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EXHIBIT 4.5
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS
SECURITY IS 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
ECOSPHERE TECHNOLOGIES, INC.
Warrant Shares: __________
Initial Exercise Date: December 15, 2006
THIS COMMON STOCK PURCHASE WARRANT (the “
Warrant ”) certifies that, for value received,
_________ (the “ Holder ”), is entitled, upon
the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the
date hereof (the “ Initial Exercise Date ”)
and on or prior to the close of business on the 5 year
anniversary of the Initial Exercise Date (the “
Termination Date ”) but not thereafter, to
subscribe for and purchase from Ecosphere Technologies, Inc., a
Delaware corporation (the “ Company ”), up to
_______ shares (the “ Warrant Shares ”) of
common stock, par value $0.01 per share, of the Company (the
“ Common Stock ”). The purchase price
of one share of Common Stock under this Warrant shall be equal
to the Exercise Price, as defined in Section 2(b). This
Warrant is issued as of October 9, 2007 and replaces a Warrant
issued December 15, 2006 to reflect the reduced exercise
price.
Section 1 .
Definitions . Capitalized terms
used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement (the
“ Purchase Agreement ”), dated December 15,
2006, among the Company and the purchasers signatory
thereto.
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Section 2 .
Exercise .
a)
Exercise of Warrant . Exercise of
the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery
to the Company of a duly executed facsimile copy of the Notice
of Exercise Form annexed hereto (or such other office or
agency of the Company as it may designate by notice in writing
to the registered Holder at the address of such Holder appearing
on the books of the Company) and delivery of the Exercise Price
to the Company by wire transfer or cashier’s check drawn
on a United States bank. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder
shall surrender this Warrant to the Company for cancellation
within 3 Trading Days of the date the final Notice of Exercise
is delivered to the Company. Partial exercises of this
Warrant resulting in purchases of a portion of the total number
of Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased
and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise Form within 1 Business
Day of receipt of such notice. In the event of any dispute
or discrepancy, the records of the Holder shall be controlling
and determinative in the absence of manifest error. The Holder
and any assignee, by acceptance of this Warrant, acknowledge and
agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares
hereunder, the number of Warrant Shares available for purchase
hereunder at any given time may be less than the amount stated
on the face hereof.
b)
Exercise Price . The exercise price
per share of the Common Stock under this Warrant shall be
$0.15 subject to adjustment hereunder (the “
Exercise Price ”).
c)
Cashless Exercise . If at any time
after one year from the date of issuance of this Warrant there
is no effective Registration Statement registering, or no
current prospectus available for, the resale of the Warrant
Shares by the Holder, then this Warrant may also be exercised at
such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive a certificate for the
number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:
(A) = the closing price of the Common Stock on
the Trading Market on the Trading Day immediately preceding the
date of such election;
(B) = the Exercise Price of this Warrant,
as adjusted; and
(X) = the number of Warrant Shares issuable upon
exercise of this Warrant in accordance with the terms of this
Warrant by means of a cash exercise rather than a cashless
exercise.
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Notwithstanding anything herein to the contrary,
on the Termination Date to the extent the closing price of the
Common Stock on the Trading Market Day prior to the Termination
Date is higher than the Exercise Price, this Warrant shall be
automatically exercised via cashless exercise pursuant to this
Section 2(c).
d)
Exercise Limitations . The Company shall
not effect any exercise of this Warrant, and a Holder
shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2(c) or otherwise, to the extent
that after giving effect to such issuance after exercise as set
forth on the applicable Notice of Exercise, such Holder
(together with such Holder’s Affiliates, and any other
person or entity acting as a group together with such Holder or
any of such Holder’s Affiliates), as set forth on the
applicable Notice of Exercise, would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by such Holder and its
Affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which
such determination is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (A)
exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by such Holder or any of its Affiliates and
(B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including,
without limitation, any other Debentures or Warrants)
subject to a limitation on conversion or exercise analogous to
the limitation contained herein beneficially owned by such
Holder or any of its affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by a Holder that
the Company is not representing to such Holder that such
calculation is in compliance with Section 13(d) of the Exchange
Act and such Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(d)
applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by such
Holder together with any Affiliates) and of which a portion of
this Warrant is exercisable shall be in the sole discretion of a
Holder, and the submission of a Notice of Exercise shall be
deemed to be each Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by
such Holder together with any Affiliates) and of which portion
of this Warrant is exercisable, in each case subject to such
aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to
any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of
this Section 2(d), in determining the number of outstanding
shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Form 10-QSB or Form 10-KSB, as the
case may be, (y) a more recent public announcement by the
Company or (z) any other notice by the Company or the
Company’s Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or
oral request of a Holder, the Company shall within two Trading
Days confirm orally and in writing to such Holder the number of
shares of
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Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by such
Holder or its Affiliates since the date as of which such number
of outstanding shares of Common Stock was reported. The
“ Beneficial Ownership Limitation ” shall be
4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of
Common Stock issuable upon exercise of this Warrant. The
Beneficial Ownership Limitation provisions of this Section 2(d)
may be waived by such Holder, at the election of such Holder,
upon not less than 61 days’ prior notice to the Company to
change the Beneficial Ownership Limitation to 9.99% of the
number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock
upon exercise of this Warrant, and the provisions of this
Section 2(d) shall continue to apply. Upon such a change
by a Holder of the Beneficial Ownership Limitation from such
4.99% limitation to such 9.99% limitation, the Beneficial
Ownership Limitation may not be further waived by such Holder.
