EXHIBIT 4.1
FORM OF WARRANT
THIS WARRANT AND THE COMMON SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND THE
COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO CHINA ARMCO METALS, INC. THAT
SUCH REGISTRATION IS NOT REQUIRED.
CHINA ARMCO METALS ,
INC.
No. 2008--1
COMMON STOCK PURCHASE WARRANT
1.
Issuance . In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged by CHINA ARMCO METALS, INC. ,
a Nevada corporation (the “Company”),
___________________ or registered assigns (the
“Holder”) is hereby granted the right to purchase at
any time, on or after the Issue Date (as defined below) until 5:00
P.M., New York City time, on the date which the last calendar of
the month in which the fifth anniversary of the Issue Date occurs
(the “Expiration Date”), _________________ (__________)
fully paid and nonassessable shares of the Company’s Common
Stock, $.001 par value per share (the “Common Stock”),
at an initial exercise price per share (the “Exercise
Price”) of $5.00 per share, subject to further adjustment as
set forth herein. This Warrant is being issued pursuant to the
terms of that certain Subscription Agreement, dated as of
_____________, 2008 (the “Agreement”), to which the
Company and Holder (or Holder’s predecessor in interest) are
parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Agreement. This Warrant was
originally issued to the Holder or the Holder’s predecessor
in interest on July ____, 2008 (the “Issue
Date”).
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2.
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Exercise of Warrants
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2.1
General . (a) This Warrant is exercisable in whole or in
part at any time and from time to time commencing on the Issue
Date. Such exercise shall be effectuated by submitting to the
Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly
executed Notice of Exercise (substantially in the form attached to
this Warrant Certificate) as provided in the Notice of Exercise (or
revised by
notice given by the Company as contemplated by
the Section headed “NOTICES” in the Agreement) or at
the office of its Warrant Agent (as provided hereinafter). The date
such Notice of Exercise is faxed to the Company shall be the
“Exercise Date,” provided that, if such exercise
represents the full exercise of the outstanding balance of the
Warrant, the Holder of this Warrant tenders this Warrant
Certificate to the Company within five (5) Trading Days (as defined
below) thereafter. The term “Trading Day” means any day
during which the Principal Market shall be open for business. The
Notice of Exercise shall be executed by the Holder of this Warrant
and shall indicate (i) the number of shares then being purchased
pursuant to such exercise and (ii) if applicable (as provided
below), whether the exercise is a “cashless”
exercise.
(b) If
the Notice of Exercise form elects a “cashless”
exercise, the Holder shall thereby be entitled to receive a number
of shares of Common Stock equal to (w) the excess of the Current
Market Value (as defined below) over the total cash exercise price
of the portion of the Warrant then being exercised, divided by (x)
the Market Price of the Common Stock. For the purposes of this
Warrant, the terms (x) “Current Market Value” shall
mean an amount equal to the Market Price of the Common Stock,
multiplied by the number of shares of Common Stock specified in the
applicable Notice of Exercise, (y) “Market Price of the
Common Stock” shall mean the average Closing Price of the
Common Stock for the three (3) Trading Days ending on the Trading
Day immediately prior to the Exercise Date, and (z) “Closing
Price” means the 4:00 P.M. closing bid price of the Common
Stock on the Principal Market on the relevant trading day(s), as
reported by Bloomberg LP (or if that service is not then reporting
the relevant information regarding the Common Stock, a comparable
reporting service of national reputation selected by the Holder and
reasonably acceptable to the Company) for the relevant date. The
provisions of this Section 2.1(b) shall only be applicable (a)
prior to the Effective Date or (b) if on the Exercise Date there is
a Non-Registration Event as described in Section 11 of the
Agreement.
(c) If
the Notice of Exercise form elects a “cash” exercise
(or if the cashless exercise referred to in the immediately
preceding paragraph (b) is not available in accordance with its
terms), the Exercise Price per share of Common Stock for the shares
then being exercised shall be payable, at the election of the
Holder, in immediately available funds by certified or official
bank check or by wire transfer in accordance with instructions
provided by the Company at the request of the
Holder.
(d) Upon
the appropriate payment, if any, of the Exercise Price for the
shares of Common Stock purchased, together with the surrender of
this Warrant Certificate (if required), the Holder shall be
entitled to receive a certificate or certificates for the shares of
Common Stock so purchased. The Company shall deliver such
certificates representing the Warrant Shares in accordance with the
instructions of the Holder as provided in the Notice of Exercise
(the certificates delivered in such manner, the “Warrant
Share Certificates”) within five (5) Trading Days (such third
Trading Day, a “Delivery Date”) of (i) with respect to
a “cashless exercise,” the Exercise Date as the case
may be, or, (ii) with respect to a “cash” exercise, the
later of the Exercise Date or the date the payment of the Exercise
Price for the relevant Warrant Shares is received by the
Company.
