CHINA ENERGY RECOVERY, INC. WARRANT
NEITHER
THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"),
AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
WARRANT
|
Warrant
No. [__]
|
Dated:
April ___, 2008
|
CHINA
ENERGY RECOVERY, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received, [NAME OF HOLDER], or its registered
assigns (the "Holder"),
is
entitled to purchase from the Company up to a total of [___] shares of common
stock, $0.001 par value per share (the "Common
Stock"),
of
the Company (each such share, a "Warrant
Share"
and all
such shares, the "Warrant
Shares")
at an
exercise price equal to $1.29 per share (as adjusted from time to time as
provided in Section
9,
the
"Exercise
Price"),
at
any time and from time to time from and after the six month anniversary of
the
date hereof through and including the 60-month anniversary of the date hereof
(the "Expiration
Date"),
and
subject to the terms and conditions set forth herein. This Warrant (this
"Warrant")
is one
of a series of similar warrants issued pursuant to the Securities Purchase
Agreements dated as of the date hereof by and between the Company and each
of
the Purchasers identified therein (the "Purchase
Agreements").
1. Definitions.
In
addition to the terms defined elsewhere in this Warrant, capitalized terms
that
are not otherwise defined herein have the meanings given to such terms in the
Purchase Agreement.
2. Registration
of the Warrant Shares.
The
Company shall register the Warrant Shares pursuant to the terms of the
Registration Rights Agreement of even date herewith between the Company and
the
Holder, among others. 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.
3. Registration
of Transfers.
The
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto duly completed and signed, to the Company’s transfer agent or to
the Company at its address specified herein. Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially the form
of
this Warrant (any such new warrant, a "New
Warrant"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of the Holder
of a Warrant.
4. Exercise
and Duration of Warrants.
(a) Exercise.
This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on or after the date the six month anniversary of the date hereof to
and
including the Expiration Date. At 5:00 P.M., Los Angeles, California time on
the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value.
(b) Procedures
for Exercise.
A
Holder may exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the "Exercise
Notice"),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
in immediately available funds for the number of Warrant Shares as to which
this
Warrant is being exercised, and the date such items are delivered to the Company
(as determined in accordance with the notice provisions hereof) is an
"Exercise
Date."
The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder. Upon the execution and delivery of the Exercise Notice,
the Company shall issue a New Warrant to the Holder evidencing the right to
purchase the remaining number of Warrant Shares.
5. Delivery
of Warrant Shares.
(a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later
than
three Business Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends unless a registration
statement covering the resale of the Warrant Shares and naming the Holder as
a
selling stockholder thereunder is not then effective and the Warrant Shares
are
not freely transferable without volume restrictions pursuant to Rule 144 under
the Securities Act. The Holder, or any Person so designated by the Holder to
receive Warrant Shares, shall be deemed to have become the holder of record
of
such Warrant Shares as of the Exercise Date. The Company shall, upon request
of
the Holder, use its best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions.
(b) This
Warrant is exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares. Upon surrender of this Warrant
following one or more partial exercises, the Company shall issue or cause to
be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.
(c) The
Company's obligations to issue and deliver Warrant Shares in accordance with
the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or
any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to
the
Holder in connection with the issuance of Warrant Shares. Nothing herein shall
limit the Holder's right to pursue any other remedies available to it hereunder,
at law or in equity, including, without limitation, a decree of specific
performance 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.
2
6. Charges,
Taxes and Expenses.
Issuance and delivery of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any issue or
transfer tax, withholding tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes
and
expenses shall be paid by the Company; provided, however, that the Company
shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder or an Affiliate thereof. The Holder
shall be responsible for all other tax liability that may arise as a result
of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
7. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable bond or indemnity, if
requested. Applicants for a New Warrant under such circumstances shall also
comply with such other reasonable regulations and procedures and pay such other
reasonable third-party costs as the Company may prescribe.
8. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from preemptive rights or any other contingent purchase rights of persons other
than the Holder (taking into account the adjustments and restrictions of
Section
9).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable. The Company will take all such actions as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
securities exchange or automated quotation system upon which the Common Stock
may be listed.
9. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Adjustments
to the Exercise Price.
3
(i) If,
at
any time or from time to time after the date hereof, the Company shall issue
any
Additional Stock (as defined in Section
9(a)(vi)
below)
without consideration or for consideration per share less than the Exercise
Price in effect immediately prior to the issuance of such Additional Stock,
such
Exercise Price in effect immediately prior to such issuance shall (except as
otherwise provided in this Section
9(a))
be
adjusted to a price determined by multiplying such Exercise Price by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common Stock
that the aggregate consideration received by the Company for such issuance
would
purchase at such Exercise Price, and the denominator of which is the number
of
shares of Common Stock outstanding immediately prior to such issuance plus
the
number of shares of such Additional Stock.
