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THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR ANY STATE SECURITIES LAW. THIS WARRANT
AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
PLEDGED, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION OR DELIVERY OF AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE WITH THE ACT OR UNLESS SOLD IN FULL COMPLIANCE WITH
RULE 144 UNDER THE ACT.
CHINA ADVANCED CONSTRUCTION MATERIALS GROUP,
INC
.
Warrant for the Purchase of Shares of Common
Stock
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No.
2008-[ ]
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_________
Shares
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FOR
VALUE RECEIVED, CHINA ADVANCED CONSTRUCTION MATERIALS GROUP,
INC., a Delaware corporation (the “
Company ”),
hereby certifies that [________________], its designee or its
permitted assigns is entitled to purchase from the Company, at any
time or from time to time commencing on June 11, 2008 (the
“
Issuance Date ”)
and prior to 5:00 P.M., New York City time, on June 10, 2013 (the
“
Exercise Period ”),
[________________] fully paid and non-assessable shares of common
stock, $0.001 par value per share, of the Company for a purchase
price per share of $2.40. Hereinafter, (i) said common stock,
$0.001 par value per share, of the Company, is referred to as the
“
Common Stock ”;
(ii) the shares of the Common Stock (subject to adjustment as set
forth herein) purchasable hereunder or under any other Warrant (as
hereinafter defined) are referred to as the “
Warrant Shares ”;
(iii) the aggregate purchase price payable for the Warrant Shares
purchasable hereunder is referred to as the “
Aggregate Warrant Price ”;
(iv) the price payable (initially $2.40 per share subject to
adjustment as set forth herein) for each of the Warrant Shares
hereunder is referred to as the “
Per Share Warrant Price ”;
(v) this Warrant, all similar Warrants issued on the date hereof
and all warrants hereafter issued in exchange or substitution for
this Warrant or such similar Warrants are referred to as the
“
Warrants ”;
(vi) the holder of this Warrant is referred to as the
“
Holder ”
and the holder of this Warrant and all other Warrants and Warrant
Shares are referred to as the “
Holders ”
and Holders of more than fifty percent (50%) of the Warrant Shares
then issuable upon exercise of then outstanding Warrants are
referred to as the “
Majority of the Holders ”)
and (vii) the then Current Market Price per share of the Common
Stock (the
“
Current Market Price
” )
shall be deemed to be the last reported sale price of the Common
Stock (as reported by Bloomberg Financial Markets) on the Trading
Day (as defined below) immediately prior to such date or, in case
no such reported sales take place on such day, the average of the
last reported bid and ask prices of the Common Stock on such day,
in either case on the principal national securities exchange on
which the Common Stock is admitted to trading or listed, including
the Nasdaq Global Select Market, the Nasdaq Global Market, and
Nasdaq Capital Market (collectively “
NASDAQ ”),
or other similar organization, or, if the Common Stock is not
reported on a national securities exchange, the per share sale
price for the Common Stock in the over-the-counter market as
reported by the OTC Bulletin Board (the “
OTCBB ”)
or another over-the-counter market, or if not so available, the
fair market value of the Common Stock as determined in good faith
by the Company’s Board of Directors. A “
Trading Day ”
shall mean any day on which shares of the Company’s Common
Stock are sold on the respective exchanges listed above. The
Aggregate Warrant Price is not subject to adjustment.
This
Warrant is one of the Warrants to purchase Common Stock issued
pursuant to a Subscription Agreement (the “
Subscription Agreement ”)
between the Company and the Subscriber named therein in connection
with a private placement by the Company of Units, each consisting
on one share of Series A Convertible Preferred Stock (the
“
Preferred Stock ”)
and one Warrant, as further described in the Company’s
Private Placement Memorandum dated March 17, 2008, as amended on
April 11, 2008, May 21, 2008 and May 28, 2008 and in the Consent to
Modification and Amendment Agreement to the PPM dated as of the
date hereof. By acceptance of this Warrant, the Holder agrees to
comply with all applicable provisions of the Subscription
Agreement.
