exh10-2_warrant.htm


     

    
      

      

    

     

     

     

     

     

     

     

     

     

    EXHIBIT 10.2

     

    FORM OF WARRANT

     

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    The
securities represented by this Warrant and issuable upon exercise hereof have
not been registered under the Securities Act of 1933, as amended (the “Act”), or
under the provisions of any applicable state securities laws, but have been
acquired by the registered holder hereof for purposes of investment and in
reliance on statutory exemptions under the Act, and under any applicable state
securities laws.  These securities and the securities issued upon
exercise hereof may not be sold, pledged, transferred or assigned, nor may this
Warrant be exercised, except in a transaction which is exempt under the
provisions of the Act and any applicable state securities laws or pursuant to an
effective registration statement.

    


    ENERGY
COMPOSITES CORPORATION

    A
Nevada Corporation

     

    COMMON
STOCK PURCHASE WARRANT

     

    Date of
Issuance: ____________ 2008

    Certificate
No. W-__

     

    For value
received, Energy Composites Corporation, a Nevada corporation (the “Company”), hereby
grants to ____________________ or its transferees and assigns (“Registered Holder”),
the right to purchase from the Company a total of ______________ shares (“Warrant Shares”) of
the Company’s common stock, par value $0.001 per share (“Common Stock”), at a
price per share equal to $5.00 (the “Initial Exercise
Price”).  The exercise price and number of Warrant Shares (and
the amount and kind of other securities) for which this Warrant is exercisable
shall be subject to adjustment as provided in Section 2 hereof.  This
Warrant is being issued in connection with the Subscription Agreement between
Registered Holder and the Company dated ___________, 2008 (the “Subscription
Agreement”).  This Warrant is subject to the following
provisions:

     

    SECTION
1.   
Exercise of
Warrant.

     

    (a)  Terms of Warrants; Exercise
Period.  Subject to the terms of this Agreement, the Registered
Holder shall have the right, commencing on the date hereof and expiring on the
3-year anniversary hereof (the “Expiration Date”), to
exercise this Warrant, in whole or in part, and receive from the Company the
number of Warrant Shares which the Registered Holder may at the time be entitled
to receive on exercise of this Warrant and payment of the Exercise Price then in
effect for the Warrant Shares.  To the extent not exercised prior to
the Expiration Date, this Warrant shall become void and all rights thereunder
and all rights in respect thereof under this Agreement shall cease as of such
time.

     

    (b)  Exercise
Procedure.

     

    (i)  This
Warrant shall be deemed to have been exer­cised on the date specified in a
written notice from the Registered Holder to the Company (the “Exercise Time”) and
within three business days following the Exercise Time, the Registered Holder
shall deliver the following to the Company:

     

    (A)  
a
completed Exercise Agreement, as described in Section 1(c)
below;

     

    (B)  
this
Warrant;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (C)  
if this
Warrant is not registered in the name of the Registered Holder, an Assignment or
Assignments in the form set forth in Exhibit II hereto
evidencing the assignment of this Warrant to the Registered Holder, in which
case the Registered Holder shall have complied with the pro­visions set
forth in Section 4 hereof; and

     

    (D)  
wire
transfer or a check payable to the Company in an amount equal to the product of
the Exercise Price (as such term is de­fined in Section 2) multiplied by the
number of Warrant Shares being purchased upon such exercise (the “Aggregate Exercise
Price”).

     

    (ii)  
Certificates
for Warrant Shares purchased upon exercise of this Warrant shall be delivered by
the Company to the Registered Holder within 5 business days after the date of
the Exercise Time.  Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company shall
prepare a new Warrant, substantially identical hereto, representing the rights
formerly represented by this Warrant that have not expired or been exercised and
shall, within such 5-day period, deliver such new Warrant to the Person
designated for delivery in the Exercise Agreement.

     

    (iii) The
Warrant Shares issuable upon the exercise of this Warrant shall be deemed to
have been issued to the Registered Holder at the Exercise Time, and the
Registered Holder shall be deemed for all purposes to have become the record
holder of such Warrant Shares at the Exercise Time.

     

    (iv) 
The
Company shall not close its books against the transfer of this Warrant or of any
Warrant Shares issued or issuable upon the exercise of this Warrant in any
manner which interferes with the timely exercise of this Warrant.

     

    (v)  
The
Company shall assist and cooperate with the Registered Holder or any Registered
Holder required to make any governmental filings or obtain any governmental
approvals prior to or in connection with any exercise of this
Warrant.

     

    (vi) 
The
Company shall at all times reserve and keep available out of its authorized but
unissued capital stock, solely for the purpose of issuance upon the exercise of
this Warrant, the maximum number of Warrant Shares issuable upon the exercise of
this Warrant.  All Warrant Shares which are so issuable shall, when
issued and upon the payment of the Exercise Price therefor, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges.  The Company shall take all such ac­tions as may be
necessary to assure that all such Warrant Shares may be so issued without
violation by the Company of any applica­ble law or governmen­tal
regulation or any requirements of any domestic securities exchange upon which
securities of the Company may be listed (except for official notice of issuance
which shall be immediately deliv­ered by the Company upon each such
issuance).

