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EXHIBIT 10.12
This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933 and may not
be transferred in the absence of such registration or an exemption
therefrom, except under circumstances where neither such registration
nor such an exemption is required by law. This Warrant may be
transferred only in compliance with the conditions specified in this
Warrant.
Eco-form International, Inc.
Common Stock Purchase Warrant
Expiring June 30, 2003
July 5, 2000
No. W2000A-001
Eco-form International, Inc. a Delaware corporation (the "Company"), for value
received, hereby certifies that VerticalVC, Inc., a Michigan corporation, or its
registered assigns, is entitled to purchase from the Company Two Million
(2,000,000) duly authorized, validly issued, fully paid and nonassessable shares
of the Company's common stock, (the "Common Stock"), at the purchase price of
$.01 per share (the "Exercise Price") at any time or from time to time prior to
5 P.M., Eastern time, on June 30, 2003 subject to the terms, conditions and
adjustments set forth below in this Warrant (this Warrant and all Warrants
issued in substitution therefor being hereinafter referred to as the
"Warrants").
1. Exercise of Warrant.
1.1. Manner of Exercise. Subject to Section 1.2, this Warrant may be
exercised by the registered holder hereof, in whole or in part, during normal
business hours on any business day by surrender of this Warrant, with the notice
of exercise attached hereto as Attachment A (or a reasonable facsimile thereof)
duly executed by such holder, to the Company at the principal office of the
Company, accompanied by payment in cash or by certified or official bank check
payable to the order of the Company in the amount obtained by multiplying (a)
the number of shares of Common Stock (without giving effect to any adjustment
therein) designated in such notice of exercise by (b) the Exercise Price, and
such holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
determined as provided in Section 2.
1.2. Restrictions on Exercise. In order to ensure compliance with the
federal and state securities laws, the Company may require the holder hereof to
obtain an opinion of counsel, satisfactory to the Company, to the effect that
the shares to be issued upon exercise of the Warrant may be issued pursuant to
exemptions from registration under the Securities Act of 1933 and all applicable
state securities laws. The holder also agrees to execute any and all
subscription documents, questionnaires and instruments that may be required by
the Company to ensure compliance with the federal and state securities laws. In
the event the holder is unable to provide
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the Company with a satisfactory legal opinion that the shares to be issued upon
the exercise of this Warrant may be issued without registration under the
Securities Act of 1933 and applicable state securities laws, the Company will
not be required to issue that stock to the holder and will return the holder's
exercise funds and the Warrant to holder.
1.3. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1, and at such time the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such exercise as provided in Section 1.4 shall be deemed to have
become the holder or holders of record thereof.
1.4. Delivery of Stock Certificate, Etc. As soon as practicable after
the exercise of this Warrant, in whole or in part, and in any event within five
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof or, subject to the restrictions contained in
Sections 1.2 and 3, as such holder (upon payment by such holder of any
applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock to which such holder shall be entitled upon such exercise,
and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment therein) to the number of such shares called
for on the face of this Warrant minus the number of such shares
designated by the holder upon such exercise as provided in Section 1.1.
2. Adjustments: Stock Dividends, Reclassification, Reorganization,
Merger and Anti-Dilution Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights and
privileges of such shares, by means of (i) the payment of a stock dividend or
the making of any other distribution on such shares payable in its Common Stock,
(ii) a stock split or subdivision of shares, (iii) a consolidation or
combination of shares, or (iv) a reclassification or recapitalization involving
its Common Stock, then the Exercise Price in effect at the time of such action
and the number of shares of Common Stock purchasable pursuant to this Warrant
(the "Warrant Stock") at that time shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the shares of Common Stock then
purchasable pursuant to this Warrant shall be increased, decreased or changed in
like manner, for the same aggregate purchase price as set forth in this Warrant,
as if the shares of Common Stock purchasable pursuant to this Warrant
immediately prior to the event at issue had been issued, outstanding, fully paid
and nonassessable at the time of that event. As an example, if the Company were
to declare a two-for-one stock split or a one hundred percent stock dividend,
then the number of unpurchased shares of Warrant Stock subject to this Warrant
would be doubled and the Exercise Price for all unpurchased shares of Warrant
Stock would be reduced by 50 percent.
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These adjustments would result in the Holder's rights under this Warrant not
being diluted by the stock split or stock dividend.
(b) If the Company pays or makes any dividend or other distribution
upon its Common Stock payable in securities or other property, excluding money
or the Company's 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 shares of 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 shares of Common Stock with respect to which the Warrant is then
exercised is to the total shares of Common Stock purchasable pursuant to this
Warrant at the time the securities or property were set aside for the Holder.
(c) If at any time the Company grants to its shareholders rights to
subscribe pro rata for additional securities of the Company, whether Common
Stock, Convertible Securities, or other classifications, or for any other
securities or interests that the Holder would have been entitled to subscribe
for if, immediately prior to such grant, the Holder had exercised this Warrant,
then the Company shall also grant to the Holder the same subscription rights
that the Holder would be entitled to if the Holder had exercised this Warrant in
full immediately prior to such grant.
