THESE
SECURITIES AND THE COMMON STOCK THAT THE HOLDER SHALL RECEIVE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR
TRANSFERRED EXCEPT (i) IN ACCORDANCE WITH REGULATION S (RULE 901
THROUGH 905), (ii) PURSUANT TO A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH
RESPECT TO THESE SECURITIES, OR (iii) PURSUANT TO A SPECIFIC
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON
A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THAT THE PROPOSED
DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE
SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR
SECURITIES LAW.” ANY HEDGING TRANSACTION INVOLVING THESE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
Warrant
Holder:
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Dated:
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For the
Purchase of __________Shares of Common Stock
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No. S-
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WARRANT FOR THE PURCHASE
OF
SHARES OF COMMON STOCK
OF
DEER CONSUMER PRODUCTS,
INC.
Expiring Three Years from the
Date Hereof
FOR VALUE RECEIVED, Deer Consumer Products, Inc.
(“Company”), hereby certifies that the Warrant Holder
specified above, or his registered assigns (“Registered
Holder”), is entitled, subject to the terms set forth below,
to purchase from the Company on or before the third anniversary of
the date hereof, that number of shares of Common Stock, $.001 par
value, of the Company (“Common Stock”) set forth above,
at a purchase price equal to $10.00 per share (as may be adjusted
as provided below) upon the terms and conditions set forth
herein. The number of shares of Common Stock purchasable
upon exercise of this Warrant, and the purchase price per share,
each as adjusted from time to time pursuant to the provisions of
this Warrant, are hereinafter referred to as the “Warrant
Shares” and the “Exercise Price,”
respectively.
1.
Registration of Transfers and Exchanges .
(i) 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 Transfer Agent or to the Company, provided, however, that the
Holder shall not make any transfers to any transferee pursuant to
this Section for the right to acquire less than 50,000 Warrant
Shares (or the balance of the Warrant Shares to which this Warrant
relates). 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 of
such transferee of all of the rights and obligations of a holder of
a Warrant.
(ii) This
Warrant is exchangeable, upon the surrender hereof by the Holder to
the office of the Company for one or more New Warrants, evidencing
in the aggregate the right to purchase the number of Warrant Shares
which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.
(i)
Procedure for Exercise . Subject to the
conditions and terms set forth herein, this Warrant may be
exercised by the Registered Holder (“Conversion
Right”), in whole or in part, by the surrender of this
Warrant (with the Notice of Exercise Form attached hereto as
Exhibit 1 duly executed by such Registered Holder) at the principal
office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful
money of the United States, of an amount equal to the then
applicable Exercise Price multiplied by the number of Warrant
Shares then being purchased upon such exercise.
(ii)
Exercise of Conversion Right . Subject to the
terms and conditions set forth herein, the Conversion Right may be
exercised by the Holder on any business day by delivering to the
Company the Warrant with a duly executed Notice of Exercise Form
attached hereto as Exhibit 1 with the conversion section completed
by specifying the total number of shares of Common Stock the
Registered Holder will purchase pursuant to such
conversion.
(iii) If
the Common Stock is registered under Section 12 of the
Securities Exchange Act of 1934, as amended, the Registered Holder
may elect to pay all or part of the Exercise Price by surrendering
shares of Common Stock to the Company, including by allowing the
Company to deduct from the number of Warrant Shares deliverable
upon exercise of this Warrant, such number of such shares which has
an aggregate Fair Market Value (defined below), determined as of
the average of the Last Sale Price (defined below) of the Common
Stock for the 20 consecutive trading days immediately preceding the
date of exercise of this Warrant, equal to the aggregate Exercise
Price. (By way of example, if the Registered Holder exercises
50,000 warrants at an exercise price of $10.00 and the 20 day
average price is $15.00, then Shares deliverable on exercise:
50,000. Aggregate Exercise Price: $500,000. Number of shares
deliverable: $500,000/$15 or 33,334. Net Shares delivered to
Registered Holder on Cashless Exercise: 50,000 – 33,334 =
16,666 shares) In the event that the Warrant Holder elects to
utilize the “cashless exercise” procedure contained in
this Section 2(iii), this Warrant is exercisable upon
surrender of this Warrant to the Company together with a duly
completed Notice of Exercise in the form attached hereto and
surrender of that number of shares of Common Stock equal to the
aggregate Exercise Price determined in accordance with this
Section 2.1(iii)(a) or (b). “Fair Market Value”
per share of Common Stock on any relevant date shall be determined
in accordance with the following provisions:
(a) If
the Common Stock is at the time traded on the NASD OTC Bulletin
Board or other electronic quotation service, then the Fair Market
Value shall be the average of the last sale price per share of the
Common Stock for the 20 consecutive trading days preceding
the date of exercise of this Warrant; or
(b) If
the Common Stock is at the time listed on any Exchange (as defined
below), the Fair Market Value shall be the average of the last sale
price per share of the Common Stock for the 20 consecutive trading
days preceding the date of exercise of this Warrant, on the
Exchange determined to be the primary market for the Common Stock.
