change Event
”), then,
as a condition of such Change Event, lawful provision shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered to the holder of this Debenture, so that the holder shall have the
right at any time prior to the Maturity Date to convert this Debenture into the
kind and amount of shares of stock and other securities and property receivable
in connection with such Change Event by a holder of the same number of shares of
Common Stock as were obtainable by the holder immediately prior to such Change
Event. In any such case appropriate provisions shall be made with
respect to the rights and interest of the holder so that the provisions hereof
shall thereafter be applicable with respect to any shares of stock or other
securities and property deliverable upon conversion hereof, and appropriate
adjustments shall be made to the conversion price per share payable hereunder,
provided the aggregate conversion price shall remain the same.
5.
Default.
5.1.
Events of
Default.
The entire unpaid and unredeemed balance of the
Principal Amount and all Interest accrued and unpaid on this Debenture shall, at
the election of the holder, be and become immediately due and payable upon the
occurrence of any of the following events (a “
Default
Event
”):
(a) The
non-payment by the Company when due of principal and interest or of any other
payment as provided in this Debenture or with respect to any other Debenture
issued by the Company.
Page 4 of 7
(b) If
the Company (i) applies for or consents to the appointment of, or if there shall
be a taking of possession by, a receiver, custodian, trustee or liquidator for
the Company or any of its property; (ii) becomes generally unable to pay its
debts as they become due; (iii) makes a general assignment for the benefit of
creditors or becomes insolvent; (iv) files or is served with any petition for
relief under the Bankruptcy Code or any similar federal or state statute; (v)
has any judgment entered against it in excess of Fifty Thousand Dollars
($50,000) in any one instance or in the aggregate during any consecutive 12
month period or has any attachment or levy made to or against any of its
property or assets; (vi) defaults with respect to any evidence of indebtedness
or liability for borrowed money, or any such indebtedness shall not be paid as
and when due and payable; or (vii) has assessed or imposed against it, or if
there shall exist, any general or specific lien for any federal, state or local
taxes or charges against any of its property or assets.
(c) Any
failure by the Company to issue and deliver shares of Common Stock as provided
herein upon conversion of this Debenture.
5.2.
Remedies.
Each
right, power or remedy of the holder hereof upon the occurrence of any Default
Event as provided for in this Debenture or now or hereafter existing at law or
in equity or by statute shall be cumulative and concurrent and shall be in
addition to every other right, power or remedy provided for in this Debenture or
now or hereafter existing at law or in equity or by statute, and the exercise or
beginning of the exercise by the holder or transferee hereof of any one or more
of such rights, powers or remedies shall not preclude the simultaneous or later
exercise by the holder hereof of any or all such other rights, powers or
remedies.
6.
Failure to Act and Waiver.
No
failure or delay by the holder hereof to insist upon the strict performance of
any term of this Debenture or to exercise any right, power or remedy consequent
upon a default hereunder shall constitute a waiver of any such term or of any
such breach, or preclude the holder hereof from exercising any such right, power
or remedy at any later time or times. By accepting payment after the due date of
any amount payable under this Debenture, the holder hereof shall not be deemed
to waive the right either to require payment when due of all other amounts
payable under this Debenture, or to declare a default for failure to effect such
payment of any such other amount.
The failure of the holder of this
Debenture to give notice of any failure or breach of the Company under this
Debenture shall not constitute a waiver of any right or remedy in respect of
such continuing failure or breach or any subsequent failure or
breach.
7.
Consent to Jurisdiction.
The
Company hereby agrees and consents that any action, suit or proceeding arising
out of this Debenture may be brought in any appropriate court in the State of
Nevada, including the United States District Court for the District of Nevada,
or in any other court having jurisdiction over the subject matter, all at the
sole election of the holder hereof, and by the issuance and execution of this
Debenture the Company irrevocably consents to the jurisdiction of each such
court.
8.
Transfer.
This Debenture
shall be transferred on the books of the Company only by the registered holder
hereof or by his/her attorney duly authorized in writing or by delivery to the
Company of a duly executed Assignment substantially in the form attached hereto
as Exhibit A.
Page 5
of 7
The
Company shall be entitled to treat any holder of record of the Debenture as the
holder in fact thereof and shall not be bound to recognize any equitable or
other claim to or interest in this Debenture in the name of any other person,
whether or not it shall have express or other notice thereof, save as expressly
provided by the laws of Nevada.
9.
Notices.
All notices and
communications under this Debenture shall be in writing and shall be either
delivered in person or accompanied by a signed receipt therefor or mailed
first-class United States certified mail, return receipt requested, postage
prepaid, and addressed as follows: if to the Company, to 4400 Commerce Drive,
Wisconsin Rapids, Wisconsin 54494, and, if to the holder of this Debenture, to
the address of such holder as it appears in the books of the Company. Any notice
of communication shall be deemed given and received as of the date of such
delivery or mailing.