(d) Upon the occurrence of any of the following events, the Company
shall cause effective provision to be made so that the Holder shall have the
right at any time thereafter prior to the expiration date of this Warrant, by
the exercise of this Warrant, to purchase for the aggregate Exercise Price
described in this Warrant the kind and amount of share of stock and other
securities, and property and interests, as would be issued or payable with
respect to or in exchange for the number of shares of Warrant Stock of the
Company that are then purchasable pursuant to this Warrant as if such shares of
Warrant Stock had been issued to the Holder immediately before such event: (i)
the reclassification, capital reorganization, or other similar change of
outstanding shares of Common Stock of the Company, other than as described and
provided for in subsection (a) above; (ii) the merger or consolidation of the
Company with one or more other corporations or other entities, other than a
merger with a subsidiary or affiliate pursuant to which the Company is the
continuing entity and the outstanding shares of Common Stock, including the
shares of Warrant Stock purchasable pursuant to this Warrant, are not affected;
or (iii) the spin-off of assets, a subsidiary or an affiliated entity, or the
sale, lease, or exchange of a significant portion of the Company's assets, 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 subsection (d) shall
similarly apply to successive reclassifications, capital reorganizations and
similar changes of shares of Common Stock and to successive consolidations,
mergers, spin-offs, sales, leases or exchanges.
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(e) Except as otherwise provided in this Section 2, upon any adjustment
of the Exercise Price, the Holder shall be entitled to purchase, at the new
Exercise Price, the number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock purchasable pursuant to this Warrant
immediately prior to the adjustment of the Exercise Price by the Exercise Price
in effect immediately prior to its adjustment and dividing the product so
obtained by the new Exercise Price.
(f) The provisions of this Section 2 shall apply to successive events that may
occur from time to time but shall only apply to a particular event if it occurs
prior to the expiration of this Warrant either by its terms of by its exercise
in full.
(g) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%) in
such price; provided, however, that any adjustments which by reason of this
Section 2(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 2(g)
shall be made to the nearest mill ($.001) or to the nearest ten thousandth
(0.0001) of a share as the case may be.
3. Restrictions on Transfer.
3.1. Restricted Securities. As used in this Agreement, the term
"Restricted Securities" shall mean all Warrants and all shares of Common Stock
acquired or to be acquired by a holder pursuant to the exercise of Warrants;
provided, that any such Warrants or shares of Common Stock shall cease to be
Restricted Securities once they are sold or otherwise disposed of pursuant to
one or more registration statements under the Securities Act of 1933 or pursuant
to Rule 144 adopted by the Securities and Exchange Commission.
3.2. Restrictive Legends. Each Warrant issued in substitution or on
transfer or exchange of any Warrant which is a Restricted Security (as defined
in Section 3.1) shall bear the following legend, unless the holder of the
Warrant to be issued delivers to the Company an opinion of counsel of the holder
reasonably satisfactory to the Company that the following legend is no longer
required to ensure compliance with the Securities Act of 1933, as amended:
"This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933 and may not
be transferred in the absence of such registration or an exemption
therefrom, except under circumstances where neither such registration
nor such an exemption is required by law. This Warrant may be
transferred only in compliance with the conditions specified in this
Warrant."
Stock certificates issued upon exercise of a Warrant which are Restricted
Securities shall bear the following legend, unless the holder of a Warrant being
exercised delivers to the Company an opinion of counsel of the holder reasonably
satisfactory to the Company that the following legend is no longer required to
ensure compliance with the Securities Act of 1933, as amended:
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"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the
absence of such registration or an exemption therefrom, except under
circumstances where neither such registration nor such an exemption is
required by law."
3.3. Restriction on Transfer. Prior to any transfer of Restricted
Securities which are not registered under an effective registration statement
under the Securities Act of 1933, as amended, the registered holder of such
securities shall, upon the Company's request, furnish to the Company an opinion
of counsel of the holder reasonably satisfactory to the Company to the effect
that the proposed transfer may be effected without registration of such
Restricted Securities under the Securities Act of 1933.
4. Registered Holder and Transfer and Exchange; Replacement of
Warrants.
4.1. Registered Holder and Transfer and Exchange. This Warrant shall be
registered in the holder's name on the books of the Company as the registered
holder hereof at its principal office. No transfer of this Warrant shall be
valid unless made in compliance with Section 3.3 and the Warrant is surrendered
at the Company's principal office by the registered holder hereof or by his
attorney duly authorized in writing accompanied by a properly executed
assignment in the form attached hereto as Attachment B. This Warrant is
exchangeable, without expense, at the option of the holder, upon surrender
hereof at the Company's principal office for other Warrants of like tenor and of
different denominations calling in the aggregate on the face or faces thereof
for the number of shares of Common Stock called for on the face hereof. Upon the
surrender of any Warrant for registration of transfer or for exchange at the
principal office of the Company, the Company at its expense will execute and
deliver to or upon the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant or Warrants so surrendered. A Warrant, if
properly assigned, may be exercised by a new holder without first having a new
Warrant issued. The Company may treat the registered holder hereof as the
absolute owner of this Warrant (notwithstanding any notice of ownership or
writing made hereon by anyone other than an authorized officer or employee of
the Company) for all purposes.
