[EXHIBIT 4.2]
NEITHER THE WARRANTS NOR THE SHARES OF COMMON STOCK TO BE ISSUED UPON
THE EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND
MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACTS, UNLESS IN THE
OPINION OF COUNSEL TO THE COMPANY SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
For the Purchase of Common Stock of
EAGLE SUPPLY GROUP, INC.
a Delaware corporation
Void After 11:59 p.m. Eastern Standard Time on February 6, 2008
(Subject to Earlier Expiration)
Warrant No. 001 Warrant to Purchase
------- 1,000,000 Shares of
Common Stock
THIS WARRANT CERTIFIES THAT, for value received, James E. Helzer
or his registered assigns (collectively referred to herein as the
"Holder") is entitled to acquire from Eagle Supply Group, Inc., a
Delaware corporation whose address is 122 East 42nd Street, Suite 1618,
New York, New York 10168 (the "Company"), an aggregate of one million
(1,000,000) shares of fully paid, nonassessable shares of the common
stock, par value $0.0001 per share of the Company ("Common Stock") at
any time on or prior to 11:59 p.m. Eastern Standard Time on February
6, 2008 (the "Expiration Date"), at such price and upon such terms and
conditions as set forth herein. If not exercised prior to the
Expiration Date, this Warrant and all rights granted under this
Warrant shall expire and lapse.
The number and character of the securities purchasable upon
exercise of this Warrant and the payment of the Purchase Price
(defined below) are subject to adjustment as provided in Section 5
hereof. The term "Warrant" as used herein shall include this Warrant
and any warrants issued in substitution for or replacement of this
Warrant, or any warrant into which this Warrant may be divided or
exchanged. The Common Stock purchasable upon exercise of this Warrant
shall be referred to hereinafter collectively as the "Warrant Shares."
1. Exercise; Issuance of Certificates; Payment for Shares.
(a) Purchase Price. The purchase price of each Warrant
Share issuable upon exercise of this Warrant shall be $1.50 per
Warrant Share, subject to adjustment as provided in Section 5 hereof
("Purchase Price").
(b) Warrant Exercise. The purchase rights represented by
this Warrant may be exercised by the Holder, in whole or in part, at
any time, and from time to time commencing on the date hereof and
continuing until the Expiration Date, by the surrender and presentment
of this
1
Warrant accompanied by a duly executed Notice of Exercise in
the form attached hereto (the "Exercise Notice"), together with the
payment of the aggregate Purchase Price (the "Aggregate Purchase
Price") for the number of Warrant Shares specified in the Exercise
Notice in the manner specified in Section 1(d) or 1(e) hereof, all of
which shall be presented to the Company, at its principal office as
set forth on page 1 of this Warrant, or at such other place as the
Company may designate by notice in writing to the Holder.
(c) Conditions to Acquisition of Warrant Shares. The
Company's obligation to sell the Warrant Shares to the Holder upon
exercise of this Warrant is subject to the conditions that (i) no
preliminary or permanent injunction or other order against the
acquisition, purchase, issuance, or delivery of the Warrant Shares
issued by any federal, state, or foreign court of competent
jurisdiction shall be in effect, and (ii) if the Holder is required by
law, rule, or regulation promulgated by any governmental entity to
comply with or seek approvals from any governmental entity prior to
purchasing the Warrant Shares, such compliance or approvals must have
been achieved or obtained by the Holder and proof thereof furnished to
the Company; provided, however, that the Company shall notify the
Holder immediately if it is unable to issue Warrant Shares due to the
condition in Section 1(c)(i) hereof not being satisfied and the Holder
at his election may withdraw his Exercise Notice; and provided,
further, that if the Exercise Notice was delivered to the Company in
accordance with Section 1(b) hereof prior to the Expiration Date, any
failure by the Company to sell Warrant Shares to the Holder as a
result of any of the foregoing conditions shall not affect or
prejudice the Holder's right to acquire such Warrant Shares upon the
subsequent satisfaction of such conditions regardless of whether
satisfaction of such conditions occurs after the Expiration Date.