(ii) No
adjustment of the Exercise Price for any Warrant Share shall be made in an
amount less than one cent per share; provided that any adjustments which are
not
required to be made by reason of this sentence shall be carried forward and
shall be taken into account in any subsequent adjustment made prior to three
years from the date of the event giving rise to the adjustment being carried
forward. Except to the limited extent provided for in Sections
9(a)(v)(C),
9(a)(v)(D)
and
9(a)(viii)
no
adjustment of such Exercise Price pursuant to this Section
9(a)
shall
have the effect of increasing the Exercise Price above the Exercise Price in
effect immediately prior to such adjustment.
(iii) In
the
case of the issuance of Additional Stock for cash, the consideration shall
be
deemed to be the amount of cash paid therefor before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with the issuance and
sale thereof.
(iv) In
the
case of the issuance of the Additional Stock for a consideration in whole or
in
part other than cash, the consideration other than cash shall be deemed to
be
the fair value thereof as determined by the Board of Directors of
the
Company irrespective of any accounting treatment.
(v) In
the
case of the issuance of options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for Common
Stock or options to purchase or rights to subscribe for such convertible or
exchangeable securities, the following provisions shall apply for all purposes
of this Section
9(a):
(A) The
aggregate number of shares of Common Stock deliverable upon exercise (assuming
the satisfaction of any conditions to exercisability, including but not limited
to the passage of time, but without taking into account potential antidilution
adjustments) of such options to purchase or rights to subscribe for Common
Stock
shall be deemed to have been issued and outstanding at the time such options
or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in Sections
9(a)(iii)
and
9(a)(iv)),
if
any, received by the Company upon the issuance of such options or rights plus
the minimum exercise price provided in such options or rights (without taking
into account potential antidilution adjustments) for the Common Stock covered
thereby.
4
(B) The
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange (assuming the satisfaction of any conditions to convertibility
or exchangeability, including but not limited to the passage of time, but
without taking into account potential antidilution adjustments) for any such
convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued and outstanding at the time such securities were issued or such options
or rights were issued and for a consideration equal to the consideration, if
any, received by the Company for any such securities and related options or
rights (excluding any cash received or account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received
by
the Company (without taking into account potential antidilution adjustments)
upon the conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be determined
in
the manner provided in Sections
9(a)(iii)
and
9(a)(iv)).
(C) In
the
event of any change in the number of shares of Common Stock deliverable or
in
the consideration payable to the Company upon exercise of such options or rights
or upon conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Exercise Price, to the extent in any way
affected by or computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be made
for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of
such
securities.
(D) Upon
the
expiration of any such options or rights, the termination of any such rights
to
convert or exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Exercise Price, to the extent in
any
way affected by or computed using such options, rights or securities or options
or rights related to such securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and convertible or
exchangeable securities which remain in effect) actually issued upon the
exercise of such options or rights, upon the conversion or exchange of such
securities or upon the exercise of the options or rights related to such
securities.
(E) The
number of shares of Common Stock deemed issued and the consideration deemed
paid
therefor pursuant to Sections
9(a)(v)(A)
and
9(a)(v)(B)
shall be
appropriately adjusted to reflect any change, termination or expiration of
the
type described in either Section
9(a)(v)(C)
or
9(a)(v)(D).
(vi) "Additional
Stock"
shall
mean any shares of Common Stock issued (or deemed to have been issued pursuant
to Section
9(a)(v))
by the
Company after the date hereof, other than:
(A) shares
of
Common Stock issued or so deemed to have been issued upon conversion of shares
of Series A Preferred Stock;
(B) shares
of
Common Stock issued or so deemed to have been issued to officers, directors,
consultants or employees of the Company pursuant to a plan or program adopted
by
the Company's Board of Directors;
5
(C) shares
of
Common Stock (or options, warrants or other rights to purchase such Common
Stock) issued or so deemed to have been issued in connection with acquisitions,
merger transactions, consolidations or similar business
combinations;
(D) shares
of
Common Stock issued or so deemed to have been issued in connection with leases,
bank financings, credit agreements or similar instruments with equipment
lessors, commercial lenders, banks, or similar financial institutions if
approved by the Board of Directors;
(E) shares
of
Common Stock issued or so deemed to have been issued in connection with a
strategic alliance or corporate partnering transaction entered into by the
Company;
(F) shares
of
Common Stock issued or so deemed to have been issued pursuant to options and
warrants outstanding on the date hereof; and
(G) shares
of
Common Stock issued or so deemed to have been issued pursuant to a transaction
described in Section
9(a)(b)
or
Section
9(a)(c)
for
which adjustments are made pursuant to such Section.
