Document:

Unassociated Document

    
      

    

    Exhibit
      10.4

    

    

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “ACT”)
      OR
      UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION AND MAY NOT BE SOLD,
      OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER
      THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES
      AN
      OPINION, IN REASONABLY ACCEPTABLE FORM AND SCOPE, OF COUNSEL REASONABLY
      SATISFACTORY TO THE COMPANY, THAT REGISTRATION, QUALIFICATION OR OTHER SUCH
      ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS. 

    

    LAPOLLA
      INDUSTRIES, INC.

    

    WARRANT
      TO PURCHASE SHARES OF COMMON STOCK

    (Expires
      February 29, 2012)

    

    
      	
              Warrant
                No. CV-1

            	
              500,000
                Shares of Common Stock

            

    

    

    

    FOR
      VALUE
      RECEIVED, subject to the provisions set forth below, the undersigned, LAPOLLA
      INDUSTRIES, INC., a Delaware corporation (the “Company”),
      hereby certifies that ComVest Capital, LLC, a Delaware limited liability
      company, or its registered assigns (the “Holder”),
      is
      entitled to purchase from the Company up to five hundred thousand (500,000)
      fully paid and nonassessable shares (the “Warrant
      Shares”)
      of the
      Company’s common stock, $.01 par value per share (the “Common
      Shares”),
      for
      cash at a price of $0.68 per share (the “Exercise Price”) at any time and from
      time to time from and after the date hereof and until 5:00 p.m. (Central time)
      on February 29, 2012 (the “Expiration
      Date”)
      upon
      surrender to the Company at its principal office (or at such other location
      as
      the Company may advise the Holder in writing) of this Warrant properly endorsed
      with the Notice of Exercise attached hereto duly filled in and signed and,
      if
      applicable, upon payment in cash or by check of the aggregate Exercise Price
      for
      the number of shares for which this Warrant is being exercised determined in
      accordance with the provisions hereof. The Exercise Price and the number of
      shares purchasable hereunder are subject to adjustment as provided in
      Section 3 of this Warrant.

    

    
      	 	
              1.

            	
              Exercise
                of Warrant.

            

    

    

    1.1.   Exercise. 
      This
      Warrant shall be exercisable from the date hereof until the Expiration Date,
      and
      this Warrant shall expire on the Expiration Date. Upon exercise of this Warrant,
      the Exercise Price shall be payable in cash or by check. This Warrant may be
      exercised in whole or in part so long as any exercise in part hereof would
      not
      involve the issuance of fractional Warrant Shares. If exercised in part, the
      Company shall deliver to the Holder a new Warrant, identical in form to this
      Warrant, in the name of the Holder, evidencing the right to purchase the number
      of Warrant Shares as to which this Warrant has not been exercised, which new
      Warrant shall be signed by an appropriate officer of the Company. The term
      “Warrant” as used herein shall include any subsequent Warrant issued as provided
      herein.

    

    1.2.   Exercise
      Procedures; Delivery of Certificate.  Upon
      surrender of this Warrant with a duly executed Notice of Exercise in the form
      of
Annex A
      attached
      hereto, together with payment of the Exercise Price for the Warrant Shares
      purchased, at the Company’s principal executive offices (the “Designated
      Office”),
      the
      Holder shall be entitled to receive a certificate or certificates for the
      Warrant Shares so purchased. The Company agrees that the Warrant Shares shall
      be
      deemed to have been issued to the Holder as of the close of business on the
      date
      on which this Warrant shall have been surrendered together with the Notice
      of
      Exercise and payment for such Warrant Shares.

    

    1.3.   Cashless
      Exercise.  In
      connection with any exercise of this Warrant, in lieu of payment of the Exercise
      Price, the Holder may exercise this Warrant, in whole or in part, by
      presentation and surrender of this Warrant to the Company, together with a
      Cashless Exercise Form in the form attached hereto as Annex B
      (or a
      reasonable facsimile thereof) duly executed (a “Cashless
      Exercise”).
      Acceptance by the Company of such presentation and surrender shall be deemed
      a
      waiver of the Holder's obligation to pay all or any portion of the Exercise
      Price, as the case may be. In the event of a Cashless Exercise, the Holder
      shall
      exchange this Warrant for that number of Common Shares determined by multiplying
      the number of Common Shares for which this Warrant is being exercised by a
      fraction, (a) the numerator of which shall be the difference between (i) the
      then current market price per Common Share, and (ii) the Exercise Price, and
      (b)
      the denominator of which shall be the then current market price per Common
      Share. For purposes of any computation under this Section l.3, the then current
      market price per Common Share at any date shall be deemed to be the average
      of
      the daily trading price for the ten (10) consecutive trading days immediately
      prior to the Cashless Exercise. If, during such measuring period, there shall
      occur any event which gives rise to any adjustment of the Exercise Price, then
      a
      corresponding adjustment shall be made with respect to the closing prices of
      the
      Common Shares for the days prior to the Effective Date of such adjustment event.
      As used herein, the term “trading price” on any relevant date means (A) if the
      Common Stock is listed for trading on the New York Stock Exchange, the American
      Stock Exchange, the NASDAQ National Market, or the NASDAQ Capital Market, the
      closing sale price (or, if no closing sale price is reported, the last reported
      sale price) of the Common Stock (regular way), or (B) if the Common Stock is
      not
      so listed but quotations for the Common Stock are reported on the OTC Bulletin
      Board, the most recent closing price as reported on the OTC Bulletin
      Board.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	 	
              2.

            	
              Transfer;
                Issuance of Stock Certificates; Restrictive
                Legends

            

    

     

    2.1.   Transfer.  Each
      transfer of this Warrant and all rights hereunder, in whole or in part, shall
      be
      registered on the books of the Company to be maintained for such purpose, upon
      surrender of this Warrant at the Designated Office, together with a written
      assignment of this Warrant in the form of Annex C
      attached
      hereto duly executed by the Holder or its agent or attorney. Upon such surrender
      and delivery, the Company shall execute and deliver a new Warrant or Warrants
      in
      the name of the assignee or assignees and in the 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, if any. A Warrant may
      be
      exercised by the new Holder for the purchase of Warrant Shares without having
      a
      new Warrant issued. Prior to due presentment for registration of transfer
      thereof, the Company may deem and treat the registered Holder of this Warrant
      as
      the absolute owner hereof (notwithstanding any notations of ownership or writing
      thereon made by anyone other than a duly authorized officer of the Company)
      for
      all purposes and shall not be affected by any notice to the contrary. All
      Warrants issued upon any assignment of Warrants shall be the valid obligations
      of the Company, evidencing the same rights and entitled to the same benefits
      as
      the Warrants surrendered upon such registration of transfer or
      exchange.