(d) Payment of Purchase Price. The Aggregate Purchase
Price of the Warrant Shares being acquired upon exercise of this
Warrant shall be paid by the Holder to the Company by delivery of a
wire transfer of immediately available funds or a certified bank or
cashier's check payable to the order of the Company in the amount of
the Aggregate Purchase Price which shall be determined by multiplying
the Purchase Price by the number of Warrant Shares specified in the
Exercise Notice to be purchased upon such exercise.
(e) Cashless Exercise of Warrants. Notwithstanding any
provisions to the contrary in this Warrant, in the event of a
Termination of Business as defined in Section 5(b)(iii) hereof
pursuant to which shareholders of the Company will receive cash for
their Common Stock, the Holder, at its option, immediately prior to
the consummation of an event constituting a Termination of Business
may, in lieu of paying the Aggregate Purchase Price in cash pursuant
to Section 1(d) hereof, require that the Company reduce the number of
Warrant Shares to be delivered to such Holder upon the exercise of the
Warrants then being exercised by the number of Warrant Shares having
an aggregate Acquisition Price (defined below) as of the date of
surrender equal to the Aggregate Purchase Price of all Warrants Shares
issuable upon such exercise. For purposes of this Warrant, the term
"Acquisition Price" shall mean, the per share cash payment made to
holders of the Common Stock in connection with the Termination of
Business.
(f) Issuance of Certificates. As soon as practicable
after full or partial exercise of this Warrant, the Company at its
expense (including, without limitation, the payment by it of all taxes
and governmental charges applicable to such exercise and issuance of
Warrant Shares) shall cause to be issued in the name of and delivered
to the Holder or such other persons as directed by the Holder, a
certificate or certificates for the total number of Warrant Shares for
which this Warrant is being exercised in such denominations as
instructed by the Holder (or, in the case of a cashless exercise under
Section 1(e) hereof, the Common Stock into which the Warrant Shares are
2
convertible), together with any other securities and property to
which the Holder is entitled upon exercise under the terms of this
Warrant. This Warrant shall be deemed to have been exercised, and the
Warrant Shares acquired thereby shall be deemed issued, and the Holder
or any person(s) designated by the Holder shall be deemed to have
become holders of record of such Warrant Shares (or, in the case of a
cashless exercise under Section 1(e) hereof, the Common Stock into
which the Warrant Shares are convertible), for all purposes, as of the
close of business on the date that this Warrant, the duly executed and
completed Exercise Notice, and full payment of the Aggregate Purchase
Price has been presented and surrendered to the Company in accordance
with the provisions of Section 1(b) hereof, notwithstanding that the
stock transfer books of the Company may then be closed. In the event
this Warrant is only partially exercised, a new Warrant evidencing the
right to acquire the number of Warrant Shares with respect to which
this Warrant shall not then have been exercised shall be executed,
issued and delivered by the Company to the Holder simultaneously with
the delivery of the certificates representing the Warrant Shares so
purchased.
2. Shares Fully Paid; Reservation of Shares. The Company
hereby agrees that it will at all times have authorized and will
reserve and keep available, solely for issuance and delivery to the
Holder, that number of shares of its Common Stock (or other securities
and property) that may be required from time to time for issuance and
delivery upon the exercise of this Warrant. All Warrant Shares when
issued in accordance with this Warrant shall be duly and validly
issued, shall be fully paid and nonassessable, free and clear of any
claim, lien, encumbrance, or security interest of any kind whatsoever,
and free from all preemptive rights of any security holders of the
Company. The Company shall take all action as may be necessary to
assure that such Warrant Shares (and any other securities and
property) may be issued and delivered as provided herein without
violation of any applicable law or regulation, or of any requirements,
of any domestic securities exchange or inter-dealer quotation system
upon which the Common Stock may be listed; provided, however, that the
Company shall not be required to effect a registration under federal
or state securities laws except as provided in Section 7(d) hereof.
The Company will not take any action which would result in any
adjustment of the Purchase Price (as described in Section 5 hereof) if
the total number of Warrant Shares issuable after such action upon
exercise of all the outstanding Warrants, together with all the Common
Stock then outstanding and all Common Stock issuable upon exercise of
all other options and warrants and upon conversion of all convertible
securities then outstanding, would exceed the total number of shares
of Common Stock then authorized by the Company's Certificate of
Incorporation, as amended.
