f8k_charlestonex4ii.htm


    
      Exhibit
4.2

    

     

    NEITHER
THIS SECURITY NOR THE SECURITIES FOR 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.

     

    


    SERIES
A COMMON STOCK PURCHASE WARRANT

    


    PANELTECH
INTERNATIONAL HOLDINGS, INC.

     

    Issue
Date:  December __,
2009

     

    Warrant
Shares: ___________                                                                                     Initial
Exercise Date: June __,
2010

    


     

        THIS SERIES A
COMMON STOCK PURCHASE WARRANT (this “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 initial exercise date set
forth above (the “Initial Exercise
Date”) and on or prior to the close of business on the seven (7) year
anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from PanelTech International
Holdings, Inc., a Delaware corporation (the “Company”), up to
_______ shares (the
“Warrant
Shares”) of 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).

     

    Section
1.   Definitions; Series A
Warrants.  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 23, 2009, among the Company and the Purchasers signatory
thereto.  This Warrant is one of a series of Series A Common Stock
Purchase Warrants (collectively referred to hereafter as the “Series A Warrants”)
issued to the Purchasers under the terms of the Offering.


    
      
        
           


        

        
          1

          
            

          

        

        
           


        

      

    

     

    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 (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 the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within three (3) Trading Days of
the date said Notice of Exercise is delivered to the Company, the Company shall
have received  payment of the aggregate Exercise Price of the shares
thereby purchased 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 this
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within three (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 two (2) Business Days of receipt of such
notice.  In the event of any dispute or discrepancy, the records of
the Company 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 $0.12, subject to adjustment hereunder (the “Exercise
Price”).

     

    c) Cashless
Exercise.  This Warrant may also be exercised 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 VWAP 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.

            


    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    d) Exercise Limitations.
From the Initial Exercise Date until the 61st day
prior to the Termination Date, 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 or
otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together
with the Holder’s Affiliates, and any other person or entity acting as a group
together with the Holder or any of the Holder’s Affiliates), 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 the 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 the 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  Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the 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 the Holder that the Company is not representing to the Holder
that such calculation is in compliance with Section 13(d) of the Exchange Act
and the 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 the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial
Ownership 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 (A) the
Company’s most recent periodic or annual report, as the case may be, (B) a more
recent public announcement by the Company or (C) any other notice by the Company
or the 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 the Holder the
number of shares of 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 the 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% (or 9.99% if the Holder’s then existing
Beneficial Ownership is equal to greater than 5% but less than 10%) 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 Holder, upon not less than 61 days’ prior notice to the
Company (unless (i) there are less than 61 days remaining until the Termination
Date, in which case such notice period shall be one day less than the number of
days remaining until the Termination Date or (ii) a Call Notice has been
delivered by the Company, pursuant to the provisions of Section 2(f)
hereafter, in which case such notice period shall be one day less than the
number of days remaining until the Call Date), may waive the Beneficial
Ownership Limitation provisions of this Section
2(d).  Any such waiver will not be effective until the 61st day
after such notice is delivered to the Company (or such shorter period described
in the previous sentence if there are less than 61 days remaining until the
Termination Date).  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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    e) Mechanics of
Exercise.

     

    i. Delivery of Certificates
Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent 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 then a participant in such system and either (A) there is an
effective Registration Statement permitting the resale of the Warrant Shares by
the Holder or (B) the shares are eligible for resale without volume or
manner-of-sale limitations pursuant to Rule 144, and otherwise by physical
delivery to the address specified by the Holder in the Notice of Exercise within
four (4) 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 (the “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 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 this Warrant has been exercised
by payment to the Company 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)(vi) prior to the issuance of such shares, have been paid. If the
Company fails for any reason to deliver to the Holder certificates evidencing
the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of
Exercise), $3 per Trading Day (increasing to $6 per Trading Day on the fifth
Trading Day after such liquidated damages begin to accrue) for each Trading Day
after such Warrant Share Delivery Date until such certificates are
delivered.

     

    ii. 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 a 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.

     

    iii. Rescission
Rights.  If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(e)(i) by
the Warrant Share Delivery Date, then, the Holder will have the right to rescind
such exercise.

     

    iv. 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 the Transfer Agent to transmit to the Holder a certificate or the
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 (A) 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 (1) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of this 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 of $10,000, under clause (A) 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
this Warrant as required pursuant to the terms hereof.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    v. 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.

     

    vi. 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.

     

    vii. 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.