    

    2.2.   Stock
      Certificates.  Certificates
      for the Warrant Shares shall be delivered to the Holder within five (5) business
      days after the rights represented by this Warrant shall have been exercised
      pursuant to Section 1, and a new Warrant representing the right to purchase
      the
      Common Shares, if any, with respect to which this Warrant shall not then have
      been exercised shall also be issued to the Holder within such time. The issuance
      of certificates for Warrant Shares upon the exercise of this Warrant shall
      be
      made without charge to the Holder hereof including, without limitation, any
      documentary, stamp or similar tax that may be payable in respect thereof;
provided,
      however,
      that
      the Company shall not be required to pay any income tax to which the Holder
      hereof may be subject in connection with the issuance of this Warrant or the
      Warrant Shares.

    

    2.3.   Restrictive
      Legend.  Except
      as
      otherwise provided in this Section 2, each certificate for Warrant Shares
      initially issued upon the exercise of this Warrant and each certificate for
      Warrant Shares issued to any subsequent transferee of any such certificate,
      shall be stamped or otherwise imprinted with a legend in substantially the
      following form:

    

    “THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
      THE
      ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
      UNDER SUCH ACT OR AN OPINION IN FORM AND FROM COUNSEL REASONABLY SATISFACTORY
      TO
      THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

    

    Notwithstanding
      the foregoing, the legend requirements of this Section 2.3 shall terminate
      as to
      any particular Warrant Shares when (i) such Warrant Shares are transferred
      pursuant to an effective resale registration statement, as contemplated in
      the
      Registration Rights Agreement between the Company and the Holder of even date
      herewith, or (ii) the Company shall have received from the Holder thereof
      an opinion of counsel in form and substance reasonably acceptable to the Company
      that such legend is not required in order to ensure compliance with the
      Securities Act. Whenever the restrictions imposed by this Section 2.3 shall
      terminate, the Holder or subsequent transferee, as the case may be, shall be
      entitled to receive from the Company without cost to such Holder or transferee
      a
      certificate for the Warrant Shares without such restrictive legend.

    

    
      	 	
              3.

            	
              Adjustment
                of Number of Shares; Exercise Price; Nature of Securities Issuable
                Upon
                Exercise of Warrants. 

            

    

    

    3.1.   Exercise
      Price; Adjustment of Number of Shares.  The
      Exercise Price and the number of shares purchasable hereunder shall be subject
      to adjustment from time to time as hereinafter provided; provided,
      however,
      that,
      notwithstanding the below, in no case shall the Exercise Price be reduced to
      below the par value per share of the class of stock for which this Warrant
      is
      exercisable at such time.

    

    3.2.   Adjustments
      Upon Distribution, Subdivision or Combination.  If
      the
      Company, at any time or from time to time after the issuance of this Warrant,
      shall (a) make a dividend or distribution on its Common Shares payable in
      Common Shares, (b) subdivide or reclassify the outstanding Common Shares
      into a greater number of shares, or (c) combine or reclassify the
      outstanding Common Shares into a smaller number of shares, the Exercise Price
      in
      effect at that time and the number of Warrant Shares into which the Warrant
      is
      exercisable at that time shall be proportionately adjusted effective as of
      the
      record date for the dividend or distribution or the effective date of the
      subdivision, combination or reclassification. 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    3.3.   Adjustment
      Upon Other Distributions.  If
      the
      Company, at any time or from time to time after the issuance of this Warrant,
      makes a distribution to the holders of Common Shares which is payable in
      securities of the Company other than Common Shares, then, in each such event,
      provision shall be made so that the Holder shall receive upon exercise of this
      Warrant, in addition to the number of Warrant Shares, the amount of such
      securities of the Company which would have been received if the portion of
      the
      Warrant so exercised had been exercised for Warrant Shares on the date of such
      event, subject to adjustments subsequent to the date of such event with respect
      to such distributed securities which shall be on terms as nearly equivalent
      as
      practicable to the adjustments provided in this Section 3 and all other
      adjustments under this Section 3.

    

    3.4.   Adjustment
      Upon Merger, Consolidation or Exchange.  If
      at any
      time or from time to time after the issuance of this Warrant there occurs any
      merger, consolidation, arrangement or statutory share exchange of the Company
      with or into any other person or company, then, in each such event, provision
      shall be made so that the Holder shall receive upon exercise of this Warrant
      the
      kind and amount of shares and other securities and property (including cash)
      which would have been received upon such merger, consolidation, arrangement
      or
      statutory share exchange by the Holder if the portion of this Warrant so
      exercised had been exercised for Warrant Shares immediately prior to such
      merger, consolidation, arrangement or statutory share exchange, subject to
      adjustments for events subsequent to the effective date of such merger,
      consolidation, arrangement or statutory share exchange with respect to such
      shares and other securities which shall be on terms as nearly equivalent as
      practicable to the adjustments provided in this Section 3 and all other
      adjustments under this Section 3.

    

    3.5.   Adjustments
      for Recapitalization or Reclassification.  If,
      at
      any time or from time to time after the issuance of this Warrant, the Warrant
      Shares issuable upon exercise of this Warrant are changed into the same or a
      different number of securities of any class of the Company, whether by
      recapitalization, reclassification or otherwise (other than a merger,
      consolidation, arrangement or statutory share exchange provided for elsewhere
      in
      this Section 3), then, in each such event, provision shall be made so that
      the Holder shall receive upon exercise of this Warrant the kind and amount
      of
      securities or other property which would have been received in connection with
      such recapitalization, reclassification or other change by the Holder if the
      portion of this Warrant so exercised had been exercised immediately prior to
      such recapitalization, reclassification or change, subject to adjustments for
      events subsequent to the effective date of such recapitalization,
      reclassification or other change with respect to such securities which shall
      be
      on terms as nearly equivalent as practicable to the adjustments provided in
      this
      Section 3 and all other adjustments under this Section 3.

    

    3.6.   Extraordinary
      Dividends or Distributions.  If,
      at
      any time or from time to time after the issuance of this Warrant, the Company
      shall declare a dividend or any other distribution upon the Common Shares
      payable otherwise than out of current earnings, retained earnings or earned
      surplus and otherwise than in Common Shares, then the Exercise Price in effect
      immediately prior to such declaration shall be reduced by an amount equal,
      in
      the case of a dividend or distribution in cash, to the amount thereof payable
      per Common Share or, in the case of any other dividend or distribution, to
      the
      value thereof per Common Share at the time such dividend or distribution was
      declared, as determined by the Board of Directors of the Company in good faith.
      Such reductions shall take effect as of the date on which a record is taken
      for
      the purposes of the subject dividend or distribution, or, if a record is not
      taken, the date as of which the holders of record of Common Shares entitled
      to
      such dividend or distribution are to be determined.