(e) The
Company understands that a delay in the delivery of the Warrant
Share Certificates by the Delivery Date could result in economic
loss to the Holder. As compensation to the Holder for such loss,
the Company agrees to pay late payment fees (as liquidated damages
and not as a penalty) to the Holder for late delivery of Warrant
Share Certificates in the amount of $100 per Trading Day after the
Delivery Date for each $10,000 of Exercise Price of the Warrant
Shares subject to the delivery default. The Company shall pay any
payments incurred under this Section in immediately available funds
upon demand. Furthermore, in addition to any other remedies which
may be available to the Holder, in the event that the Company fails
for any reason to effect delivery of the Warrant Share Certificates
by the Delivery Date, the Holder may revoke all or part of the
relevant Warrant exercise by delivery of a notice to such effect to
the Company, whereupon the Company and the Holder shall each be
restored to their respective positions immediately prior to the
exercise of the relevant portion of this Warrant, except that the
liquidated damages described above shall be payable through the
date notice of revocation or rescission is given to the
Company.
(f) In
addition to any other rights available to the Holder, if the
Company fails to deliver to the Warrant Share Certificates within
seven (7) Trading Days after the Delivery Date and the Holder
purchases (in an open market transaction or otherwise) shares of
common stock (“Bought Shares”) to deliver in
satisfaction of a sale by the Holder of the shares of Common Stock
which the Holder was entitled to receive from the Company on
exercise of this Warrant (a “Buy-In”), then the Company
shall pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (A) the
Holder’s total purchase price (including brokerage
commissions, if any) for the Bought Shares exceeds (B) the Exercise
Price for such Warrant Shares, together with interest thereon at a
rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if the
Holder purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to $10,000 (based
on the Exercise Price) of Warrant Shares, the Company shall be
required to pay the Subscriber $1,000, plus interest. The Holder
shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In.
(g) The
Holder shall be deemed to be the holder of the shares issuable to
it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
2.2
Limitation on Exercise . Notwithstanding the provisions of
this Warrant, the Agreement or of the other Transaction Agreements,
in no event (except (i) as specifically provided in this Warrant as
an exception to this provision, (ii) during the forty-five (45) day
period prior to the Expiration Date, or (iii) while there is
outstanding a tender offer for any or all of the shares of the
Company’s Common Stock) shall the Holder be entitled to
exercise this Warrant, or shall the Company have the obligation to
issue shares upon such exercise of all or any portion of this
Warrant to the extent that, after such exercise the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder
and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of
the
unexercised portion of the Warrants or other
rights to purchase Common Stock or through the ownership of the
unconverted portion of convertible securities), and (2) the number
of shares of Common Stock issuable upon the exercise of the
Warrants with respect to which the determination of this proviso is
being made, would result in beneficial ownership by the Holder and
its affiliates of more than 4.99% of the outstanding shares of
Common Stock (after taking into account the shares to be issued to
the Holder upon such exercise). For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”),
except as otherwise provided in clause (1) of such sentence. The
Holder, by its acceptance of this Warrant, further agrees that if
the Holder transfers or assigns any of the Warrants to a party who
or which would not be considered such an affiliate, such assignment
shall be made subject to the transferee’s or assignee’s
specific agreement to be bound by the provisions of this Section
2.3 as if such transferee or assignee were the original Holder
hereof.
2.3
Trustee for Warrant Holders . In the event that a qualified
bank or trust company shall have been appointed as trustee for the
Holder of the Warrants pursuant to Subsection 6.3, such bank or
trust company shall have all the powers and duties of a warrant
agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or
such successor, as the case may be, on exercise of this Warrant
pursuant to Section 2.1.
3.
Reservation of Shares . The Company hereby agrees that, at
all times during the term of this Warrant, there shall be reserved
for issuance upon exercise of this Warrant, one hundred percent
(100%) of the number of shares of its Common Stock as shall be
required for issuance of the Warrant Shares for the then
unexercised portion of this Warrant. For the purposes of such
calculations, the Company should assume that the outstanding
portion of this Warrant was exercisable in full at any time,
without regard to any restrictions which might limit the
Holder’s right to exercise all or any portion of this Warrant
held by the Holder.
4.
Mutilation or Loss of Warrant . Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or
destruction) receipt of reasonably satisfactory
indemnification,