     

    (c)  Exercise
Agreement.  Upon any exercise of this Warrant, the Registered
Holder shall deliver an Exercise Agreement in the form set forth in Exhibit I
hereto, except that if the Warrant Shares are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be issued does
not 

     

     

    
      
         

      

      
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      include
all the Warrant Shares purchasable here­under, it shall also state the name
of the Person to whom a new Warrant for the unexer­cised portion of the
rights hereunder is to be issued.  Such Exercise Agreement shall be
dated the actual date of execution thereof.

    

     

    (d)  Mandatory
Exercise.  The Company may force the exercise of this Warrant
if all of the following conditions have been met:

     

    (i)  
The
Company’s common stock, $0.001 par value (the “Common Stock”) has
traded above the Exercise Price for at least 20 consecutive trading days
immediately preceding the Mandatory Exercise Notice (defined
below);

     

    (ii)  
The
average trading volume shall be at least 100,000 shares per day during such
20-consecutive day trading period; and

     

    (iii) 
The
shares of Common Stock issuable upon exercise of this Warrant shall be eligible
for resale pursuant to Rule 144 under the Securities Act of 1933 or there shall
be an effective registration statement covering the resale of the Warrant
Shares.

     

    The
Company may exercise its right to force the exercise this Warrant by giving
notice thereof (the “Mandatory Exercise
Notice”) to the holder of this Warrant as it appears on the books of the
Company, which notice shall specify the number of Warrant Shares to be issued
and shall fix a date for mandatory exercise, which date shall not be less than
30 days nor more than 45 days after the date of the Mandatory Exercise
Notice.

     

    SECTION
2.   Adjustment of Exercise Price
and Number of Shares.  In order to prevent dilution of the
rights granted under this Warrant, the Initial Exercise Price shall be subject
to adjustment from time to time as provided in this Section 2 (such price
or such price as last adjusted pursuant to the terms hereof, as the case may be,
is herein called the “Exercise Price”), and
the number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time as provided in this
Section 2.

     

    (a)  Reorganization,
Reclassification, Consolida­tion, Merger or Sale.  In case
of any reclassification, capital reorganization, consolidation, merger, sale of
all or substan­tially all of the Company’s assets to another Person or any
other change in the Common Stock of the Company, other than as a result of a
subdivision, combination, or stock dividend provided for in Section 2(b)
below (any of which, a “Change Event”), then,
as a condition of such Change Event, lawful provision shall be made, and duly
executed documents evidencing the same from the Company or its successor shall
be delivered to the Registered Holder, so that the Registered Holder shall have
the right at any time prior to the expiration of this Warrant to purchase, at a
total price equal to that payable upon the exercise of this Warrant (subject to
adjustment of the Exercise Price as provided in Section 2), the kind and amount
of shares of stock and other securities and property receivable in connection
with such Change Event by a holder of the same number of shares of Common Stock
as were purchasable by the Registered Holder immediately prior to such Change
Event.  In any such case appropriate provisions shall be made with
respect to the rights and interest of the Registered Holder so that the
provisions hereof shall thereafter be applicable with respect to any shares of
stock or other securities and property deliverable upon exercise hereof, and
appropriate adjustments shall 

     

     

    
      
         

      

      
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      be made
to the purchase price per share payable hereunder, provided the aggregate
purchase price shall remain the same.

    

     

    (b)  Subdivisions, Combinations
and Other Issuances.  If the Company shall at any time prior to
the expiration of this Warrant (i) subdivide its Common Stock, by split-up or
otherwise, or combine its Common Stock, or (ii) issue additional shares of its
Common Stock or other equity securities as a dividend with respect to any shares
of its Common Stock, the number of shares of Common Stock issuable on the
exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the
same.  Any adjustment under this Section 2(b) shall become
effective at the close of business on the date the subdivision or combination
becomes effective, or as of the record date of such dividend, or in the event
that no record date is fixed, upon the making of such dividend.

     

    (c)  Issuance of New
Warrant.  Upon the occurrence of any of the events listed in
this Section 2 that results in an adjustment of the type, number or exercise
price of the securities underlying this Warrant, the Registered Holder shall
have the right to receive a new warrant reflecting such adjustment upon the
Registered Holder tendering this Warrant in exchange.  The new warrant
shall otherwise have terms identical to this Warrant.

     

    (d)  Notices.

     

    (i)  
The
Company shall give written notice to the Regis­tered Holder of this Warrant
at least 10 days prior to the date on which the Company closes its books or
takes a record for determining rights to vote with respect to any event
described in this Section 2 or any dissolu­tion or liquidation.

     

    (ii) 
The
Company shall also give written notice to the Registered Holder of this Warrant
at least 10 days prior to the date on which any event described in this Section
2 or any dissolution or liquidation shall take place.

     

    SECTION
3.   No Voting Rights;
Limitations of Liability.  This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Company.  No provision hereof, in the absence of affirmative action by
the Registered Holder to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of the Registered Holder shall give rise to any
liability of such holder for the Exercise Price of Warrant Shares acquirable by
exercise hereof or as a stockholder of the Company.