    

    
      	 	
              3.7

            	
               Adjustment
                Upon Certain Issuances of Common
                Stock.

            

    

    

    (a)    If
      the
      Company, at any time or from time to time, issues or sells any Additional Shares
      of Common Stock (as defined below), other than as provided in the foregoing
      subsections of this Section 3, for a price per share (which, in the case of
      options, warrants, convertible securities or other rights, includes the amounts
      paid therefor plus the exercise price, conversion price or other such amounts
      payable thereunder) that is less than the
      Exercise Price then in effect, then and in each such case, the then applicable
      Exercise Price shall automatically be reduced as of the opening of business
      on
      the date of such issue or sale, to a price determined by multiplying the
      Exercise Price then in effect by a fraction (i) the numerator of which
      shall be (A) the number of Common Shares deemed outstanding (as determined
      below) immediately prior to such issue or sale, plus (B) the number of
      Common Shares which the aggregate consideration received by the Company for
      the
      total number of Additional Shares of Common Stock so issued would purchase
      at
      such Exercise Price, and (ii) the denominator of which shall be the number
      of Common Shares deemed outstanding (as defined below) immediately prior to
      such
      issue or sale plus the total number of Additional Shares of Common Stock so
      issued; provided,
      however,
      that
      upon the expiration or other termination of options, warrants or other rights
      to
      purchase or acquire Common Shares which triggered any adjustment under this
      Section 3.7, and upon the expiration or termination of the right to convert
      or
      exchange convertible or exchangeable securities (whether by reason of redemption
      or otherwise) which triggered any adjustment under this Section 3.7, if any
      thereof shall not have been exercised, converted or exchanged, as applicable,
      the number of Common Shares deemed to be outstanding pursuant to this
      Section 3.7(a) shall be reduced by the number of shares as to which
      options, warrants, and rights to purchase or acquire Common Shares shall have
      expired or terminated unexercised, and as to which conversion or exchange rights
      shall have expired or terminated unexercised, and such number of shares shall
      no
      longer be deemed to be outstanding; and the Exercise Price then in effect shall
      forthwith be readjusted and thereafter be the price that it would have been
      had
      adjustment been made on the basis of the issuance only of the Common Shares
      actually issued. For purposes of the preceding sentence, the number of Common
      Shares deemed to be outstanding as of a given date shall be the sum of
      (x) the number of Common Shares actually outstanding, (y) the number
      of Common Shares for which this Warrant could be exercised on the day
      immediately preceding the given date, and (z) the number of Common Shares
      which could be obtained through the exercise or conversion of all other rights,
      options and convertible securities outstanding on the day immediately preceding
      the given date. “Additional
      Shares of Common Stock”
shall
      mean all Common Shares, and all options, warrants, convertible securities or
      other rights to purchase or acquire Common Shares, issued by the Company other
      than (i) Common Shares issued pursuant to the exercise of options, warrants
      or convertible securities outstanding on the date hereof (including, without
      limitation, the Term Note and all of the Warrants issued pursuant to the
      Revolving Credit and Term Loan Agreement dated as of February 21, 2007 by and
      between ComVest Capital, LLC and the Company), or hereafter issued from time
      to
      time pursuant to and in accordance with stock purchase or stock option plans
      as
      in effect on the date hereof, and (ii) Common Shares and/or options, warrants
      or
      other Common Share purchase rights for up to an aggregate of 900,000 Common
      Shares (such number to be subject to adjustment in accordance with Section
      3.2
      above), where such options, warrants or other rights are issued both (A) with
      exercise prices per Common Share at the then-current fair market value of a
      Common Share, as determined in good faith by the Board of Directors of the
      Company or the Compensation Committee thereof, and (B) to employees, officers
      or
      directors of, or consultants to, the Company or any subsidiary pursuant to
      stock
      purchase or stock option plans or other arrangements that are approved by the
      Company’s Board of Directors or the Compensation Committee thereof, and by the
      Company’s stockholders.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (b)    In
      the
      event that the exercise price, conversion price, purchase price or other price
      at which Common Shares are purchasable pursuant to any options, warrants,
      convertible securities or other rights to purchase or acquire Common Shares
      is
      reduced at any time or from time to time (other than under or by reason of
      provisions designed to protect against dilution), then, upon such reduction
      becoming effective, the Exercise Price then in effect hereunder shall forthwith
      be decreased to such Exercise Price as would have been obtained had the
      adjustments made and required under this Section 3.7 upon the issuance of such
      options, warrants, convertible securities or other rights been made upon the
      basis of (and the total consideration received therefor) (i) the issuance of
      the
      number of Common Shares theretofore actually delivered upon the exercise,
      conversion or exchange of such options, warrants, convertible securities or
      other rights, (ii) the issuance of all of the Common Shares and all other
      options, warrants, convertible securities and other rights to purchase or
      acquire Common Shares issued after the issuance of the modified options,
      warrants, convertible securities or other rights, and (iii) the original
      issuance at the time of the reduction of any such options, warrants, convertible
      securities or other rights then still outstanding.

    

    (c)    In
      no
      event shall an adjustment under this Section 3.7 be made if it would result
      in an increase in the then applicable Exercise Price.

    

    3.8.   Certificate
      of Adjustment.  Whenever
      the Exercise Price and/or the number of Warrant Shares receivable upon exercise
      of this Warrant is adjusted, the Company shall promptly deliver to the Holder
      a
      certificate of adjustment, setting forth the Exercise Price and/or Warrant
      Shares issuable after adjustment, a brief statement of the facts requiring
      the
      adjustment and the computation by which the adjustment was made. The certificate
      of adjustment shall be prima facie evidence of the correctness of the
      adjustment.

    

    3.9.   Successive
      Adjustments.  The
      provisions of this Section 3 shall be applicable successively to each event
      described herein which may occur subsequent to the issuance of this Warrant
      and
      prior to the exercise in full of this Warrant.

    

    4.   Registration;
      Exchange and Replacement of Warrant; Reservation of Shares. 
The
      Company shall keep at the Designated Office a register in which the Company
      shall provide for the registration, transfer and exchange of this Warrant.
      The
      Company shall not at any time, except upon the dissolution, liquidation or
      winding-up of the Company, close such register so as to result in preventing
      or
      delaying the exercise or transfer of this Warrant.