3. Exchange, Assignment, or Loss of Warrant.
(a) This Warrant is exchangeable, without expense other
than as provided in this Section 3, at the option of the Holder upon
presentation and surrender hereof to the Company for other Warrants of
different denominations entitling the Holder thereof to acquire in the
aggregate the same number of Warrant Shares that may be acquired
hereunder.
(b) All of the covenants and provisions of this Warrant by
or for the benefit of the Holder shall be binding upon and shall inure
to the benefit of its heirs, successors, and permitted assigns
hereunder. This Warrant may be sold, transferred, assigned, or
hypothecated only in compliance with Section 7 herein. If permitted
under Section 7, any such assignment shall be made by surrender of
this Warrant to the Company, together with a duly executed assignment
in the form attached hereto ("Assignment Form"), whereupon the Company
shall, without charge, execute and deliver a new Warrant containing
the same terms and conditions of this Warrant in the name of the
assignee as named in the Assignment Form, and this Warrant shall be
cancelled at that time. This
3
Warrant, if properly assigned, may be exercised by a new Holder without
first having the new Warrant issued.
(c) This Warrant may be divided or combined with other
Warrants that carry the same rights upon presentation and surrender of
this Warrant at the office of the Company, together with a written
notice signed by the Holder, specifying the names and denominations in
which new Warrants are to be issued.
(d) The Company will execute and deliver to the Holder a
new Warrant of like tenor and date upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant; provided, that (i) in the
case of loss, theft, or destruction, the Company receives a reasonably
satisfactory indemnity or bond, or (ii) in the case of mutilation, the
Holder shall provide and surrender this Warrant to the Company for
cancellation.
(e) Any new Warrant executed and delivered by the Company
in substitution or replacement of this Warrant shall constitute a
contractual obligation of the Company regardless of whether this
Warrant was lost, stolen, destroyed, or mutilated, and shall be
enforceable by any Holder thereof.
(f) The Holder shall pay all transfer and excise taxes
applicable to any issuance of new Warrants under this Section 3.
4. Rights of the Holder. The Holder by virtue hereof shall
not be entitled to any rights of a shareholder in the Company
(including, without limitation, rights to receive dividends, vote or
receive notice of meetings) or otherwise deemed to be a shareholder of
the Company, either at law or equity, except as specifically provided
for herein. The Company covenants, however, that for so long as this
Warrant is at least partially unexercised, it will furnish the Holder
with copies of all reports and communications furnished to the
shareholders of the Company. The rights of the Holder are limited to
those expressed in this Warrant and are not enforceable against the
Company except to the extent set forth herein.
5. Adjustment of Purchase Price and Number of Warrant Shares.
The number and kind of securities and other property that may be
acquired upon the exercise of this Warrant and the Purchase Price
shall be subject to adjustment, from time to time, upon the happening
of any of the following events:
(a) Dividends, Subdivisions, Combinations, or
Consolidations of Common Stock.
(i) In the event that the Company shall declare,
pay, or make any dividend upon its outstanding shares of Common Stock
payable in Common Stock or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock, then the number of Warrant Shares that may thereafter be
purchased upon the exercise of the rights represented hereby shall be
increased in proportion to the increase in the number of outstanding
shares of Common Stock through such dividend or subdivision, and the
Purchase Price shall be decreased in such proportion. In case the
Company shall at any time combine the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, the number of
Warrant Shares that may thereafter be acquired upon the exercise of
the rights represented hereby
4
shall be decreased in proportion to the decrease through such
combination and the Purchase Price shall be increased in such
proportion.
(ii) If the Company declares, pays, or makes any
dividend or other distribution upon its outstanding shares of Common
Stock payable in securities or other property (excluding cash
dividends from current income and dividends payable in shares of
Common Stock, but including, without limitation, shares of any other
class of the Company's stock or stock or other securities convertible
into or exchangeable for Common Stock or any other class of the
Company's stock or other interests in the Company or its assets
("Convertible Securities")), a proportionate part of those securities
or that other property shall be set aside by the Company and delivered
to the Holder in the event that the Holder exercises this Warrant.