(b) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction
of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.
(c) Pro
Rata Distributions.
If the
Company, at any time while this Warrant is outstanding, distributes to all
holders of Common Stock (i) evidences of its indebtedness, (ii) any security
(other than a distribution of Common Stock covered by Section
9(b)),
(iii)
rights or warrants to subscribe for or purchase any security, or (iv) any other
asset (in each case, "Distributed
Property"),
then
in each such case the Exercise Price in effect immediately prior to the record
date fixed for determination of stockholders entitled to receive such
distribution shall be adjusted (effective on such record date) to equal the
product of such Exercise Price times a fraction of which the denominator shall
be the average of the closing price of the Company’s Common Stock (as reflected
on the OTCBB, the American Stock Exchange or the NASDAQ) for the five trading
days immediately prior to (but not including) such record date and of which
the
numerator shall be such average less the then fair market value of the
Distributed Property distributed in respect of one outstanding share of Common
Stock, as determined by the Company's independent certified public accountants
that regularly examine the financial statements of the Company (an "Appraiser").
In
such event, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case such fair market value
shall be deemed to equal the average of the values determined by each of the
Appraiser and such appraiser. As an alternative to the foregoing adjustment
to
the Exercise Price, at the request of the Holder delivered before the 90th
day
after such record date the Company will deliver to the Holder, within five
Business Days after such request (or, if later, on the effective date of such
distribution), the Distributed Property that the Holder would have been entitled
to receive in respect of the Warrant Shares for which this Warrant could have
been exercised immediately prior to such record date. If such Distributed
Property is not delivered to the Holder pursuant to the preceding sentence,
then
upon expiration of or any exercise of the Warrant that occurs after such record
date, the Holder shall remain entitled to receive, in addition to the Warrant
Shares otherwise issuable upon such exercise (if applicable), such Distributed
Property.
6
(d) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding, (i) the Company effects any merger
or consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series
of
related transactions, (iii) 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 (iv) 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
(other than as a result of a subdivision or combination of shares of Common
Stock covered by Section
9(b)
above)
(in any such case, a "Fundamental
Transaction"),
then
the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the Holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the "Alternate
Consideration").
The
aggregate Exercise Price for this Warrant will not be affected by any such
Fundamental Transaction, but the Company shall apportion such aggregate 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. In the event
of
a Fundamental Transaction, the Company or the successor or purchasing Person,
as
the case may be, shall execute with the Holder a written agreement providing
that:
(x) this
Warrant shall thereafter entitle the Holder to purchase the Alternate
Consideration in accordance with this Section
9(d);
(y) in
the
case of any such successor or purchasing Person, upon such consolidation,
merger, statutory exchange, combination, sale or conveyance, such successor
or
purchasing Person shall be jointly and severally liable with the Company for
the
performance of all of the Company's obligations under this Warrant and the
Purchase Agreement; and
(z) if
registration or qualification is required under the Securities Exchange Act
of
1934, as amended, or applicable state law for the public resale by the Holder
of
shares of stock and other securities so issuable upon exercise of this Warrant,
all rights applicable to registration of the Common Stock issuable upon exercise
of this Warrant shall apply to the Alternate Consideration.
7
If,
in
the case of any Fundamental Transaction, the Alternate Consideration includes
shares of stock, other securities, other property or assets of a Person other
than the Company or any such successor or purchasing Person, as the case may
be,
in such Fundamental Transaction, then such written agreement shall also be
executed by such other Person and shall contain such additional provisions
to
protect the interests of the Holder as the Board of Directors of the Company
shall reasonably consider necessary by reason of the foregoing. At the Holder's
request, 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 purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof. 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 Subsection
(d)
and
insuring that the Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
If any Fundamental Transaction constitutes or results in a change of control,
the Company (or any such successor or surviving entity) will purchase the
Warrant from the Holder for a purchase price, payable in cash within five
Business Days after such request (or, if later, on the effective date of the
Fundamental Transaction), equal to the Black-Scholes value of the remaining
unexercised portion of this Warrant on the date of such request.
(e) Number
of Warrant Shares.
Simultaneously with any adjustments to the Exercise Price pursuant to
Subsections
(a), (b)
or
(c),
the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price
in
effect immediately prior to such adjustment.
(f) Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable.
The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(g) Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
9,
the
Company at its expense will promptly compute such adjustment in accordance
with
the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted
number or type of Warrant Shares or other securities issuable upon exercise
of
this Warrant (as applicable), describing the transactions giving rise to such
adjustments and showing in detail the facts upon which such adjustment is based.
Upon written request, the Company will promptly deliver a copy of each such
certificate to the Holder and to the Company's transfer agent.