    

    The
      Company may deem and treat the person in whose name this Warrant is registered
      as the Holder and owner hereof for all purposes and shall not be affected by
      any
      notice to the contrary, until presentation of this Warrant for registration
      or
      transfer as provided in this Section 4.

    

    Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant and (in case of loss, theft
      or
      destruction) of the Holder’s indemnity in form satisfactory to the Company, and
      (in the case of mutilation) upon surrender and cancellation of this Warrant,
      the
      Company will (in the absence of notice to the Company that the Warrant has
      been
      acquired by a bona fide purchaser) make and deliver a new Warrant of like tenor
      in lieu of this Warrant, without requiring the posting of any bond or the giving
      of any security.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    The
      Company shall at all times reserve and keep available out of its authorized
      shares of capital stock, solely for the purpose of issuance upon the exercise
      of
      this Warrant, such number of Common Shares as shall be issuable upon the
      exercise hereof. The Company covenants and agrees that, upon exercise of this
      Warrant and payment of the Exercise Price therefor, if applicable, all Warrant
      Shares issuable upon such exercise shall be duly and validly authorized and
      issued, fully paid and non-assessable.

    

    5.   Investment
      Representations.  The
      Holder, by accepting this Warrant, covenants and agrees that, at the time of
      exercise of this Warrant, if the Warrant Shares shall not then be the subject
      of
      an effective registration statement under the Act, the securities acquired
      by
      the Holder upon exercise hereof are for the account of the Holder or are being
      acquired for its own account for investment and are not acquired with a view
      to,
      or for sale in connection with, any distribution thereof (or any portion
      thereof) and with no present intention (at such time) of offering and
      distributing such securities (or any portion thereof), except in compliance
      with
      applicable federal and state securities laws.

    

    6.   Fractional
      Warrants and Fractional Shares.  If
      the
      number of Warrant Shares purchasable upon the exercise of this Warrant is
      adjusted pursuant to Section 3 hereof, the Company shall nevertheless not be
      required to issue fractions of shares upon exercise of this Warrant or
      otherwise, or to distribute certificates that evidence fractional shares. With
      respect to any fraction of a share called for upon any exercise hereof, the
      Company shall pay to the Holder an amount in cash equal to such fraction
      multiplied by the current market value of a Common Share (determined in
      accordance with the last sentence of Section 1.3).

    

    7.   Warrant
      Holders Not Deemed Stockholders.  No
      Holder
      of this Warrant shall, as such, be entitled to vote or to receive dividends
      or
      be deemed the holder of Warrant Shares that may at any time be issuable upon
      exercise of this Warrant, nor shall anything contained herein be construed
      to
      confer upon the Holder of this Warrant, as such, any of the rights of a
      stockholder of the Company or any right to vote for the election of directors
      or
      upon any matter submitted to stockholders at any meeting thereof, or to give
      or
      withhold consent to any corporate action (whether upon any recapitalization,
      issue or reclassification of stock, change of par value or change of stock
      to no
      par value, consolidation, merger or conveyance or otherwise), or to receive
      notice of meetings, or subscription rights, until such Holder shall have
      exercised this Warrant and been issued Warrant Shares or deemed to have been
      issued Warrant Shares in accordance with the provisions hereof.

    

    8.   Notices. 
      Any
      notice which is required to be given by this Warrant must be in writing, and
      shall be given or served, unless otherwise expressly provided herein, by
      depositing the same in the United States Mail, postpaid and certified and
      addressed to the party to be notified, with return receipt requested, or by
      delivering the same by courier or in person to such party (or, if the party
      or
      parties to be notified be incorporated, to an officer of such party). Notice
      deposited in the mail, postpaid and certified with return receipt requested,
      shall be deemed received and effective upon the deposit in a proper United
      States depository. Notice given in any other manner shall be effective only
      if
      and when received by the party to be notified. For the purposes of notice,
      the
      addresses of the parties for the receipt of notice hereunder are:

    

    If
      to
      the Company:

    LaPolla
      Industries, Inc.

    15402
      Vantage Parkway East, Suite 322

    Houston,
      Texas 77032

    Telephone:
      (281) 219-4700

    Fax:
      (281) 219-4710

    Attention:
      Michael T. Adams, EVP and Secretary

    

    If
      to
      the Holder:

    ComVest
      Capital, LLC

    One
      North
      Clematis, Suite 300

    West
      Palm
      Beach, Florida 33401

    Attention:
      Chief Financial Officer

    Telephone:
      (281) 468-0434

    e-mail:
      larryl@comvest.com

    

    Any
      party
      shall have the right from time to time, and at any time, to change its address
      for the receipt of notice by giving at least five (5) days’ prior written notice
      of the change of its address to the other parties in the manner specified
      herein. 

    

    9.    Successors. 
      All
      the
      covenants, agreements, representations and warranties contained in this Warrant
      shall bind the parties hereto and their respective heirs, executors,
      administrators, distributees, successors, assigns and
      transferees.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    10.   Law
      Governing.  THIS
      WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
      STATE
      OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES
      THEREOF.

    

    11.   Entire
      Agreement; Amendments and Waivers.  This
      Warrant, together with the Registration Rights Agreement of even date herewith
      executed by the Company for the benefit of the Holder, sets forth the entire
      understanding of the parties with respect to the subject matter hereof. The
      failure of any party to seek redress for the violation or to insist upon the
      strict performance of any term of this Warrant shall not constitute a waiver of
      such term and such party shall be entitled to enforce such term without regard
      to such forbearance. This Warrant may be amended, and any breach of or
      compliance with any covenant, agreement, warranty or representation may be
      waived, only if the Company has obtained the written consent or written waiver
      of the Holder, and then such consent or waiver shall be effective only in the
      specific instance and for the specific purpose for which given.

    

    12.   Severability;
      Headings.  If
      any
      term of this Warrant as applied to any person or to any circumstance is
      prohibited, void, invalid or unenforceable in any jurisdiction, such term shall,
      as to such jurisdiction, be ineffective to the extent of such prohibition or
      invalidity without in any way affecting any other term of this Warrant or
      affecting the validity or enforceability of this Warrant or of such provision
      in
      any other jurisdiction. The Section headings in this Warrant have been inserted
      for purposes of convenience only and shall have no substantive
      effect.

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as
      of
      the 21st
      day of
      February, 2007.