(a)
Except
as set forth in
Section 1(d) below,
this Warrant may be exercised in whole at any time, or in part from
time to time, by the Holder during the Exercise Period by the
surrender of this Warrant (with the exercise notice, in the form
attached hereto (the “
Exercise Notice ”),
duly executed) at the address set forth in
Section 10(a) hereof,
together with proper payment of the Aggregate Warrant Price, or the
proportionate part thereof if this Warrant is exercised in part,
with payment for the Warrant Shares made by certified or official
bank check payable to the order of, or wire transfer of immediately
available funds to, the Company; or
(b)
If
this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock and
the Holder is entitled to receive a new Warrant covering the
Warrant Shares that have not been exercised and setting forth
the proportionate part of the Aggregate Warrant Price
applicable to such Warrant Shares. Upon surrender of this
Warrant in connection with the exercise of this Warrant
pursuant to the terms hereof, the Company will (i) issue a
certificate or certificates in the name of the Holder for the
largest number of whole shares of the Common Stock to which
the Holder shall be entitled upon such exercise and, if this
Warrant is exercised in whole, no fractional shares of Common
Stock are to be issued, but rather the number of shares of
Common Stock to which the Holder shall be entitled shall be
rounded up to the nearest whole number, and (ii) deliver the
other securities and properties receivable upon the exercise
of this Warrant, or the proportionate part thereof, if this
Warrant is exercised in part, pursuant to the provisions of
this Warrant.
(c)
Notwithstanding
anything contained herein to the contrary, the Holder may, in
its sole discretion, exercise this Warrant, in lieu of making
the cash payment otherwise contemplated to be made to the
Company upon such exercise in payment of the Aggregate Warrant
Price, and elect instead to receive upon such exercise the
“
Net Number ”
of shares of Common Stock determined according to the following
formula (a “
Cashless Exercise ”):
Net
Number =
(A x B) - (A x C)
B
For
purposes of the foregoing formula:
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A=
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the
total number of shares with respect to which this Warrant is then
being exercised.
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B=
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the
average of the Current Market Prices of the shares of Common Stock
for the five Trading Days ending on the date immediately preceding
the date of the written notice of exercise.
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C= |
the
Per Share Warrant Price then in effect for the applicable Warrant
Shares at the time of such exercise.
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(d)
Notwithstanding
anything herein to the contrary, in no event shall the Holder
have the right or be required to exercise this Warrant to the
extent, and only to the extent, that as a result of such
exercise, the aggregate number of shares of Common Stock
beneficially owned by the Holder, its affiliates and any
“group” (as defined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended and
the rules promulgated thereunder (the “
Exchange Act ”))
of which the Holder may be deemed to be a party (collectively the
“
Affiliates ”)
would exceed 9.99% of the outstanding shares of the Common Stock
immediately after giving effect to such exercise. For purposes of
this Section, beneficial ownership shall be calculated in
accordance with Sections 13(d) and Section 16(a) of the Exchange
Act. The provisions of this
Section 1(d) may
be waived by a Holder as to itself (and solely as to itself) upon
not less than sixty-five (65) days prior written notice to the
Company. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock, the Holder may rely upon the
number of outstanding shares of Common Stock as reflected in the
Company’s most recent annual or quarterly report on Form 10-K
or Form 10-Q, respectively.
(e)
Upon
exercise of this Warrant, the Company shall promptly (but in
no event later than five (5) Trading Days after the date the
Exercise Notice is delivered to the Company (the
“
Exercise Date ”))
issue or cause to be issued and cause to be delivered to or upon
the written order of the Holder (together with such other transfer
documentation as may be reasonably requested by the Company) and in
such name or names as the Holder may designate (provided that, if
the Registration Statement is not effective and the Holder directs
the Company to deliver a certificate for the Warrant Shares in a
name other than that of the Holder or an Affiliate of the Holder,
it shall deliver to the Company on the Exercise Date an opinion of
counsel reasonably satisfactory to the Company to the effect that
the issuance of such Warrant Shares in such other name may be made
pursuant to an available exemption from the registration
requirements of the Act and all applicable state securities or blue
sky laws), a certificate for the Warrant Shares issuable upon such
exercise, free of restrictive legends, unless a registration
statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or
the Warrant Shares are not freely transferable without volume
restrictions pursuant to Rule 144(b) under the Act. The Holder, or
any person permissibly so designated by the Holder to receive
Warrant Shares, shall be deemed to have become the holder of record
of such Warrant Shares as of the Exercise Date. If the Warrant
Shares are to be issued free of all restrictive legends, the
Company shall, upon the written request of the Holder, use its best
efforts to deliver, or cause to be delivered, Warrant Shares
hereunder electronically through The Depository Trust Company or
another established clearing corporation performing similar
functions, if available; provided, that, the Company may, but will
not be required to, change its transfer agent if its current
transfer agent cannot deliver Warrant Shares electronically through
such a clearing corporation.
