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ECOLOGY COATINGS, INC WARRANT No. 1

Warrant Agreement

ECOLOGY COATINGS, INC WARRANT No. 1 | Document Parties: ECOLOGY COATINGS, INC. | STROMBACK ACQUISITION CORPORATION You are currently viewing:
This Warrant Agreement involves

ECOLOGY COATINGS, INC. | STROMBACK ACQUISITION CORPORATION

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Title: ECOLOGY COATINGS, INC WARRANT No. 1
Governing Law: Michigan     Date: 10/2/2009
Industry: Misc. Capital Goods     Sector: Capital Goods

ECOLOGY COATINGS, INC WARRANT No. 1, Parties: ecology coatings  inc. , stromback acquisition corporation
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THESE SECURITIES MAY NOT BE OFFERED OR SOLD UNLESS AT THE TIME OF SUCH OFFER OR SALE, THE PERSON MAKING SUCH OFFER OR SALE DELIVERS A PROSPECTUS MEETING THE REQUIREMENTS OF SECTION 10 OF THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), FORMING A PART OF A REGISTRATION STATEMENT, OR POST-EFFECTIVE AMENDMENT THERETO, WHICH IS EFFECTIVE UNDER SAID ACT, UNLESS IN THE OPINION OF COUNSEL TO THE CORPORATION, SUCH OFFER AND SALE IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SAID ACT.

 

ECOLOGY COATINGS, INC.

 

WARRANT No. 1

 

This Warrant (the " Warrant " ) is made and entered into as of this 30th day of September, 2009 ( " Grant Date " ) between ECOLOGY COATINGS, INC. , a Nevada corporation  (the " Company " ), and STROMBACK ACQUISITION CORPORATION , an Illinois corporation   (the " Holder " ).

 

WHEREAS, by this Agreement, the Company and the Holder desire to set forth terms upon which the Company will grant to the Holder and the Holder will accept from the Company this Warrant.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Company and the Holder hereby agree as follows:

 

1.   Grant and Term of the Warrant .

 

1.1   Grant of Warrant.   Subject to the terms and conditions of this Agreement, the Company grants to the Holder the right and Warrant (the " Warrant " ) to purchase from the Company all or any part of an aggregate of 14,400 shares of its Common Stock, authorized (the " Shares " ) of Common Stock, par value $.001 per share, at a price of $.42 per share  (the " Purchase Price " ), as adjusted from time to time pursuant to the provisions hereunder set forth.  This Warrant is not granted under any Warrant plan of the Company.

 

1.2   Time of Exercise.   Subject to the provisions of Sections 1.5, " Transfer and Assignment, " and 3.1, " Registration and Legends, " this Warrant may be exercised at any time and from time to time after 9:00 a.m., E.S.T., on September 30, 2009 (the " Exercise Commencement Date " ) and will terminate at 5:00 p.m., E.S.T., on September 30, 2019 (the " Expiration Date " ).

 

1.3   Manner of Exercise .

 

1.3.1   The Holder may exercise this Warrant, in whole or in part, upon surrender of this Warrant with the form of subscription attached hereto duly executed to the Company at its corporate office together with the full Purchase Price payable in cash.

 

1.3.2   Upon receipt of this Warrant with the form of subscription duly executed and accompanied by payment of the aggregate Purchase Price for the Shares for which this Warrant is then being exercised, the Company shall cause to be issued certificates or other evidence of ownership for the total number of whole Shares for which this Warrant is being exercised in such denominations as are required for delivery to the Holder, and the Company shall thereupon deliver such documents to the Holder or its nominee.

 

1.3.3   If the Holder exercises this Warrant with respect to fewer than all of the Shares that may be purchased under this Warrant, the Company shall execute a new Warrant for the balance of the Shares that may be purchased upon exercise of this Warrant and deliver such new Warrant to the Holder.

 

1.3.4   The Company covenants and agrees to pay when due and payable any and all taxes that may be payable in respect of the issue of this Warrant, or the issue of any Shares upon the exercise of this Warrant.  The Company shall not, however, be required to pay any tax that may be payable in respect of any transfer involved in the issuance or delivery of this Warrant or of the Shares in a name other than that of the Holder at the time of surrender, and until the payment of such tax, the Company shall not be required to issue such Shares.

 

1.3.5   The Company shall, at the time of any exercise of all or part of this Warrant, upon the request of the Holder hereof, acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holders shall continue to be entitled after such exercise in accordance with the provisions of this Warrant, provided that if the Holder of this Warrant fails to make any such request, such failure shall not affect the continuing obligations of the Company to afford any such rights to such Holder.

 

1.4   Exchange of Warrant.   This Warrant may be split-up, combined or exchanged for another Warrant or Warrants of like tenor to purchase a like aggregate number of Shares.  If the Holder desires to split-up, combine or exchange this Warrant, it shall make such request in writing delivered to the Company at its corporate office and shall surrender this Warrant and any other Warrants to be so split-up, combined or exchanged, the Company shall execute and deliver to the person entitled thereto an Warrant or Warrants, as the case may be, as so requested.  The Company shall not be required to effect any split-up, combination or exchange which will result in the issuance of an Warrant entitling the Holder to purchase upon exercise a fraction of a Share.  The Company may require the Holder to pay a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any split-up, combination or exchange of Warrants.  The term "Warrant" as used herein includes any Warrants issued in substitution for or replacement of this Warrant, or into which this Warrant may be divided or exchanged.