     

    f) Call
Provision.  Subject to the provisions of Section 2(d) and this
Section 2(f),
if, on any date commencing thirty (30) days after the Initial Exercise Date, (i)
the VWAP for each of the immediately preceding sixty (60) consecutive Trading
Days (the “Measurement
Period”) exceeds $0.192 (subject to adjustment for forward and reverse
stock splits, recapitalizations, stock dividends and the like after the Issue
Date) and (ii) the average daily volume for such Measurement Period exceeds
$150,000 aggregate value of shares of Common Stock per Trading Day, then the
Company may, within one (1) Trading Day of the end of such Measurement Period,
call for cancellation of all or any portion of this Warrant for which a Notice
of Exercise has not yet been delivered (such right, a “Call”) for
consideration equal to $.0001 per Warrant Share.  To exercise this
right, the Company must deliver to the Holder an irrevocable written notice (a
“Call Notice”),
indicating therein the portion of unexercised portion of this Warrant to which
such notice applies.  If the conditions set forth below for such Call
are satisfied from the period from the date of the Call Notice through and
including the Call Date (as defined below), then any portion of this Warrant
subject to such Call Notice for which a Notice of Exercise shall not have been
received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on
the thirtieth (30th)
Trading Day after the date the Call Notice is received by the Holder (such date
and time, the “Call
Date”).  Any unexercised portion of this Warrant to which the
Call Notice does not pertain will be unaffected by such Call
Notice.  In furtherance thereof, the Company covenants and agrees that
it will honor all Notices of Exercise with respect to Warrant Shares subject to
a Call Notice that are tendered through 6:30 p.m. (New York City time) on the
Call Date.  The parties agree that any Notice of Exercise delivered
following a Call Notice which calls less than all the Warrant Shares shall first
reduce to zero the number of Warrant Shares subject to such Call Notice prior to
reducing the remaining Warrant Shares available for purchase under this
Warrant.  For example, if (A) this Warrant then permits the Holder to
acquire 100 Warrant Shares, (B) a Call Notice pertains to 75 Warrant Shares, and
(C) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders
a Notice of Exercise in respect of 50 Warrant Shares, then (x) on the Call Date
the right under this Warrant to acquire 25 Warrant Shares will be automatically
cancelled, (y) the Company, in the time and manner required under this Warrant,
will have issued and delivered to the Holder 50 Warrant Shares in respect of the
exercises following receipt of the Call Notice, and (z) the Holder may, until
the Termination Date, exercise this Warrant for 25 Warrant Shares (subject to
adjustment as herein provided and subject to subsequent Call
Notices).  Subject again to the provisions of this Section 2(f), the
Company may deliver subsequent Call Notices for any portion of this Warrant for
which the Holder shall not have delivered a Notice of
Exercise.  Notwithstanding anything to the contrary set forth in this
Warrant, the Company may not deliver a Call Notice or require the cancellation
of this Warrant (and any such Call Notice shall be void), unless, from the
beginning of the Measurement Period through the Call Date, (1) the Company shall
have honored in accordance with the terms of this Warrant all Notices of
Exercise delivered by  6:30 p.m. (New York City time) on the Call
Date, and (2) a Registration Statement shall be effective as to all Warrant
Shares and the Prospectus thereunder available for use by the Holder for the
resale of all such Warrant Shares, and (3) the Common Stock shall be listed or
quoted for trading on a Trading Market, and (4) there is a sufficient number of
authorized shares of Common Stock for issuance of all Securities under the
Transaction Documents.  The Company’s right to call the Warrants under
this Section
2(f) shall be exercised ratably among all of the holders of Series A
Warrants, including the Holder, based on the number of Warrant Shares initially
exercisable pursuant to each of the Series A Warrants.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Section
3.    Certain
Adjustments.

    
       

      a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(i) 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), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged.  Any
adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

    

     

    b) Subsequent Equity
Sales. If the Company or any Subsidiary thereof, as applicable, at any
time while this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock, at an effective price per share less than the
then Exercise Price (such lower price, the “Base Share Price” and
such issuances collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall
at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock at an effective
price per share which is less than the Exercise Price, such issuance shall be
deemed to have occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then as to any Dilutive Issuances the Exercise Price shall
be reduced and only reduced to equal the Base Share
Price.  Additionally, the number of Warrant Shares issuable hereunder
shall be increased such that the aggregate Exercise Price payable hereunder,
after taking into account the decrease in the Exercise Price, shall be equal to
the aggregate Exercise Price prior to such adjustment. Such adjustment shall be
made whenever such Common Stock or Common Stock Equivalents are
issued.  Notwithstanding the foregoing, no adjustments shall be made,
paid or issued under this Section 3(b) in
respect of an Exempt Issuance (as such term is defined in Section 3(j)
hereafter).  The Company shall notify the Holder, in writing, no later
than the Trading Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this Section 3(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance
Notice”).  For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise.