(h) Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including without limitation
any
granting of rights or warrants to subscribe for or purchase any capital stock
of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction, or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to
the
Holder a notice describing the material terms and conditions of such
transaction, at least 20 calendar days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to insure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as
to
participate in or vote with respect to such transaction; provided, however,
that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such
notice.
8
10. Fractional
Shares.
The
Company shall not be required to issue or cause to be issued fractional Warrant
Shares upon the exercise of this Warrant. If any fraction of a Warrant Share
would, except for the provisions of this Section, be issuable upon exercise
of
this Warrant, the number of Warrant Shares to be issued will be rounded up
to
the nearest whole share.
11. Notices.
Any and
all notices or other communications or deliveries hereunder (including without
limitation any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 5:00 p.m. (Los Angeles, California time) on a Business
Day, (ii) the next Business Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile number specified
in
this Section on a day that is not a Business Day or later than 5:00 p.m. (Los
Angeles, California time) on any Business Day, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to
be
given. The address for such notices or communications shall be as set forth
in
the Purchase Agreement.
12. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon 30 days' notice
to
the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation
resulting from any consolidation to which the Company or any new warrant agent
shall be a party or any corporation to which the Company or any new warrant
agent transfers substantially all of its corporate trust or stockholders
services business shall be a successor warrant agent under this Warrant without
any further act. Any such successor warrant agent shall promptly cause notice
of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.
13. Miscellaneous.
(a) Subject
to the restrictions on transfer set forth on the first page hereof, this Warrant
may be assigned by the Holder. This Warrant may not be assigned by the Company
except to a successor in the event of a Fundamental Transaction. This Warrant
shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns. Subject to the preceding sentence, nothing
in
this Warrant shall be construed to give to any Person other than the Company
and
the Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company
and
the Holder and their successors and assigns.
9
(b) The
Company will not, by amendment of its governing documents 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 action as may be necessary or appropriate in order to protect
the rights of the Holder against impairment. Without limiting the generality
of
the foregoing, the Company (i) will not increase the par value of any Warrant
Shares above the amount payable therefor on such exercise, (ii) will take all
such action as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of this Warrant, and (iii) will not close its stockholder
books or records in any manner which interferes with the timely exercise of
this
Warrant.
(c) Governing
Law; Venue; Waiver Of Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Warrant (whether brought against a party
hereto or its respective Affiliates, directors, officers, stockholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of Los Angeles, California. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of Los Angeles, California for the adjudication
of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of this Warrant), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address
in
effect for notices to it under this Warrant and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives,
to
the fullest extent permitted by applicable law, any and all right to trial
by
jury in any legal proceeding arising out of or relating to this Warrant or
the
transactions contemplated hereby. If either party shall commence an action
or
proceeding to enforce any provisions of this Warrant, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
reasonable attorneys fees and other reasonable costs and expenses incurred
with
the investigation, preparation and prosecution of such action or proceeding.
(d) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions hereof.
(e) In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[Remainder
of This Page Intentionally Left Blank; Signature Page to
Follow]
10
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
authorized officer as of the date first indicated above.
| |
|
|
| By: | ||
| Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||
| Title: Chief Executive Officer | ||
11
FORM
OF EXERCISE NOTICE
(To
be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)
The
undersigned is the Holder of Warrant No. _______ (the "Warrant")
issued
by China Energy Recovery, Inc., a Delaware corporation (the "Company").
Capitalized terms used herein and not otherwise defined have the respective
meanings set forth in the Warrant.
|
1.
|
The
Warrant is currently exercisable to purchase a total of ______________
Warrant Shares.
|
|
2.
|
The
undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the Warrant.
|
|
3.
|
The
Holder shall pay the sum of $___________ to the Company in accordance
with
the terms of the Warrant.
|
|
4.
|
Pursuant
to this exercise, the Company shall deliver to the Holder _______________
Warrant Shares in accordance with the terms of the Warrant.
|
|
5.
|
Following
this exercise, the Warrant shall be exercisable to purchase a total
of
______________ Warrant Shares.
|
|
Dated: ________________,
________
|
Name
of
▇▇▇▇▇▇: |
|
| (Print) | ||
| By: | ||
| Name: | ||
| Title: | ||
12
FORM
OF ASSIGNMENT
(To
be
completed and signed only upon transfer of the Warrant)
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant
to
purchase ____________ shares of Common Stock of China Energy Recovery, Inc.
to
which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of China Energy Recovery, Inc. with full power
of substitution in the premises.
|
Dated: ________________,
________
|
Name
of ▇▇▇▇▇▇:
|
|
|
Name:
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
(Signature
must conform in all respects to name of the Holder as specified
on the
face of the Warrant)
|
||
|
Address:
|
||
|
In
the presence of:
|
||
13