4.2. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, upon delivery of indemnity reasonably satisfactory to the Company
in form and amount or, in the case of any such mutilation, upon surrender of
such Warrant for cancellation at the principal office of the Company, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
5. Maintenance of Reserved Shares. The Company shall reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock, for the purpose of effecting the exercise of this Warrant, the
full number of shares then issuable upon the exercise of the outstanding
Warrant.
6. Common Stock to be Validly Issued. All shares of Common Stock which
may be issued upon the exercise of the Warrant will, upon issuance, be validly
issued, fully paid and
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nonassessable, and free from all taxes (other then taxes payable in respect of
the transfer of any such shares), claims, liens, encumbrances, charges or
equities with respect to the issue thereof.
7. Warrant Holder Not Shareholder. No Warrant Holder, as such, shall be
entitled to vote or receive dividends or be deemed the holder of shares of
Common Stock for any purpose, nor shall anything contained in this Warrant be
construed to confer upon any Warrant Holder, as such, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
action by the Company (whether upon any recapitalization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings or other action affecting shareholders, except as
provided herein, receive dividends or subscription rights, or otherwise, until
the Warrant shall have been exercised and the shares of Common Stock purchasable
upon the exercise of the Warrant shall have become deliverable hereunder.
8. Notices. All notices, certificates, requests, or other similar items
provided for in this Warrant shall be in writing and shall be personally
delivered or deposited in the mail, postage prepaid, addressed to the Company at
1040 Riverside Drive, Suite 33, London, Ontario, Canada N6H 5H1 or to the Holder
at the address of the Holder shown on the Company's records. All notices shall
be deemed to be delivered upon personal delivery or upon the expiration of three
business days following deposit in the United States mail. The addresses of the
parties may be changed, and addresses of other Holders and holders of Warrant
Stock may be specified, by written notice delivered pursuant to this Section.
9. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Company shall bind its successors and assigns, whether so expressed or
not.
10. Governing Law. This Warrant shall be construed and interpreted in
accordance with the laws of the State of Michigan without reference to its
principles of conflicts of law.
11. Definitions. For all purposes of this Warrant, unless the context
otherwise requires:
(a) Common Stock: the Common Stock of the Company as
constituted on June 30, 2003, any stock, securities or other property
into which such Common Stock shall have been changed or any stock
resulting from any reclassification of such Common Stock.
(b) Company: includes any corporation which shall become fully
liable for the obligations of the Company hereunder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its officers thereunto duly authorized, and to be dated as of the day and year
first above written.
ECO-FORM INTERNATIONAL, INC.
By:
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Howard W. Keep, President
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Attachment A
NOTICE OF EXERCISE
(To be executed by a Holder desiring to exercise the right to purchase Common
Stock pursuant to a Warrant).
The undersigned Holder of Warrant Number W2000A- hereby
(i) irrevocably elects to exercise the Warrant to the extent of
purchasing shares of Common Stock;
(ii) makes payment in full of the aggregate Exercise Price for
those shares in the amount of $ by the delivery of cash
or certified or cashier's check in that amount;
(iii) requests that a certificate for such shares be issued in the
name of the undersigned or, if the name and address of some
other person is specified below, in the name of such other
person:
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(Name and address of person other than the
undersigned in whose name shares are to be
registered)
(iv) requests, if the number of shares transferred are not all the
shares purchasable pursuant to the unexercised portion of the
Warrant, that a new Warrant of like tenor for the remaining
shares purchasable pursuant to the Warrant be issued and
delivered to the undersigned at the address stated below.
Date:
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Signature
(This signature must conform in all respects
to the name of the Holder as specified on the
face of the Warrant.)
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Printed Name
Address:
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Attachment B
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ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned, , hereby sells, assigns and
transfers unto:
Name:
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(Please type or print in block letters)
Address:
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the right to purchase shares of Common Stock pursuant to the terms and
conditions of Warrant Number W2000A- held by the undersigned. The
undersigned hereby authorizes and directs the Company (i) to issue and deliver
to the above-named assignee at the above address a new Warrant pursuant to which
the rights to purchase being assigned may be exercised, and (ii) if there are
rights to purchase Common Stock remaining pursuant to the undersigned's Warrant
after the assignment contemplated herein, to issue and deliver to the
undersigned at the address stated below a new Warrant covering such remaining
rights. Except for the number of shares purchasable, 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 Form, the
undersigned hereby irrevocably constitutes and appoints as
the undersigned's attorney-in-fact to transfer the Warrants and the rights
thereunder on the books of the Company with full power of substitution for these
purposes.
The undersigned acknowledges that this transfer may only be effective and
recorded on the records of the Company if it is made pursuant to the
restrictions on transfer set forth in Sections 3.3 and 4.1 of the Warrant.
Date:
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Signature
(This signature must conform in all respects
to the name of the Holder as specified on the
face of the Warrant.)
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Printed Name
Address:
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