(f)
If
by the close of the fifth (5
th )
Trading Day after delivery of an Exercise Notice, the Company fails
to deliver to the Holder a certificate representing the required
number of Warrant Shares in the manner required pursuant to
Section 1 ,
and if after such fifth Trading Day and prior to the receipt of
such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a
“
Buy-In ”),
then the Company shall, within three (3) Trading Days after the
Holder’s request and in the Holder’s sole discretion,
either (1) pay in cash to the Holder an amount equal to the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
(the “
Buy-In Price ”),
at which point the Company’s obligation to deliver such
certificate (and to issue such Warrant Shares) shall terminate or
(2) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Warrant Shares and
pay cash to the Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of Warrant
Shares, times (B) the closing bid price of a share of Common Stock
on the date of exercise.
(g)
To
the extent permitted by law, the Company’s obligations
to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof.
Nothing herein shall limit the Holder’s right to pursue
any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates
representing shares of Common Stock upon exercise of this
Warrant as required pursuant to the terms hereof.
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2.
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Reservation of Warrant Shares; Listing
.
The Company agrees that, prior to the expiration of this Warrant,
the Company shall at all times (a) have authorized and in reserve,
and shall keep available, solely for issuance and delivery upon the
exercise of this Warrant, one hundred twenty (120%) percent of the
shares of the Common Stock receivable upon the exercise of this
Warrant, free and clear of all restrictions on sale or transfer,
other than under Federal or state securities laws, and free and
clear of all preemptive rights and rights of first refusal and (b)
if the Company hereafter lists its Common Stock on any national
securities exchange, including NASDAQ, use its commercially
reasonable efforts to keep the Warrant Shares authorized for
listing on such exchange upon notice of issuance. The Company
covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Per Share
Warrant Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable. The
Company will take all such action as may be necessary to assure
that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation
system upon which the Common Shares may be listed. Pursuant to the
terms of the Subscription Agreement, the Company shall seek to have
the Warrants listed on the OTCBB.
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(a)
Stock Dividends and Splits .
If the Company, at any time while this Warrant is outstanding: (i)
pays a stock dividend or otherwise make a distribution or
distributions on shares of its Common Stock or any other equity or
equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this
Warrant)(“
Common Stock Equivalents ”),
(ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case
the Per Share Warrant Price shall be multiplied by a fraction the
numerator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding immediately before
such event and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such event and
the number of shares issuable upon exercise of this Warrant shall
be proportionately adjusted. Any adjustment made pursuant to
this
Section 3(a) shall
become effective at the close of business on the record date for
the determination of stockholders entitled to receive such dividend
or distribution and shall become effective at the close of business
on the effective date in the case of a subdivision, combination or
re-classification. Any adjustment in the Per Share Warrant Price in
accordance with this
Section 3(a) shall
also effect a proportionate adjustment in the Threshold Price
(defined below).
(b)
Subsequent Equity Sales .
If the Company, at any time while this Warrant is outstanding,
shall sell or grant any option to purchase or sell or grant any
right to reprice its securities, or otherwise dispose of or issue
(or announce any offer, sale, grant or any option to purchase or
other disposition) any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at an
effective price per share less than $2.00 (the “
Threshold Price ”)
(provided that in the event the Company issues any warrants
entitling any Person to acquire shares of Common Stock, the
Threshold Price with respect to such warrants shall equal $2.40)
per share of Common Stock (such lower price, the “
Base Share Price ”
and suc
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