     

    
      
        	 	
                LAPOLLA
                  INDUSTRIES, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/ Michael T. Adams, EVP

              
	 	
                Name:
                  Michael T. Adams

              
	 	
                Title:
                  Executive Vice President

              

      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

         

      

    

    ANNEX A

    

    NOTICE
      OF EXERCISE

    

    (To
      be executed upon partial or full

    exercise
      of the within Warrant)

    

    The
      undersigned hereby irrevocably elects to exercise the right to purchase
      __________ shares of Common Stock of LaPolla Industries, Inc. covered by the
      within Warrant according to the conditions hereof and herewith makes payment
      of
      the Exercise Price of such shares in full in the amount of
      $______________.

    

    
      	 	
              By: 
                

            	 
	 	 	
              (Signature
                of Registered Holder)

            

    

    

    

    
      	
              Dated:

            	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      B

    

    CASHLESS
      EXERCISE FORM

    

    (To
      be executed upon partial or full

    exercise
      of Warrants pursuant to Section 1.3 of the Warrant)

    

    The
      undersigned hereby irrevocably elects to surrender ____________ shares of Common
      Stock of LaPolla Industries, Inc. purchasable under the Warrants for such shares
      of Common Stock issuable in exchange therefor pursuant to the Cashless Exercise
      provisions of the within Warrants, as provided for in Section 1.3 of such
      Warrant.

    

    Please
      issue a certificate or certificates for such Common Stock in the name of, and
      pay cash for fractional shares in the name of:

    

    (Please
      print name, address, and social security number/tax identification
      number:)

    

    

    

    and,
      if
      said number of shares of Common Stock shall not be all the shares of Common
      Stock purchasable thereunder, that a new Warrant for the balance remaining
      of
      the shares of Common Stock purchasable under the within Warrants be registered
      in the name of the undersigned Holder or its transferee as below indicated
      and
      delivered to the address stated below.

    

    
      	
              Dated:

            	 	 

    

    

    
      	
              Name
                of Warrant Holder

            	 
	
              or
                transferee:

            	 	 
	 	
              (Please
                print)

            	 

    

    

    
      	
              Address:

            	 	 
	 	 	 
	
              Signature:

            	 	 

    

    

    
      	
              NOTICE:

            	
              The
                signature on this form must correspond with the name as written upon
                the
                face of this Warrant in every particular, without alteration or
                enlargement or any change
                whatsoever.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX C

    

    ASSIGNMENT
      FORM

    

    FOR
      VALUE
      RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns
      and transfers unto the Assignee named below all of the rights of the undersigned
      under this Warrant, with respect to the number of shares of Common Stock set
      forth below:

    

    

    
      	
              Name
                and Address of Assignee

            	
              No.
                of Shares of 

              Common
                Stock

            

    

    

    

    

    and
      does
      hereby irrevocably constitute and appoint _______________________
      attorney-in-fact to register such transfer onto the books of LaPolla Industries,
      Inc. maintained for the purpose, with full power of substitution in the
      premises.

    

    
      	
              Dated:
                

            	 	 	
              Print
                Name:

            	 
	 	 	 	 	 
	 	 	 	
              Signature:

            	 
	 	 	 	 	 
	 	 	 	
              Witness:

            	 

    

    
 

    
      	
              NOTICE:

            	
              The
                signature on this assignment must correspond with the name as written
                upon
                the face of this Warrant in every particular, without alteration
                or
                enlargement or any change
                whatsoever.Unassociated Document

    
      

    

    

      Exhibit
        10.5

       

       

      THESE
        SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
        AMENDED
        (THE “ACT”)
        OR
        UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION AND MAY NOT BE SOLD,
        OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED
        UNDER
        THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES
        AN
        OPINION, IN REASONABLY ACCEPTABLE FORM AND SCOPE, OF COUNSEL REASONABLY
        SATISFACTORY TO THE COMPANY, THAT REGISTRATION, QUALIFICATION OR OTHER SUCH
        ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS. 

      

      LAPOLLA
        INDUSTRIES, INC.

      

      WARRANT
        TO PURCHASE SHARES OF COMMON STOCK

      (Expires
        February 29, 2012)

      

      
        	
                Warrant
                  No. CV-2

              	
                500,000
                  Shares of Common Stock

              

      

      

      FOR
        VALUE
        RECEIVED, subject to the provisions set forth below, the undersigned, LAPOLLA
        INDUSTRIES, INC., a Delaware corporation (the “Company”),
        hereby certifies that ComVest Capital, LLC, a Delaware limited liability
        company, or its registered assigns (the “Holder”),
        is
        entitled to purchase from the Company up to five hundred thousand (500,000)
        fully paid and nonassessable shares (the “Warrant
        Shares”)
        of the
        Company’s common stock, $.01 par value per share (the “Common
        Shares”),
        for
        cash at a price of $0.77 per share (the “Exercise Price”) at any time and from
        time to time from and after the date hereof and until 5:00 p.m. (Central
        time)
        on February 29, 2012 (the “Expiration
        Date”)
        upon
        surrender to the Company at its principal office (or at such other location
        as
        the Company may advise the Holder in writing) of this Warrant properly endorsed
        with the Notice of Exercise attached hereto duly filled in and signed and,
        if
        applicable, upon payment in cash or by check of the aggregate Exercise Price
        for
        the number of shares for which this Warrant is being exercised determined
        in
        accordance with the provisions hereof. The Exercise Price and the number
        of
        shares purchasable hereunder are subject to adjustment as provided in
        Section 3 of this Warrant.

      

      
        	 	
                1.

              	
                Exercise
                  of Warrant.

              

      

      

      1.1.    Exercise.  This
        Warrant shall be exercisable from the date hereof until the Expiration Date,
        and
        this Warrant shall expire on the Expiration Date. Upon exercise of this Warrant,
        the Exercise Price shall be payable in cash or by check. This Warrant may
        be
        exercised in whole or in part so long as any exercise in part hereof would
        not
        involve the issuance of fractional Warrant Shares. If exercised in part,
        the
        Company shall deliver to the Holder a new Warrant, identical in form to this
        Warrant, in the name of the Holder, evidencing the right to purchase the
        number
        of Warrant Shares as to which this Warrant has not been exercised, which
        new
        Warrant shall be signed by an appropriate officer of the Company. The term
        “Warrant” as used herein shall include any subsequent Warrant issued as provided
        herein.

      

      1.2.    Exercise
        Procedures; Delivery of Certificate.  Upon
        surrender of this
        Warrant with a duly executed Notice of Exercise in the form of Annex A
        attached
        hereto, together with payment of the Exercise Price for the Warrant Shares
        purchased, at the Company’s principal executive offices (the “Designated
        Office”),
        the
        Holder shall be entitled to receive a certificate or certificates for the
        Warrant Shares so purchased. The Company agrees that the Warrant Shares shall
        be
        deemed to have been issued to the Holder as of the close of business on the
        date
        on which this Warrant shall have been surrendered together with the Notice
        of
        Exercise and payment for such Warrant Shares.