     

    c) Subsequent Rights
Offerings.  If the Company, at any time while this Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to holders of the Series A Warrants) entitling them to subscribe
for or purchase shares of Common Stock at a price per share less than the VWAP
at the record date mentioned below, then, the Exercise Price shall be multiplied
by a fraction, of which the denominator shall be the number of shares of the
Common Stock outstanding on the date of issuance of such rights or warrants plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so offered (assuming receipt by the Company in full of all consideration
payable upon exercise of such rights, options or warrants) would purchase at
such VWAP.  Such adjustment shall be made whenever such rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights,
options or warrants.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    d) Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to
holders of the Series A Warrants) evidences of its indebtedness or assets
(including cash and cash dividends) or rights or warrants to subscribe for or
purchase any security other than the Common Stock (which shall be subject
to Section
3(b)), then in each such case the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP on
such record date less the then per share fair market value at such record date
of the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by the
Board of Directors in good faith.  In either case the adjustments
shall be described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such subscription rights
applicable to one share of Common Stock.  Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

     

    e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the
Company effects any merger (other than a merger between the Company and a
wholly-owned Subsidiary of the Company) or consolidation of the Company with or
into another Person, (ii) the Company effects any sale of all or substantially
all of its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property or (iv) the Company effects
any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property (each “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate
Consideration”) receivable as a result of such merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. For purposes
of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 3(e) and
insuring that this Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

     

    f) Adjustment for Failure of
the Company to Pay the Liquidation Preference Amount.  In the
event of the occurrence of a Liquidation Event (as such term is defined in the
Certificate of Designation) and the failure of the Company to pay the
Liquidation Preference Amount (as such term is defined in the Certificate of
Designation), in full, within one (1) year after the Liquidation Event, the
Exercise Price shall be permanently reduced by fifty percent (50%) of the then
Exercise Price

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    g) Adjustment for Failure to
Meet Certain Performance Thresholds.  In the event that the
Company fails to achieve or is otherwise unable to report either or both of the
minimum performance thresholds for fiscal years 2010 and 2011 set forth below
(the “Performance
Thresholds”) then the then applicable Exercise Price shall reset lower by
the percentage difference by which the Company’s Earnings are below the
applicable Performance Threshold.  The Performance Thresholds for
fiscal years 2010 and 2011 are:

     

    
      	
              ·  

            	
              Fiscal
      Year 2010 Earnings Performance Threshold: $5,000,000;
  and

            


    

     

    
      	
              ·  

            	
              Fiscal
      Year 2011 Earnings Performance Threshold:
  $14,000,000.

            


    

    


    By way of
example, and for illustrative purposes only, in the event the Company reports
2010 fiscal Earnings of $4,500,000, the Exercise Price shall be reset at ten
percent (10%) below the then applicable Exercise Price. Should the Company then
report 2011 fiscal Earnings of $13,000,000, then the Exercise Price shall be
reset to seven percent (7%) below the then applicable Exercise
Price.  For the purposes of this provision, “Earnings” shall mean
earnings before interest, taxes, depreciation and non-cash expenses related to
financings, as reported in the Company’s consolidated financial statements for
the applicable fiscal year, which have been prepared in accordance with GAAP and
audited by the Company’s independent public accountant.

     

    h) Calculations. All
calculations under this Section 3 shall be
made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number
of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding

     

    i) Notice to
Holder.

     

    i. Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section
3, the Company shall promptly mail to the Holder a notice setting forth
the Exercise Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. If the Company enters into a Variable Rate
Transaction, despite the prohibition thereon in the Purchase Agreement, the
Company shall be deemed to have issued Common Stock or Common Stock Equivalents
at the lowest possible conversion or exercise price at which such securities may
be converted or exercised.

     

    ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least fifteen (15) calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of which the holders
of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  The Holder is
entitled to exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    j) Exempt
Issuance.  For the purposes of this Section 3, “Exempt
Issuance” shall mean the issuance of (A) shares of Common Stock or shares of the
Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the
“Series A Preferred
Stock”) issued as dividends with respect to the Series A Preferred Stock,
(B) shares of Common Stock issued or issuable upon conversion or exercise of any
convertible debt or equity securities or warrants outstanding as of the
Secondary Closing Date (or as of the Initial Closing Date if there is no
Secondary Closing Date), and in accordance with the terms thereof on such date,
(C) shares of Common Stock or Common Stock Equivalents (or Common Stock issued
upon exercise, exchange or conversion of Common Stock Equivalents) issued in
connection with any stock-based compensation plans of the Company approved by
the stockholders of the Company and the Board, (D) shares of Common Stock issued
pursuant to a firm commitment underwritten public offering, the terms of which
are approved by the Company’s Board of Directors (including a majority of the
independent directors serving on the Board), (E) securities or rights to acquire
securities issued to financial institutions in connection with commercial credit
arrangements, equipment financings, service agreements or similar transactions
approved by the Company’s Board of Directors and the primary purpose of which is
not equity financing, (F) securities or rights to acquire securities issued in
connection with strategic acquisitions, collaborations, development agreements,
joint ventures or licensing transactions or to consultants or other service
providers of the Company, the terms of which are approved by the Board
(including a majority of the independent directors serving on the Board or (G)
Series A Preferred Stock issued on or prior to December 31, 2009.