 

1.5   Holder as Owner.   Prior to due presentment for registration of transfer of this Warrant, the Company may deem and treat the Holder as the absolute owner of this Warrant (notwithstanding any notation of ownership or other writing hereon) for the purpose of any exercise hereof and for all other purposes, and the Company shall not be affected by any notice to the contrary.  Irrespective of the date of issue and delivery of certificates for any Shares issuable upon the exercise of the Warrant, each person in whose name any such certificate is issued shall be deemed to have become the holder of record of the Shares represented thereby on the date on which all or a portion of the Warrant surrendered in connection with the subscription therefore was surrendered and payment of the purchase price was tendered.  No surrender of all or a portion of the Warrant on any date when the stock transfer books of the Company are closed, however, shall be effective to constitute the person or persons entitled to receive Shares upon such surrender as the record holder of such Shares on such date, but such person or persons shall be constituted the record holder or holders of such Shares at the close of business on the next succeeding date on which the stock transfer books are opened.  Each person holding any Shares received upon exercise of Warrant shall be entitled to receive only dividends or distributions payable to holders of record on or after the date on which such person shall be deemed to have become the holder of record of such Shares.

 

1.6   Transfer and Assignment.   This Warrant may not be sold, hypothecated, exercised, assigned or transferred except in accordance with and subject to the provisions of the Securities Act of 1933, as amended ("Act") and only upon the consent of the Company.

 

1.7   Method for Assignment.   Any assignment permitted under this Warrant shall be made by surrender of this Warrant to the Company at its principal office with the form of assignment attached hereto duly executed and funds sufficient to pay any transfer tax.  In such event, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee designated in such instrument of assignment and this Warrant shall promptly be canceled.  This Warrant may be divided or combined with other Warrants that carry the same rights upon presentation thereof at the corporate office of the Company together with a written notice signed by the Holder, specifying the names and denominations in which such new Warrants are to be issued.

 

1.8   Rights of Holder.   Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or consent or receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company.  If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following shall occur:

 

1.8.1   The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company;

 

1.8.2   The Company shall offer to the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any Warrant, right or warrant to subscribe therefore;

 

1.8.3   There shall be proposed any capital reorganization or reclassification of the Common Stock, or a sale of all or substantially all of the assets of the Company, or a consolidation or merger of the Company with another entity; or

 

1.8.4   There shall be proposed a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall cause to be mailed to the Holder, at the earliest practicable time (and, in any event, not less than thirty (30) days before any record date or other date set for definitive action), written notice of the date on which the books of the Company shall close or a record shall be taken to determine the stockholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such reorganization, reclassification, sale, consolidation, merger, dissolution, liquidation or winding up, as the case may be.  Such notice shall also set forth such facts as shall indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Purchase Price and the kind and amount of the Common Stock and other securities and property deliverable upon exercise of this Warrant.  Such notice shall also specify the date as of which the holders of the Common Stock of record shall participate in said distribution or subscription rights or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, sale, consolidation, merger, dissolution, liquidation or winding up, as the case may be (on which date, in the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, the right to exercise this Warrant shall terminate).  Without limiting the obligation of the Company to provide notice to the holder of actions hereunder, it is agreed that failure of the Company to give notice shall not invalidate such action of the Company.

 

1.9   Lost 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 of reasonably satisfactory indemnification, including a surety bond if required by the Company, and upon surrender and cancellation of this Warrant, if mutilated, the Company will cause to be executed and delivered a new Warrant of like tenor and date.  Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone.

 

1.10   Covenants of the Company.   The Company covenants and agrees as follows:

 

1.10.1   At all times it shall reserve and keep available for the exercise of this Warrant into Common Stock such number of authorized shares of Common Stock as are sufficient to permit the exercise in full of this Warrant into Common Stock; and

 

1.10.2   All Shares issued upon exercise of the Warrant shall be duly authorized, validly issued and outstanding, fully-paid and non-assessable.

 

2.   Adjustment of Purchase Price and Number of Shares Purchasable Upon Exercise.

 

2.1   Recapitalization.   The number of Shares purchasable on exercise of this Warrant and the purchase price therefore shall be subject to adjustment from time to time in the event that the Company shall:  (i) pay a dividend in, or make a distribution of, shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) spin-off a subsidiary by distributing, as a dividend or otherwise, shares of the subsidiary to its stockholders.  In any such case, the total number of shares purchasable on exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive, at the same aggregate purchase price, the number of shares of Common Stock that the Holder would have owned or would have been entitled to receive immediately following the occurrence of any of the events described above had this Warrant been exercised in full immediately prior to the occurrence (or applicable record date) of such event.  An adjustment made pursuant to this Section 2 shall, in the case of a stock dividend or distribution, be made as of the record date and,  in the case o


 
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