      

      1.3.    Cashless
        Exercise.  In
        connection with any exercise of this Warrant, in lieu of payment of the Exercise
        Price, the Holder may exercise this Warrant, in whole or in part, by
        presentation and surrender of this Warrant to the Company, together with
        a
        Cashless Exercise Form in the form attached hereto as Annex B
        (or a
        reasonable facsimile thereof) duly executed (a “Cashless
        Exercise”).
        Acceptance by the Company of such presentation and surrender shall be deemed
        a
        waiver of the Holder's obligation to pay all or any portion of the Exercise
        Price, as the case may be. In the event of a Cashless Exercise, the Holder
        shall
        exchange this Warrant for that number of Common Shares determined by multiplying
        the number of Common Shares for which this Warrant is being exercised by
        a
        fraction, (a) the numerator of which shall be the difference between (i)
        the
        then current market price per Common Share, and (ii) the Exercise Price,
        and (b)
        the denominator of which shall be the then current market price per Common
        Share. For purposes of any computation under this Section l.3, the then current
        market price per Common Share at any date shall be deemed to be the average
        of
        the daily trading price for the ten (10) consecutive trading days immediately
        prior to the Cashless Exercise. If, during such measuring period, there shall
        occur any event which gives rise to any adjustment of the Exercise Price,
        then a
        corresponding adjustment shall be made with respect to the closing prices
        of the
        Common Shares for the days prior to the Effective Date of such adjustment
        event.
        As used herein, the term “trading price” on any relevant date means (A) if the
        Common Stock is listed for trading on the New York Stock Exchange, the American
        Stock Exchange, the NASDAQ National Market, or the NASDAQ Capital Market,
        the
        closing sale price (or, if no closing sale price is reported, the last reported
        sale price) of the Common Stock (regular way), or (B) if the Common Stock
        is not
        so listed but quotations for the Common Stock are reported on the OTC Bulletin
        Board, the most recent closing price as reported on the OTC Bulletin
        Board.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                2.

              	
                Transfer;
                  Issuance of Stock Certificates; Restrictive
                  Legends

              

      

       

      2.1.    Transfer.  Each
        transfer of this Warrant and all rights hereunder, in whole or in part, shall
        be
        registered on the books of the Company to be maintained for such purpose,
        upon
        surrender of this Warrant at the Designated Office, together with a written
        assignment of this Warrant in the form of Annex C
        attached
        hereto duly executed by the Holder or its agent or attorney. Upon such surrender
        and delivery, the Company shall execute and deliver a new Warrant or Warrants
        in
        the name of the assignee or assignees and in the 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, if any. A Warrant
        may be
        exercised by the new Holder for the purchase of Warrant Shares without having
        a
        new Warrant issued. Prior to due presentment for registration of transfer
        thereof, the Company may deem and treat the registered Holder of this Warrant
        as
        the absolute owner hereof (notwithstanding any notations of ownership or
        writing
        thereon made by anyone other than a duly authorized officer of the Company)
        for
        all purposes and shall not be affected by any notice to the contrary. All
        Warrants issued upon any assignment of Warrants shall be the valid obligations
        of the Company, evidencing the same rights and entitled to the same benefits
        as
        the Warrants surrendered upon such registration of transfer or
        exchange.

      

      2.2.    Stock
        Certificates.  Certificates
        for the Warrant Shares shall be delivered to the Holder within five (5) business
        days after the rights represented by this Warrant shall have been exercised
        pursuant to Section 1, and a new Warrant representing the right to purchase
        the
        Common Shares, if any, with respect to which this Warrant shall not then
        have
        been exercised shall also be issued to the Holder within such time. The issuance
        of certificates for Warrant Shares upon the exercise of this Warrant shall
        be
        made without charge to the Holder hereof including, without limitation, any
        documentary, stamp or similar tax that may be payable in respect thereof;
        provided,
        however,
        that
        the Company shall not be required to pay any income tax to which the Holder
        hereof may be subject in connection with the issuance of this Warrant or
        the
        Warrant Shares.

      

      2.3.    Restrictive
        Legend.  Except
        as
        otherwise provided in this Section 2, each certificate for Warrant Shares
        initially issued upon the exercise of this Warrant and each certificate for
        Warrant Shares issued to any subsequent transferee of any such certificate,
        shall be stamped or otherwise imprinted with a legend in substantially the
        following form:

      

      
        	 	
                “THESE
                  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933, AS
                  AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
                  IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
                  TO THE
                  SECURITIES UNDER SUCH ACT OR AN OPINION IN FORM AND FROM COUNSEL
                  REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
                  NOT
                  REQUIRED.”

              	 

      

      

      Notwithstanding
        the foregoing, the legend requirements of this Section 2.3 shall terminate
        as to
        any particular Warrant Shares when (i) such Warrant Shares are transferred
        pursuant to an effective resale registration statement, as contemplated in
        the
        Registration Rights Agreement between the Company and the Holder of even
        date
        herewith, or (ii) the Company shall have received from the Holder thereof
        an opinion of counsel in form and substance reasonably acceptable to the
        Company
        that such legend is not required in order to ensure compliance with the
        Securities Act. Whenever the restrictions imposed by this Section 2.3 shall
        terminate, the Holder or subsequent transferee, as the case may be, shall
        be
        entitled to receive from the Company without cost to such Holder or transferee
        a
        certificate for the Warrant Shares without such restrictive legend.

      

      
        	 	
                3.

              	
                Adjustment
                  of Number of Shares; Exercise Price; Nature of Securities Issuable
                  Upon
                  Exercise of Warrants. 

              

      

      

      3.1.    Exercise
        Price; Adjustment of Number of Shares.  The
        Exercise Price and the number of shares purchasable hereunder shall be subject
        to adjustment from time to time as hereinafter provided; provided,
        however,
        that,
        notwithstanding the below, in no case shall the Exercise Price be reduced
        to
        below the par value per share of the class of stock for which this Warrant
        is
        exercisable at such time.