     

    SECTION
4.   Warrant
Transferable.  Subject to compliance with applicable securities
laws and the terms of this Section 6, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the Registered Holder upon
surrender of this Warrant with a properly executed Assignment (in the form of
Exhibit II
hereto) at the principal office of the Company.

     

     

    
      
         

      

      
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    SECTION
5.   Warrant Exchangeable for
Different Denominations.  This Warrant is exchangeable, upon
the surrender hereof by the Registered Holder at the principal office of the
Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants shall represent such
portion of such rights as is designated by the Registered Holder at the time of
such surrender.  The date the Company initially issues this Warrant
shall be deemed to be the “Date of Issuance” hereof regardless of the number of
times new certificates representing the unexpired and unexercised rights
formerly represented by this Warrant shall be issued.  All Warrants
representing portions of the rights hereunder are referred to herein as the
“Warrants.”

     

    SECTION
6.   Replacement.  Upon
receipt of evidence reasonably satisfactory to the Company of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Company, or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at the expense
of the Registered Holder) execute and deliver in lieu of such certificate a new
certificate of like kind representing the same rights represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.

     

    SECTION
7.   Notices.  Any
notice, demand, offer, request or other communication required or permitted to
be given pursuant to the terms of this Warrant shall be in writing and shall be
deemed effectively given the earlier of (i) when received, (ii) when delivered
personally, (iii) one business day after being delivered by facsimile (with
receipt of appropriate confirmation), or (iv) one business day after being
deposited with an overnight courier service, and addressed to the recipient at
the addresses set forth below unless another address is provided to the other
party in writing:

     

    If to Company,
to:

    


    Energy
Composites Corporation

    4400 Commerce Drive

    Wisconsin
Rapids, WI 54494

    Attn:    Samuel W.
Fairchild

                                 
Fax:     (715) 421 2048

     

    If to Registered Holder,
to:

    


    ________________________

    ________________________

    ________________________

    Fax:          _______________

    


     

    
      
         

      

      
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    or, in
any case, at such other address or addresses as shall have been furnished in
writing to the Company (in the case of a Registered Holder of Warrants) or to
the Registered Holders of Warrants (in the case of the Company) in accordance
with the provisions of this paragraph.

     

    SECTION
8.   Amendment and
Waiver.  Except as otherwise provided herein, the provisions of
the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Registered Holders
of Warrants representing a majority of the Warrant Shares obtainable upon
exercise of the then-outstanding Warrants; provided, however, that no such
action may change the Exercise Price of the Warrants or the number of shares or
class of capital stock obtainable upon exercise of each Warrant without the
written consent of all Registered Holders.

     

    SECTION
9.   Descriptive Headings;
Governing Law.

     

    (a)  
The
descriptive headings of the several Sections of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.

     

    (b)  
All
issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by, and construed in
accordance with, the laws of the State of Nevada, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Nevada or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Nevada.

     

    SECTION
10.  Warrant
Register.  The Company shall maintain at its principal
executive office books for the registration and the registration of transfer of
this Warrant.  The Company may deem and treat the Registered Holder as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice to the contrary.

     

    SECTION
11.   Fractions of
Shares.  The Company may, but shall not be required, to issue a
fraction of a Warrant Share upon the exercise of this Warrant in whole or in
part.  As to any fraction of a share which the Company elects not to
issue, the Company shall make a cash payment in respect of such fraction in an
amount equal to the same fraction of the market price of a Warrant Share on the
date of such exercise (as determined by the board of directors in its reasonable
discretion).

     

    *
* * * *

     


    
      
         


      

      
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    IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested
by its duly authorized officers and to be dated as of the Date of Issuance
hereof.

     

     

    ENERGY
COMPOSITES CORPORATION

     

    


     

    By: _______________________________

    Samuel W. Fairchild

    Chief Executive Officer

    


     

    


     


    
      
         


      

      
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    EXHIBIT
I

     

    EXERCISE
AGREEMENT

     

    


     

    To:                                                                                     Dated:

     

    


     

    The
undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. W-____), hereby agrees to subscribe for the purchase of ______
Warrant Shares covered by such Warrant and makes payment herewith in full
therefor at the price per share provided by such Warrant.  Please
issue the Warrant Shares in the following names and amounts:

     

    


     

    Name                                                                Number
of Warrant Shares

     

    


     

    


     

    


     

    


     

    Signature
____________________

     

    


     

    Address
______________________

     

    


     


    
      
         


      

      
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    EXHIBIT
II

     

    ASSIGNMENT

     

    


     

    FOR VALUE
RECEIVED, _____________________________ hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant (Certificate No.
W-_____) with respect to the number of the Warrant Shares covered thereby set
forth below, unto:

     

    Names of
Assignee                                                          Address                                                      No. of
Shares

     

    


     

    


     

    


     

    


     

    


     

    Dated:                                                                              Signature                             _______________________

     

    


     

    Witness                                _______________________

     

    


     

    


     

    The
Assignee agrees to be bound by the terms of the Warrant.

     

    


     

    Signature                                _______________________

     

    


     

    Witness                                _______________________

     

     

     

     

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