10.
Governing
Law.
This Debenture shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada, or, where
applicable, the laws of the United States.
IN WITNESS WHEREOF, the Company has
caused this Debenture to be duly executed under its corporate seal.
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ENERGY
COMPOSITES CORPORATION
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By:
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Samuel
W. Fairchild
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Chief
Executive Officer
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Page 6 of 7
Exhibit
A
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned
hereby assigns to ___________________, the three-year Unsecured Convertible
Debenture of ENERGY COMPOSITES CORPORATION, No. ________ and hereby irrevocably
appoints __________________________________, Attorney, to transfer said
debenture on the books of the within named corporation, with full power of
substitution in the premises.
WITNESS my hand and seal this ____ day
of _______________, 20___.
_________________________________
_________________________________
Page 7 of 7
EXHIBIT 10.2
FORM OF WARRANT
The
securities represented by this Warrant and issuable upon exercise hereof have
not been registered under the Securities Act of 1933, as amended (the “Act”), or
under the provisions of any applicable state securities laws, but have been
acquired by the registered holder hereof for purposes of investment and in
reliance on statutory exemptions under the Act, and under any applicable state
securities laws. These securities and the securities issued upon
exercise hereof may not be sold, pledged, transferred or assigned, nor may this
Warrant be exercised, except in a transaction which is exempt under the
provisions of the Act and any applicable state securities laws or pursuant to an
effective registration statement.
ENERGY
COMPOSITES CORPORATION
A
Nevada Corporation
COMMON
STOCK PURCHASE WARRANT
Date of
Issuance: ____________ 2008
Certificate
No. W-__
For value
received, Energy Composites Corporation, a Nevada corporation (the “
Company
”), hereby
grants to ____________________ or its transferees and assigns (“
Registered Holder
”),
the right to purchase from the Company a total of ______________ shares (“
Warrant Shares
”) of
the Company’s common stock, par value $0.001 per share (“
Common Stock
”), at a
price per share equal to
$5.00
(the “
Initial Exercise
Price
”). The exercise price and number of Warrant Shares (and
the amount and kind of other securities) for which this Warrant is exercisable
shall be subject to adjustment as provided in Section 2 hereof. This
Warrant is being issued in connection with the Subscription Agreement between
Registered Holder and the Company dated ___________, 2008 (the “
Subscription
Agreement
”). This Warrant is subject to the following
provisions:
SECTION
1.
Exercise of
Warrant
.
(a)
Terms of Warrants; Exercise
Period
. Subject to the terms of this Agreement, the Registered
Holder shall have the right, commencing on the date hereof and expiring on the
3-year anniversary hereof (the “
Expiration Date
”), to
exercise this Warrant, in whole or in part, and receive from the Company the
number of Warrant Shares which the Registered Holder may at the time be entitled
to receive on exercise of this Warrant and payment of the Exercise Price then in
effect for the Warrant Shares. To the extent not exercised prior to
the Expiration Date, this Warrant shall become void and all rights thereunder
and all rights in respect thereof under this Agreement shall cease as of such
time.
(b)
Exercise
Procedure
.
(i)
This
Warrant shall be deemed to have been exercised on the date specified in a
written notice from the Registered Holder to the Company (the “
Exercise Time
”) and
within three business days following the Exercise Time, the Registered Holder
shall deliver the following to the Company:
(A)
a
completed Exercise Agreement, as described in Section 1(c)
below;
(B)
this
Warrant;
(C)
if this
Warrant is not registered in the name of the Registered Holder, an Assignment or
Assignments in the form set forth in
Exhibit II
hereto
evidencing the assignment of this Warrant to the Registered Holder, in which
case the Registered Holder shall have complied with the provisions set
forth in Section 4 hereof; and
(D)
wire
transfer or a check payable to the Company in an amount equal to the product of
the Exercise Price (as such term is defined in Section 2) multiplied by the
number of Warrant Shares being purchased upon such exercise (the “
Aggregate Exercise
Price
”).
(ii)
Certificates
for Warrant Shares purchased upon exercise of this Warrant shall be delivered by
the Company to the Registered Holder within 5 business days after the date of
the Exercise Time. Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant that have not expired or been exercised and
shall, within such 5-day period, deliver such new Warrant to the Person
designated for delivery in the Exercise Agreement.
(iii)
The
Warrant Shares issuable upon the exercise of this Warrant shall be deemed to
have been issued to the Registered Holder at the Exercise Time, and the
Registered Holder shall be deemed for all purposes to have become the record
holder of such Warrant Shares at the Exercise Time.