      

      3.2.    Adjustments
        Upon Distribution, Subdivision or Combination.  If
        the Company, at any
        time or from time to time after the issuance of this Warrant, shall
        (a) make a dividend or distribution on its Common Shares payable in Common
        Shares, (b) subdivide or reclassify the outstanding Common Shares into a
        greater number of shares, or (c) combine or reclassify the outstanding
        Common Shares into a smaller number of shares, the Exercise Price in effect
        at
        that time and the number of Warrant Shares into which the Warrant is exercisable
        at that time shall be proportionately adjusted effective as of the record
        date
        for the dividend or distribution or the effective date of the subdivision,
        combination or reclassification. 

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      3.3.    Adjustment
        Upon Other Distributions.  If
        the Company, at any
        time or from time to time after the issuance of this Warrant, makes a
        distribution to the holders of Common Shares which is payable in securities
        of
        the Company other than Common Shares, then, in each such event, provision
        shall
        be made so that the Holder shall receive upon exercise of this Warrant, in
        addition to the number of Warrant Shares, the amount of such securities of
        the
        Company which would have been received if the portion of the Warrant so
        exercised had been exercised for Warrant Shares on the date of such event,
        subject to adjustments subsequent to the date of such event with respect
        to such
        distributed securities which shall be on terms as nearly equivalent as
        practicable to the adjustments provided in this Section 3 and all other
        adjustments under this Section 3.

      

      3.4.    Adjustment
        Upon Merger, Consolidation or Exchange.  If
        at any time or from
        time to time after the issuance of this Warrant there occurs any merger,
        consolidation, arrangement or statutory share exchange of the Company with
        or
        into any other person or company, then, in each such event, provision shall
        be
        made so that the Holder shall receive upon exercise of this Warrant the kind
        and
        amount of shares and other securities and property (including cash) which
        would
        have been received upon such merger, consolidation, arrangement or statutory
        share exchange by the Holder if the portion of this Warrant so exercised
        had
        been exercised for Warrant Shares immediately prior to such merger,
        consolidation, arrangement or statutory share exchange, subject to adjustments
        for events subsequent to the effective date of such merger, consolidation,
        arrangement or statutory share exchange with respect to such shares and other
        securities which shall be on terms as nearly equivalent as practicable to
        the
        adjustments provided in this Section 3 and all other adjustments under this
        Section 3.

      

      3.5.    Adjustments
        for Recapitalization or Reclassification.  If,
        at any time or from
        time to time after the issuance of this Warrant, the Warrant Shares issuable
        upon exercise of this Warrant are changed into the same or a different number
        of
        securities of any class of the Company, whether by recapitalization,
        reclassification or otherwise (other than a merger, consolidation, arrangement
        or statutory share exchange provided for elsewhere in this Section 3),
        then, in each such event, provision shall be made so that the Holder shall
        receive upon exercise of this Warrant the kind and amount of securities or
        other
        property which would have been received in connection with such
        recapitalization, reclassification or other change by the Holder if the portion
        of this Warrant so exercised had been exercised immediately prior to such
        recapitalization, reclassification or change, subject to adjustments for
        events
        subsequent to the effective date of such recapitalization, reclassification
        or
        other change with respect to such securities which shall be on terms as nearly
        equivalent as practicable to the adjustments provided in this Section 3 and
        all other adjustments under this Section 3.

      

      3.6.    Extraordinary
        Dividends or Distributions.  If,
        at any time or from
        time to time after the issuance of this Warrant, the Company shall declare
        a
        dividend or any other distribution upon the Common Shares payable otherwise
        than
        out of current earnings, retained earnings or earned surplus and otherwise
        than
        in Common Shares, then the Exercise Price in effect immediately prior to
        such
        declaration shall be reduced by an amount equal, in the case of a dividend
        or
        distribution in cash, to the amount thereof payable per Common Share or,
        in the
        case of any other dividend or distribution, to the value thereof per Common
        Share at the time such dividend or distribution was declared, as determined
        by
        the Board of Directors of the Company in good faith. Such reductions shall
        take
        effect as of the date on which a record is taken for the purposes of the
        subject
        dividend or distribution, or, if a record is not taken, the date as of which
        the
        holders of record of Common Shares entitled to such dividend or distribution
        are
        to be determined.

       

      
        	 	
                3.7

              	
                Adjustment
                  Upon Certain Issuances of Common
                  Stock.

              

      

      

      (a)    If
        the
        Company, at any time or from time to time, issues or sells any Additional
        Shares
        of Common Stock (as defined below), other than as provided in the foregoing
        subsections of this Section 3, for a price per share (which, in the case of
        options, warrants, convertible securities or other rights, includes the amounts
        paid therefor plus the exercise price, conversion price or other such amounts
        payable thereunder) that is less than the
        Exercise Price then in effect, then and in each such case, the then applicable
        Exercise Price shall automatically be reduced as of the opening of business
        on
        the date of such issue or sale, to a price determined by multiplying the
        Exercise Price then in effect by a fraction (i) the numerator of which
        shall be (A) the number of Common Shares deemed outstanding (as determined
        below) immediately prior to such issue or sale, plus (B) the number of
        Common Shares which the aggregate consideration received by the Company for
        the
        total number of Additional Shares of Common Stock so issued would purchase
        at
        such Exercise Price, and (ii) the denominator of which shall be the number
        of Common Shares deemed outstanding (as defined below) immediately prior
        to such
        issue or sale plus the total number of Additional Shares of Common Stock
        so
        issued; provided,
        however,
        that
        upon the expiration or other termination of options, warrants or other rights
        to
        purchase or acquire Common Shares which triggered any adjustment under this
        Section 3.7, and upon the expiration or termination of the right to convert
        or
        exchange convertible or exchangeable securities (whether by reason of redemption
        or otherwise) which triggered any adjustment under this Section 3.7, if any
        thereof shall not have been exercised, converted or exchanged, as applicable,
        the number of Common Shares deemed to be outstanding pursuant to this
        Section 3.7(a) shall be reduced by the number of shares as to which
        options, warrants, and rights to purchase or acquire Common Shares shall
        have
        expired or terminated unexercised, and as to which conversion or exchange
        rights
        shall have expired or terminated unexercised, and such number of shares shall
        no
        longer be deemed to be outstanding; and the Exercise Price then in effect
        shall
        forthwith be readjusted and thereafter be the price that it would have been
        had
        adjustment been made on the basis of the issuance only of the Common Shares
        actually issued. For purposes of the preceding sentence, the number of Common
        Shares deemed to be outstanding as of a given date shall be the sum of
        (x) the number of Common Shares actually outstanding, (y) the number
        of Common Shares for which this Warrant could be exercised on the day
        immediately preceding the given date, and (z) the number of Common Shares
        which could be obtained through the exercise or conversion of all other rights,
        options and convertible securities outstanding on the day immediately preceding
        the given date. “Additional
        Shares of Common Stock”
shall
        mean all Common Shares, and all options, warrants, convertible securities
        or
        other rights to purchase or acquire Common Shares, issued by the Company
        other
        than (i) Common Shares issued pursuant to the exercise of options, warrants
        or convertible securities outstanding on the date hereof (including, without
        limitation, the Term Note and all of the Warrants issued pursuant to the
        Revolving Credit and Term Loan Agreement dated as of February 21, 2007 by
        and
        between ComVest Capital, LLC and the Company), or hereafter issued from time
        to
        time pursuant to and in accordance with stock purchase or stock option plans
        as
        in effect on the date hereof, and (ii) Common Shares and/or options, warrants
        or
        other Common Share purchase rights for up to an aggregate of 900,000 Common
        Shares (such number to be subject to adjustment in accordance with Section
        3.2
        above), where such options, warrants or other rights are issued both (A)
        with
        exercise prices per Common Share at the then-current fair market value of
        a
        Common Share, as determined in good faith by the Board of Directors of the
        Company or the Compensation Committee thereof, and (B) to employees, officers
        or
        directors of, or consultants to, the Company or any subsidiary pursuant to
        stock
        purchase or stock option plans or other arrangements that are approved by
        the
        Company’s Board of Directors or the Compensation Committee thereof, and by the
        Company’s stockholders.