     

    Section
4.    Transfer of
Warrant.

     

    a) Transferability.  Subject
to compliance with any applicable securities laws and the conditions set forth
in Section 4(d)
hereof and to the provisions of Section 4.1 of the Purchase Agreement, this
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such
transfer.  Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new warrant or warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  This Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new warrant issued.

     

    b) New Warrants. This
Warrant may be divided or combined with other Series A Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new warrants are
to be issued, signed by the Holder or its agent or attorney.  Subject
to compliance with Section 4(a), as to
any transfer which may be involved in such division or combination, the Company
shall execute and deliver a new warrant or warrants in exchange for this Warrant
or Warrants to be divided or combined in accordance with such notice. All
warrants issued on transfers or exchanges shall be dated the original Issue Date
and shall be identical with this Warrant except as to the number of Warrant
Shares issuable pursuant thereto.

     

    c) Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

     

    d) Transfer Restrictions. If, at the time of the
surrender of this Warrant in connection with any transfer of this Warrant, the
transfer of this Warrant shall not be either (i) registered pursuant to an
effective registration statement under the Securities Act and under applicable
state securities or blue sky laws or (ii) eligible for resale without volume or
manner-of-sale restrictions pursuant to Rule 144, the Company may require, as a
condition of allowing such transfer, that the Holder or transferee of this
Warrant, as the case may be, comply with the provisions of Section 5.7 of the
Purchase Agreement.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    Section
5.   Miscellaneous.

     

    a) No Rights as Stockholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section
2.

     

    b) Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of this Warrant,
shall not include the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such warrant or stock certificate.

     

    c) Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    d) Authorized
Shares.

     

    The
Company covenants that, during the period this Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.  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).

     

    Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation 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 observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) 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 upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    e) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    f) Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

     

    g) Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

     

    h) Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

     

    i) Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    j) Remedies.  The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.

     

    k) Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.

     

    l) Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the holders of Series A Warrants exercisable
for at least equal to a majority of the Warrant Shares issuable upon exercise of
all then outstanding Series A Warrants.

     

    m) Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibitd by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

     

    n) Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    


    ********************

     

    (Signature
Pages Follow)

     


    
      
         


      

      
        11

        
          

        

      

      
         


      

    


    


    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.

    
 

    
      	
              PANELTECH
      INTERNATIONAL HOLDINGS, INC.

               

               

            
	
              By:
      __________________________________________

                   
       Name:

                    
      Title:

               

            


    

    
 


    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    NOTICE
OF EXERCISE

    


    TO:        PANELTECH INTERNATIONAL HOLDINGS,
INC.

     

    (1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    (2) Payment
shall take the form of (check applicable box):

     

    [  ]
in lawful money of the United States; or

     

    [ ] [if
permitted] the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection
2(c).

     

    (3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    _______________________________

    


    


    The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

    


    _______________________________

    


    _______________________________

    


    _______________________________

     

    (4)  Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

    


    [SIGNATURE
OF HOLDER]

    


    Name of
Investing Entity:
________________________________________________________________________

    Signature of Authorized Signatory of
Investing Entity:
_________________________________________________

    Name of
Authorized Signatory:
___________________________________________________________________

    Title of
Authorized Signatory:
____________________________________________________________________

    Date:
________________________________________________________________________________________

    


    

      
        
           


        

        
          13

          
            

          

        

        
           


        

      

    

    ASSIGNMENT
FORM

    


    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the Warrant.)

    


    


    FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to

     

    


    _______________________________________________
whose address is

    


    _______________________________________________________________.

    


    


    


    _______________________________________________________________

    


    Dated:  ______________,
_______

    


     

     

    
      
        	
                             Holder’s
      Signature: 

              	 
      
	 
      	 
      
	
                             Holder’s
      Address:  

              	 
      
	 
      	 
      
	
                         

              	 
      


      



     

    Signature
Guaranteed:  ___________________________________________

    


    


    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

    


     


    
      
         


      

      
        14