The securities and other property then deliverable to the Holder upon
the exercise of this Warrant shall be in the same ratio to the total
securities and property set aside for the Holder as the number of
Warrant Shares with respect to which this Warrant is then exercised is
to the total Warrant Shares that may be acquired pursuant to this
Warrant at the time the securities or property were set aside for the
Holder.
(b) Effect of Reclassification, Reorganization,
Consolidation, Merger, or Sale of Assets.
(i) Upon the occurrence of any of the following
events, the Company shall cause an effective provision to be made so
that the Holder shall have the right thereafter, by the exercise of
this Warrant, to acquire for the Aggregate Purchase Price described in
this Warrant the kind and amount of shares of stock and other
securities, property (including cash), and interests as would be
issued or payable with respect to or in exchange for the number of
Warrant Shares that are then purchasable pursuant to this Warrant as
if such Warrant Shares had been issued to the Holder immediately prior
to such event: (A) reclassification, capital reorganization, or other
change of outstanding Common Stock (other than a change as a result of
an issuance of Common Stock under Subsection 5(a) or from sale of
authorized but unissued shares of Common Stock by the Company for cash
or property which does not result in a merger or consolidation), (B)
consolidation or merger of the Company with or into another
corporation or entity, or (C) spin-off of assets, a subsidiary, or any
affiliated entity, or the sale, lease, pledge, mortgage, conveyance,
or exchange of a significant portion of the Company's assets taken as
a whole, in a transaction pursuant to which the Company's shareholders
of record are to receive securities or other interests in a successor
entity. Any such provision made by the Company for adjustments with
respect to this Warrant shall be as nearly equivalent to the
adjustments otherwise provided for in this Warrant as is reasonably
practicable. The foregoing provisions of this Section 5(b)(i) shall
similarly apply to successive reclassifications, capital
reorganizations and similar changes of Common Stock and to successive
consolidations, mergers, spin-offs, sales, leases or exchanges. In
the event that in any such reclassification, capital reorganization,
change, consolidation, merger, spin-off, sale, lease, or exchange,
additional shares of Common Stock are issued in exchange, conversion,
substitution, or payment, in whole or in part, for securities of the
Company other than Common Stock, any such issue shall be determined in
accordance with Section 5(e)(ii) below.
(ii) If any sale, lease, pledge, mortgage, conveyance,
or exchange of all, or substantially all, of the Company's assets or
business or any dissolution, liquidation or winding up of the Company
(a "Termination of Business") shall be proposed, the Company shall
deliver written notice to the Holder of this Warrant in accordance
with Section 6 below. If the result of the Termination of Business is
that shareholders of the Company are to receive securities or other
interests of a successor entity, the provisions of Section 5(b)(i)
above shall apply. However, if the
5
result of the Termination of Business is that shareholders of the
Company are to receive money or property other than securities or other
interests in a successor entity, the Holder of this Warrant shall be
entitled to exercise this Warrant and, with respect to any Warrant
Shares so acquired, shall be entitled to all of the rights of the other
holders of shares of Common Stock with respect to any distribution by
the Company in connection with the Termination of Business. In the
event no successor entity is involved and Section 5(b)(i) does not apply,
all acquisition rights under this Warrant shall terminate at the close
of business on the date as of which shareholders of record of shares of
the Common Stock shall be entitled to participate in a distribution of
the assets of the Company in connection with the Termination of Business;
provided, that, in no event shall that date be less than 30 days after
delivery to the Holder of this Warrant of the written notice described
above and in Section 6. If the termination of acquisition rights under
this Warrant is to occur as a result of the event at issue, a statement
to that effect shall be included in that written notice.
(c) Obligation of Successors or Transferees. The Company
shall not effect any consolidation, merger, or sale or conveyance of
assets within the meaning of Section 5(b)(i)(B), unless prior to or
simultaneously with the consummation thereof the successor corporation
(if other than the Company) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume by
written instrument executed and mailed or delivered to the Holder
pursuant to Section 11 herein the obligation to deliver to the Holder
such shares of stock, securities, or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to acquire. In no
event shall the securities received pursuant to this Section be
registerable or transferable other than pursuant and subject to the
terms of this Warrant.