(iv)
The
Company shall not close its books against the transfer of this Warrant or of any
Warrant Shares issued or issuable upon the exercise of this Warrant in any
manner which interferes with the timely exercise of this Warrant.
(v)
The
Company shall assist and cooperate with the Registered Holder or any Registered
Holder required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this
Warrant.
(vi)
The
Company shall at all times reserve and keep available out of its authorized but
unissued capital stock, solely for the purpose of issuance upon the exercise of
this Warrant, the maximum number of Warrant Shares issuable upon the exercise of
this Warrant. All Warrant Shares which are so issuable shall, when
issued and upon the payment of the Exercise Price therefor, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be
necessary to assure that all such Warrant Shares may be so issued without
violation by the Company of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
securities of the Company may be listed (except for official notice of issuance
which shall be immediately delivered by the Company upon each such
issuance).
(c)
Exercise
Agreement
. Upon any exercise of this Warrant, the Registered
Holder shall deliver an Exercise Agreement in the form set forth in
Exhibit I
hereto, except that if the Warrant Shares are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not
include
all the Warrant Shares purchasable hereunder, it shall also state the name
of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be issued. Such Exercise Agreement shall be
dated the actual date of execution thereof.
(d)
Mandatory
Exercise
. The Company may force the exercise of this Warrant
if all of the following conditions have been met:
(i)
The
Company’s common stock, $0.001 par value (the “
Common Stock
”) has
traded above the Exercise Price for at least 20 consecutive trading days
immediately preceding the Mandatory Exercise Notice (defined
below);
(ii)
The
average trading volume shall be at least 100,000 shares per day during such
20-consecutive day trading period; and
(iii)
The
shares of Common Stock issuable upon exercise of this Warrant shall be eligible
for resale pursuant to Rule 144 under the Securities Act of 1933 or there shall
be an effective registration statement covering the resale of the Warrant
Shares.
The
Company may exercise its right to force the exercise this Warrant by giving
notice thereof (the “
Mandatory Exercise
Notice
”) to the holder of this Warrant as it appears on the books of the
Company, which notice shall specify the number of Warrant Shares to be issued
and shall fix a date for mandatory exercise, which date shall not be less than
30 days nor more than 45 days after the date of the Mandatory Exercise
Notice.
SECTION
2.
Adjustment of Exercise Price
and Number of Shares
. In order to prevent dilution of the
rights granted under this Warrant, the Initial Exercise Price shall be subject
to adjustment from time to time as provided in this Section 2 (such price
or such price as last adjusted pursuant to the terms hereof, as the case may be,
is herein called the “
Exercise Price
”), and
the number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time as provided in this
Section 2.
(a)
Reorganization,
Reclassification, Consolidation, Merger or Sale
. In case
of any reclassification, capital reorganization, consolidation, merger, sale of
all or substantially all of the Company’s assets to another Person or any
other change in the Common Stock of the Company, other than as a result of a
subdivision, combination, or stock dividend provided for in Section 2(b)
below (any of which, a “
Change Event
”), then,
as a condition of such Change Event, lawful provision shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered to the Registered Holder, so that the Registered Holder shall have
the right at any time prior to the expiration of this Warrant to purchase, at a
total price equal to that payable upon the exercise of this Warrant (subject to
adjustment of the Exercise Price as provided in Section 2), the kind and amount
of shares of stock and other securities and property receivable in connection
with such Change Event by a holder of the same number of shares of Common Stock
as were purchasable by the Registered Holder immediately prior to such Change
Event. In any such case appropriate provisions shall be made with
respect to the rights and interest of the Registered Holder so that the
provisions hereof shall thereafter be applicable with respect to any shares of
stock or other securities and property deliverable upon exercise hereof, and
appropriate adjustments shall
be made
to the purchase price per share payable hereunder, provided the aggregate
purchase price shall remain the same.
(b)
Subdivisions, Combinations
and Other Issuances
. If the Company shall at any time prior to
the expiration of this Warrant (i) subdivide its Common Stock, by split-up or
otherwise, or combine its Common Stock, or (ii) issue additional shares of its
Common Stock or other equity securities as a dividend with respect to any shares
of its Common Stock, the number of shares of Common Stock issuable on the
exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the
same. Any adjustment under this Section 2(b) shall become
effective at the close of business on the date the subdivision or combination
becomes effective, or as of the record date of such dividend, or in the event
that no record date is fixed, upon the making of such dividend.
(c)
Issuance of New
Warrant
. Upon the occurrence of any of the events listed in
this Section 2 that results in an adjustment of the type, number or exercise
price of the securities underlying this Warrant, the Registered Holder shall
have the right to receive a new warrant reflecting such adjustment upon the
Registered Holder tendering this Warrant in exchange. The new warrant
shall otherwise have terms identical to this Warrant.
(d)
Notices
.