“Exchange” shall mean the any of the NASDAQ markets,
the New York Stock Exchange, American Stock Exchange or any
organization or association that is defined as a national exchange
by the Securities and Exchange Commission.
“last sale price” shall mean (X) if
the Common Stock is listed on an Exchange or quoted on the Nasdaq
markets or NASD OTC Bulletin Board (or successor such as the
Bulletin Board Exchange), the last sale price of the Common Stock
in the principal trading market for the Common Stock as reported by
the Exchange, Nasdaq or the NASD, as the case may be; (Y) if the
Common Stock is not listed on an Exchange or quoted on the Nasdaq
markets, or the NASD OTC Bulletin Board (or successor such as the
Bulletin Board Exchange), but is traded in the over-the-counter
market, the closing bid price for the Common Stock on the last
trading day preceding the date in question for which such
quotations are reported by the Pink Sheets, LLC or similar
publisher of such quotations; and (Z) if the fair market value of
the Common Stock cannot be determined pursuant to clause (X) or (Y)
above, such price as the Board of Directors of the Company shall in
good faith determine at their sole discretion.
(iv)
Date of Exercise . Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the
close of business on the day on which this Warrant shall have been
surrendered to the Company. At such time, the person or
persons in whose name or names any certificates for Warrant Shares
shall be issuable upon such exercise shall be deemed to have become
the holder or holders of record of the Warrant Shares represented
by such certificates.
(v)
Issuance of Certificate . As soon as practicable
after the exercise of the purchase right represented by this
Warrant, the Company at its expense will cause to be issued in the
name of, and delivered to, the Registered Holder, or, subject to
the terms and conditions hereof, to such other individual or entity
as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct:
(a) a
certificate or certificates for the number of full shares of
Warrant Shares to which such Registered Holder shall be entitled
upon such exercise plus, in lieu of any fractional share to which
such Registered Holder would otherwise be entitled, cash in an
amount determined pursuant to Section 4 hereof, and
(b) in
case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, stating on the face or faces
thereof the number of shares currently stated on the face of this
Warrant minus the number of such shares purchased by the Registered
Holder upon such exercise as provided in subsection 2(i)
above.
(vi)
Exercise of Warrant . The Warrant may be
exercised in whole or from time to time in part on or prior to the
third anniversary of the date hereof, as first set forth
above.
(i)
Split, Subdivision or Combination of Shares . If,
at any time while this Warrant remains outstanding and unexpired,
the outstanding shares of the Company’s Common Stock shall be
subdivided or split into a greater number of shares, or a dividend
in Common Stock shall be paid in respect of Common Stock, the
Exercise Price in effect immediately prior to such subdivision or
at the record date of such dividend shall, simultaneously with the
effectiveness of such subdivision or split or immediately after the
record date of such dividend (as the case may be), shall be
proportionately decreased. If the outstanding shares of
Common Stock shall be combined or reverse-split into a smaller
number of shares, the Exercise Price in effect immediately prior to
such combination or reverse split shall, simultaneously with the
effectiveness of such combination or reverse split, be
proportionately increased. &