(d) Diluting Issuances. In the event, subsequent to the
date hereof, the Company shall issue or sell, or is deemed to have
issued or sold under this Section 5(d), Common Stock for a cash
consideration per share which is less than the Purchase Price in
effect on the date of, and immediately prior to, such issuance
("Diluting Issue"), then in each such case the Purchase Price in
effect immediately prior to the Diluting Issue shall be deemed
immediately after such sale or issuance to be reduced to the price
determined by multiplying the applicable Purchase Price in effect
immediately prior to the Diluting Issue by a fraction determined as
follows:
(i) the numerator shall be the sum of (A) the
number of shares of Common Stock and Common Stock equivalents outstanding
immediately prior to the Diluting Issue calculated on a fully diluted
basis assuming conversion, exercise, or exchange of all derivative
securities exercisable or exchangeable into Common Stock, plus (B) the
number of shares of Common Stock which the aggregate consideration
received for the Diluting Issue would be able to purchase at such
applicable Purchase Price, and
(ii) the denominator shall be the number of shares
of Common Stock and Common Stock equivalents outstanding immediately
after the Diluting Issue calculated on a fully diluted basis assuming
conversion, exercise, or exchange of all derivative securities
exercisable or exchangeable into Common Stock.
(iii) Notwithstanding anything to the contrary
herein, the provisions of this Section 5(d) shall not apply to: (A)
shares of Common Stock issued or issuable upon exercise of the Warrants,
(B) shares of Common Stock issued or issuable upon the exercise of
options or warrants issued or granted prior to the date of this Warrant,
(C) securities issued or issuable upon the exercise of options granted
or to be granted under any stock option plan, stock purchase plan,
restricted stock plan or agreement, or other equity-based incentive
plan or agreement in an amount and under terms
6
approved by the Board of Directors or an authorized committee thereof,
(D) Common Stock issued to employees, officers, directors, or consultants
as compensation for services in lieu of cash payments therefor, (E)
securities offered to the public pursuant to a registration statement
declared effective under the Securities Act, (F) shares of Common
Stock issued in connection with a merger, acquisition, purchase of
assets, or other transaction involving a non-cash issuance of the
Common Stock approved by the Board of Directors, or (G) any of the
types of transfer or other adjustments specifically subject to
adjustment under Section 5(a), (b), and (c) hereof.
(e) Purchase Price Adjustments.
(i) Except as otherwise provided in this Section 5,
upon any adjustment of the Purchase Price, the Holder shall be
entitled to purchase, based upon the new Purchase Price, the number of
shares of Common Stock, calculated to the nearest full share, obtained
by multiplying the number of Warrant Shares that may be acquired
pursuant to this Warrant immediately prior to the adjustment of the
Purchase Price by the Purchase Price in effect immediately prior to
its adjustment and dividing the product so obtained by the new
Purchase Price.
(ii) If consideration other than money is received
or issued by the Company upon the issuance, sale, or purchase of shares
of Common Stock, Convertible Securities, or other securities or
interests, the fair market value of such consideration, as reasonably
determined by the Company's Board of Directors or, at its option,
appraisers appointed by the Board of Directors shall be used for
purposes of any adjustment required by this Section 5. The fair
market value of such consideration shall be determined as of the date
of the adoption of the resolution of the Board of Directors of the
Company that authorizes the transaction giving rise to the adjustment.
In case of the issuance or sale of shares of Common Stock, Convertible
Securities, or other securities or property without separate
allocation of the purchase price, the Company's Board of Directors or,
at its option, appraisers appointed by the Board of Directors shall
reasonably determine an allocation of the consideration among the
items being issued or sold. The reclassification of securities other
than shares of Common Stock into securities including the Common Stock
shall be deemed to involve the issuance of that Common Stock for a
consideration other than money immediately prior to the close of
business on the date fixed for the determination of shareholders
entitled to receive the Common Stock. The Company shall promptly
deliver written notice of all such determinations by its Board of
Directors or appraisers appointed by the Board of Directors to the
Holder of this Warrant.
(e) Application of this Section. The provisions of this
Section 5 shall apply to successive events that may occur from time to
time but shall apply only to a particular event if it occurs prior to
the expiration of this Warrant either by its terms or by its exercise
in full.