(i)
The
Company shall give written notice to the Registered Holder of this Warrant
at least 10 days prior to the date on which the Company closes its books or
takes a record for determining rights to vote with respect to any event
described in this Section 2 or any dissolution or liquidation.
(ii)
The
Company shall also give written notice to the Registered Holder of this Warrant
at least 10 days prior to the date on which any event described in this Section
2 or any dissolution or liquidation shall take place.
SECTION
3.
No Voting Rights;
Limitations of Liability
. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by
the Registered Holder to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of the Registered Holder shall give rise to any
liability of such holder for the Exercise Price of Warrant Shares acquirable by
exercise hereof or as a stockholder of the Company.
SECTION
4.
Warrant
Transferable
. Subject to compliance with applicable securities
laws and the terms of this Section 6, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Registered Holder upon
surrender of this Warrant with a properly executed Assignment (in the form of
Exhibit II
hereto) at the principal office of the Company.
SECTION
5.
Warrant Exchangeable for
Different Denominations
. This Warrant is exchangeable, upon
the surrender hereof by the Registered Holder at the principal office of the
Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants shall represent such
portion of such rights as is designated by the Registered Holder at the time of
such surrender. The date the Company initially issues this Warrant
shall be deemed to be the “Date of Issuance” hereof regardless of the number of
times new certificates representing the unexpired and unexercised rights
formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
“Warrants.”
SECTION
6.
Replacement
. Upon
receipt of evidence reasonably satisfactory to the Company of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Company, or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at the expense
of the Registered Holder) execute and deliver in lieu of such certificate a new
certificate of like kind representing the same rights represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
SECTION
7.
Notices
. Any
notice, demand, offer, request or other communication required or permitted to
be given pursuant to the terms of this Warrant shall be in writing and shall be
deemed effectively given the earlier of (i) when received, (ii) when delivered
personally, (iii) one business day after being delivered by facsimile (with
receipt of appropriate confirmation), or (iv) one business day after being
deposited with an overnight courier service, and addressed to the recipient at
the addresses set forth below unless another address is provided to the other
party in writing:
If to Company,
to
:
Energy
Composites Corporation
4400 Commerce Drive
Wisconsin
Rapids, WI 54494
Attn: Samuel W.
Fairchild
Fax: (715) 421 2048
If to Registered Holder,
to
:
________________________
________________________
________________________
Fax: _______________
or, in
any case, at such other address or addresses as shall have been furnished in
writing to the Company (in the case of a Registered Holder of Warrants) or to
the Registered Holders of Warrants (in the case of the Company) in accordance
with the provisions of this paragraph.
SECTION
8.
Amendment and
Waiver
. Except as otherwise provided herein, the provisions of
the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Registered Holders
of Warrants representing a majority of the Warrant Shares obtainable upon
exercise of the then-outstanding Warrants; provided, however, that no such
action may change the Exercise Price of the Warrants or the number of shares or
class of capital stock obtainable upon exercise of each Warrant without the
written consent of all Registered Holders.
SECTION
9.
Descriptive Headings;
Governing Law
.
(a)
The
descriptive headings of the several Sections of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.
(b)
All
issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Nevada or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Nevada.
SECTION
10.
Warrant
Register
. The Company shall maintain at its principal
executive office books for the registration and the registration of transfer of
this Warrant. The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.
SECTION
11.
Fractions of
Shares
. The Company may, but shall not be required, to issue a
fraction of a Warrant Share upon the exercise of this Warrant in whole or in
part. As to any fraction of a share which the Company elects not to
issue, the Company shall make a cash payment in respect of such fraction in an
amount equal to the same fraction of the market price of a Warrant Share on the
date of such exercise (as determined by the board of directors in its reasonable
discretion).
*
* * * *
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested
by its duly authorized officers and to be dated as of the Date of Issuance
hereof.
ENERGY
COMPOSITES CORPORATION
By: _______________________________
Samuel W. Fairchild
Chief Executive Officer
EXHIBIT
I
EXERCISE
AGREEMENT
To: Dated:
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. W-____), hereby agrees to subscribe for the purchase of ______
Warrant Shares covered by such Warrant and makes payment herewith in full
therefor at the price per share provided by such Warrant. Please
issue the Warrant Shares in the following names and amounts:
Name Number
of Warrant Shares
Signature
____________________
Address
______________________
EXHIBIT
II
ASSIGNMENT
FOR VALUE
RECEIVED, _____________________________ hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant (Certificate No.
W-_____) with respect to the number of the Warrant Shares covered thereby set
forth below, unto:
Names of
Assignee
Address
No. of
Shares
Dated: Signature _______________________
Witness _______________________
The
Assignee agrees to be bound by the terms of the Warrant.
Signature _______________________
Witness _______________________
9