The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this Section 2(d) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in
this paragraph shall apply to a successor holder of this
Warrant. Notwithstanding the foregoing, the Company shall
have no liability to the Holder or any successor if it fails to
comply with the first sentence and permits any exercise in
excess of the Beneficial Ownership Limitation.
e)
Mechanics of Exercise .
i.
Authorization of Warrant Shares .
The Company covenants that all Warrant Shares which may be
issued upon the exercise of the purchase rights represented by
this Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring
contemporaneously with such issue).
ii.
Delivery of Certificates Upon Exercise .
Certificates for shares purchased hereunder shall be
transmitted by the transfer agent of the Company to the Holder
by crediting the account of the Holder’s prime broker with
the Depository Trust Company through its Deposit Withdrawal
Agent Commission (“ DWAC ”) system if the
Company is a participant in such system, and otherwise by
physical delivery to the address specified by the Holder in the
Notice of Exercise within 3 Trading Days from the delivery to
the Company of the Notice of Exercise Form, surrender of this
Warrant (if required) and payment of the aggregate Exercise
Price as set forth above (“ Warrant Share Delivery
Date ”). This Warrant shall be deemed to have
been exercised on the date the Exercise Price is received by the
Company. The Warrant Shares shall be deemed to
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have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become
a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised, the Company has received
payment of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if
any, pursuant to Section 2(e)(vii) prior to the issuance of such
shares, have been paid.
iii.
Delivery of New Warrants Upon Exercise .
If this Warrant shall have been exercised in part, the
Company shall, at the request of a Holder and upon surrender of
this Warrant certificate, at the time of delivery of the
certificate or certificates representing Warrant Shares, deliver
to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
iv.
Rescission Rights . If the Company
fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares
pursuant to this Section 2(e)(iv) by the Warrant Share Delivery
Date, then the Holder will have the right to rescind such
exercise.
v.
Compensation for Buy-In on Failure to Timely
Deliver Certificates Upon Exercise . In addition to
any other rights available to the Holder, if the Company fails
to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, 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 (1) pay in cash to the Holder the amount
by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue
times (B) the price at which the sell order giving rise to such
purchase obligation was executed, plus (C) the brokerage
commissions, if any, resulting from such sale and (2) at the
option of the Holder, either reinstate the portion of the
Warrant and equivalent number of Warrant Shares for which such
exercise was not honored or deliver to the Holder the number of
shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of
shares of Common Stock with an aggregate sale price giving rise
to such purchase obligation
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of $10,000, under clause (1) of the immediately
preceding sentence the Company shall be required to pay the
Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the
amount of such loss. Nothing herein shall limit a
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 the Warrant as required pursuant to the terms hereof.
vi.
No Fractional Shares or Scrip . No
fractional shares or scrip representing fractional shares shall
be issued upon the exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to
purchase upon such exercise, the Company shall at its election,
either pay a cash adjustment in respect of such final fraction
in an amount equal to such fraction multiplied by the Exercise
Price or round up to the next whole share.
vii.
Charges, Taxes and Expenses .
Issuance of certificates for Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the name
of the Holder or in such name or names as may be directed by the
Holder; provided , however , that in the event
certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require,
as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.
viii.
Closing of Books . The Company will
not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the
terms hereof.
Section 3 .
Certain Adjustments .
a)
Stock Dividends and Splits . If, at any
time while this Warrant is outstanding, the Company: (A) 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), (B)
subdivides out
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