(f) Definition of Common Stock. Unless the context
requires otherwise, whenever reference is made in this Section 5 to
the issue or sale of Common Stock, the term "Common Stock" shall mean:
(i) the $0.0001 par value common stock of the Company, (ii) any other
class of stock ranking on a parity with, and having substantially
similar rights and privileges as the Company's $0.0001 par value
common stock, and (iii) any Convertible Security convertible into
either (i) or (ii). However, Warrant Shares issuable upon exercise of
this Warrant shall include only common stock designated as $0.0001 par
value common stock of the Company as of the date of this Warrant.
(g) Fractional Shares. No fractional Warrant Shares or
scrip representing fractional shares of Common Stock shall be issued
upon the exercise of this Warrant. In the event
7
that an adjustment in the number of shares of Common Stock issuable upon
exercise of this Warrant made pursuant to this Section 5 hereof results
in a number of shares issuable upon exercise which includes a fraction,
at the Holder's election, this Warrant may be exercised for the next
larger whole number of shares or the Company shall make a cash payment
equal to that fraction multiplied by the current market value of that
share.
(h) Company-Held Shares. For purposes of Section 5(a)
above, shares of Common Stock owned or held at any relevant time by,
or for the account of, the Company in its treasury or otherwise, shall
not be deemed to be outstanding for purposes of the calculation and
adjustments described therein.
6. Notice to the Holder.
(a) If, prior to the expiration of this Warrant either by
its terms or by exercise in full, any of the following shall occur:
(i) the Company shall declare a dividend or authorize any other
distribution on its Common Stock, including those of the type
identified in Section 5(a) hereof; (ii) the Company shall authorize
the granting to the holders of its Common Stock of rights to subscribe
for or purchase any securities or any other similar rights; (iii) any
reclassification, reorganization, or similar change of the Common
Stock, or any consolidation or merger to which the Company is a party,
or the sale, lease, pledge, mortgage, exchange, or other conveyance of
all or substantially all of the assets of the Company; (iv) the
voluntary or involuntary dissolution, liquidation or winding up of the
Company; or (v) any purchase, retirement or redemption by the Company
of its Common Stock; then, and in any such case, the Company shall
deliver to the Holder written notice thereof at least 30 days prior to
the earliest applicable date specified below with respect to which
notice is to be given, which notice shall state the following: (x) the
date on which a record is to be taken for the purpose of such
dividend, distribution, or rights, or, if a record is not to be taken,
the date as of which the holders of shares of Common Stock of record
to be entitled to such dividend, distribution, or rights are to be
determined; (y) the date on which such reclassification,
reorganization, consolidation, merger, sale, lease, pledge, mortgage,
exchange, transfer, dissolution, liquidation, winding up or purchase,
retirement, or redemption is expected to become effective, and the
date, if any, as of which the Company's holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, sale, lease, pledge, mortgage,
exchange, transfer, dissolution, liquidation, winding up, purchase,
retirement, or redemption; and (z) if any matters referred to in the
foregoing clauses (x) and (y) are to be voted upon by holders of
shares of Common Stock, the date as of which those shareholders to be
entitled to vote are to be determined.
(b) Upon the happening of an event requiring adjustment
of the Purchase Price or the kind or amount of securities or property
purchasable hereunder, the Company shall forthwith give notice to the
Holder which indicates the event requiring the adjustment, the
adjusted Purchase Price and the adjusted number of Warrant Shares that
may be acquired or the kind and amount of any such securities or
property so purchasable upon exercise of this Warrant, as the case may
be, and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based. The Company's
Chief Financial Officer shall determine the method of calculating the
adjustment and shall prepare a certificate setting forth such
calculations, the reason for the methodology chosen, and the facts
upon which the calculation is based. Such certificate shall accompany
the notice to be provided to the Holder pursuant to this Section 6(b).
8
7. Transfer to Comply with the Securities Act.
(a) Neither this Warrant nor the Warrant Shares or any
other security issued or issuable upon exercise of this Warrant may be
offered or sold except in compliance with the Securities Act of 1933,
as amended (the "Securities Act").
(b) The Company may cause the following legend, or its
equivalent, to be set forth on each certificate representing the
Warrant Shares, or any other security issued or issuable upon exercise
of this Warrant, not theretofore distributed to the public or sold to
underwriters, as defined by the Securities Act:
"The shares represented by this Certificate may
not be offered for sale, sold, assigned, pledged,
hypothecated, or otherwise transferred except
pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the
"Securities Act"), or pursuant to an exemption
from registration under the Securities Act, the
availability of which is to be established to the
satisfaction of the Company."
(c) The Holder agrees that it will not offer for sale,
sell, assign, pledge, hypothecate, or otherwise transfer (a
"Disposition") the Warrant, the Warrant Shares, or any other
securities issued or issuable upon exercise of this Warrant unless the
Disposition of such securities is registered under the Securities Act
and the securities laws of all other applicable jurisdictions or an
exemption therefrom is available as supported by an opinion of counsel
reasonably satisfactory to the Company. Subject to the preceding, the
Warrant and the Warrant Shares, and any other securities issued or
issuable upon exercise of this Warrant are assignable in whole or in
part by the Holder. The Holder agrees that, prior to a Disposition of
the Warrant, Warrant Shares, or any other securities issued or
issuable upon the exercise hereof, the Holder shall give written
notice to the Company, expressing his intention as to the Disposition
to be made of such Warrant, Warrant Shares, or other security issued
or issuable upon exercise of this Warrant, together with the opinion
of counsel for the Holder. If, in the opinion of the Holder's counsel
the proposed disposition does not require registration of the Warrant
Shares or any other security issuable or issued upon the exercise of
this Warrant under the Securities Act, the securities laws of any
other applicable jurisdiction, the Company shall, as promptly as
practicable, notify the Holder of such opinion, whereupon the Holder
shall be entitled to dispose of such Warrant Shares issuable or issued
upon the exercise thereof, all in accordance with the terms of the
notice delivered by the Holder to the Company.
(d) The Warrant Shares issuable upon exercise of this
Warrant have not been registered under the Securities Act and the
Holder may be entitled to registration rights in accordance with the
Securities Purchase Agreement, dated February 6, 2003, by and between
the Company and the Holder, which registration rights are incorporated
herein by reference.
8. Investment Representations. By acceptance of this Warrant,
the holder hereby represents, warrants and covenants: (a) that any
securities purchased upon exercise of this Warrant or acquired upon
conversion thereof shall be acquired for investment purposes only and
not with a view to, or for sale in connection with, any distribution
thereof within the meaning of Section 2(11) of the Securities Act;
(b) that the Holder has had such opportunity as such Holder has deemed
adequate to obtain from representatives of the Company such
information as is necessary to permit the Holder to evaluate the
merits and risks of its investment in the Company; (c) that the Holder is
9
able to bear the economic risk of holding such securities as may be
acquired pursuant to the exercise of this Warrant for an indefinite
period; (d) that the Holder understands that the securities acquired
pursuant to the exercise of this Warrant or acquired upon conversion
thereof will not be registered under the Securities Act (unless
otherwise required pursuant to exercise by the Holder of the
registration rights, if any, previously granted to the registered
Holder) and will be "restricted securities" within the meaning of Rule
144 under the Securities Act and that the exemption from registration
under Rule 144 will not be available for at least one year from the
date of exercise of this Warrant, and even then will not be available
unless a public market then exists for the securities, adequate
information concerning the Company is then available to the public,
and other terms and conditions of Rule 144 are complied with.
9. No Impairment. The Company covenants that it will not, by
amendment of its Articles of Incorporation or bylaws, or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observation or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in carrying out all those terms and in taking all action
necessary or appropriate to protect the rights of the Holder against
dilution or other impairment.
10. Further Assurances. The Company will take all such action
as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
or other securities upon the exercise of all Warrants from time to
time outstanding.
11. Notices. All notices, demands, requests, certificates, or
other communications by the Company to the Holder and by the Holder to
the Company shall be in writing and shall be deemed to have been
delivered, given, and received when personally given or on the fifth
calendar day after it is mailed by registered or certified mail to the
Holder, postage pre-paid and addressed to the Holder at his last
registered address or, if the Holder has designated, by notice in
writing to the Company, any other address, to such other address; and,
if to the Company, addressed to it at that address appearing on page 1
of this Warrant. The Company may change its address for purposes of
service of notice by written notice to the Holder at the address
provided above, and the Holder may change its address by written
notice to the Company.
12. Binding Effect. This Warrant shall be binding upon any
corporation or other entity succeeding the Company by merger,
consolidation, or other acquisition and the benefits of this Warrant
shall inure to the Holder's heirs, legal representatives, successors,
and assigns (except to the extent that the registration rights inure
only to the benefit of the Holder and his heirs).
13. Corporate Books. The Company will at no time close its
transfer books against the transfer of any Warrant or of any Warrant
Shares issued or issuable upon the exercise of any Warrant in any
manner which interferes with the timely exercise of this Warrant.
14. Applicable Law. This Warrant shall be governed by and
construed in accordance with the substantive laws of the State of
Delaware, without giving effect to the principles of the conflict of
laws. In the event that any provision of this Warrant is invalid or
unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
10
15. Survival. The various rights and obligations of the
Holder and of the Company set forth herein shall survive the exercise
and surrender of this Warrant.
16. No Amendments or Modifications. Neither this Warrant nor
any provision hereof may be amended, modified, waived, or terminated
except upon the written consent of the Company and the Holder of this
Warrant.
17. Descriptive Headings. The descriptive headings of the
several Sections of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by an officer, thereunto duly authorized this 6th day of
February, 2003.
EAGLE SUPPLY GROUP, INC.
By: /s/ Douglas P. Fields
-------------------------------
Douglas P. Fields,
Chief Executive Officer
11
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned ____________________________
hereby sell(s), assign(s), and transfer(s) unto_____________________,
the rights represented by the within Warrant to purchase ____________
(______) shares of the Common Stock of Eagle Supply Group, Inc., a
Delaware corporation, pursuant to the terms and conditions of this
Warrant held by the undersigned. The undersigned hereby authorizes and
directs the Company (i) to issue and deliver to the above-named
assignee a new Warrant pursuant to which the rights to purchase being
assigned may be exercised, and (ii) if there are rights to purchase
Warrant Shares remaining pursuant to the undersigned's Warrant after
the assignment contemplated herein, to issue and deliver to the
undersigned a new Warrant evidencing the right to purchase the number of
Warrant Shares remaining after issuance and delivery of this Warrant to
the above-named assignee. Except for the number of shares that may be
purchased, the new Warrants to be issued and delivered by the Company are
to contain the same terms and conditions as the undersigned's Warrant.
To complete the assignment contemplated by this Assignment, the
undersigned irrevocably appoints __________________________ as th
e undersigned's attorney-in-fact to transfer this Warrant and the rights
thereunder on the books of the Company with the full power of substitution
for these purposes.
Date _______________,__ ____________________________________
Printed Name of the Holder
____________________________________
Signature
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the within Warrant, in every particular,
without alteration or enlargement, or any change whatsoever, and must
be guaranteed by an eligible guarantor institution (banks, stock
brokers, savings and loan associations, and credit unions with
membership in an approved signature guarantee medallion program)
pursuant to Securities and Exchange Commission Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.
NOTICE OF EXERCISE
------------------
The undersigned Holder of a Warrant to purchase shares of Common
Stock of Eagle Supply Group, Inc., a Delaware corporation, hereby
elects to purchase, pursuant to the provisions of the Holder's Warrant
dated ___________, 2003 held by the undersigned, the following number
of such shares __________________________(___________); and requests
that the Certificate for such shares be issued in the name of, and
delivered to ________________________, whose address is
_____________________________________________; and further requests,
if the number of shares transferred are not all the shares that may be
acquired pursuant to the unexercised portion of this Warrant, that a
new Warrant of like tenor for the remaining shares that may be
acquired pursuant to this Warrant be issued and delivered to the
undersigned.
Dated:_________________,__
Printed Name:__________________________
Signature: __________________________
Address: __________________________
IRS ID No. __________________________
(Signature must conform in all respects to the name of holder as
specified on the face of this Warrant.)