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      (b)    In
        the
        event that the exercise price, conversion price, purchase price or other
        price
        at which Common Shares are purchasable pursuant to any options, warrants,
        convertible securities or other rights to purchase or acquire Common Shares
        is
        reduced at any time or from time to time (other than under or by reason of
        provisions designed to protect against dilution), then, upon such reduction
        becoming effective, the Exercise Price then in effect hereunder shall forthwith
        be decreased to such Exercise Price as would have been obtained had the
        adjustments made and required under this Section 3.7 upon the issuance of
        such
        options, warrants, convertible securities or other rights been made upon
        the
        basis of (and the total consideration received therefor) (i) the issuance
        of the
        number of Common Shares theretofore actually delivered upon the exercise,
        conversion or exchange of such options, warrants, convertible securities
        or
        other rights, (ii) the issuance of all of the Common Shares and all other
        options, warrants, convertible securities and other rights to purchase or
        acquire Common Shares issued after the issuance of the modified options,
        warrants, convertible securities or other rights, and (iii) the original
        issuance at the time of the reduction of any such options, warrants, convertible
        securities or other rights then still outstanding.

      

      (c)    In
        no
        event shall an adjustment under this Section 3.7 be made if it would result
        in an increase in the then applicable Exercise Price.

      

      3.8.    Certificate
        of Adjustment.  Whenever
        the Exercise
        Price and/or the number of Warrant Shares receivable upon exercise of this
        Warrant is adjusted, the Company shall promptly deliver to the Holder a
        certificate of adjustment, setting forth the Exercise Price and/or Warrant
        Shares issuable after adjustment, a brief statement of the facts requiring
        the
        adjustment and the computation by which the adjustment was made. The certificate
        of adjustment shall be prima facie evidence of the correctness of the
        adjustment.

      

      3.9.    Successive
        Adjustments.  The
        provisions of this
        Section 3 shall be applicable successively to each event described herein
        which
        may occur subsequent to the issuance of this Warrant and prior to the exercise
        in full of this Warrant.

      

      4.    Registration;
        Exchange and Replacement of Warrant; Reservation of Shares.  The
        Company shall keep at the Designated Office a register in which the Company
        shall provide for the registration, transfer and exchange of this Warrant.
        The
        Company shall not at any time, except upon the dissolution, liquidation or
        winding-up of the Company, close such register so as to result in preventing
        or
        delaying the exercise or transfer of this Warrant.

      

      The
        Company may deem and treat the person in whose name this Warrant is registered
        as the Holder and owner hereof for all purposes and shall not be affected
        by any
        notice to the contrary, until presentation of this Warrant for registration
        or
        transfer as provided in this Section 4.

      

      Upon
        receipt by the Company of evidence reasonably satisfactory to it of the loss,
        theft, destruction or mutilation of this Warrant and (in case of loss, theft
        or
        destruction) of the Holder’s indemnity in form satisfactory to the Company, and
        (in the case of mutilation) upon surrender and cancellation of this Warrant,
        the
        Company will (in the absence of notice to the Company that the Warrant has
        been
        acquired by a bona fide purchaser) make and deliver a new Warrant of like
        tenor
        in lieu of this Warrant, without requiring the posting of any bond or the
        giving
        of any security.

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      The
        Company shall at all times reserve and keep available out of its authorized
        shares of capital stock, solely for the purpose of issuance upon the exercise
        of
        this Warrant, such number of Common Shares as shall be issuable upon the
        exercise hereof. The Company covenants and agrees that, upon exercise of
        this
        Warrant and payment of the Exercise Price therefor, if applicable, all Warrant
        Shares issuable upon such exercise shall be duly and validly authorized and
        issued, fully paid and non-assessable.

      

      5.    Investment
        Representations.  The
        Holder, by accepting this Warrant, covenants and agrees that, at the time
        of
        exercise of this Warrant, if the Warrant Shares shall not then be the subject
        of
        an effective registration statement under the Act, the securities acquired
        by
        the Holder upon exercise hereof are for the account of the Holder or are
        being
        acquired for its own account for investment and are not acquired with a view
        to,
        or for sale in connection with, any distribution thereof (or any portion
        thereof) and with no present intention (at such time) of offering and
        distributing such securities (or any portion thereof), except in compliance
        with
        applicable federal and state securities laws.

      

      6.    Fractional
        Warrants and Fractional Shares.  If
        the
        number of Warrant Shares purchasable upon the exercise of this Warrant is
        adjusted pursuant to Section 3 hereof, the Company shall nevertheless not
        be
        required to issue fractions of shares upon exercise of this Warrant or
        otherwise, or to distribute certificates that evidence fractional shares.
        With
        respect to any fraction of a share called for upon any exercise hereof, the
        Company shall pay to the Holder an amount in cash equal to such fraction
        multiplied by the current market value of a Common Share (determined in
        accordance with the last sentence of Section 1.3).

      

      7.    Warrant
        Holders Not Deemed Stockholders.  No
        Holder of this Warrant
        shall, as such, be entitled to vote or to receive dividends or be deemed
        the
        holder of Warrant Shares that may at any time be issuable upon exercise of
        this
        Warrant, nor shall anything contained herein be construed to confer upon
        the
        Holder of this Warrant, as such, any of the rights of a stockholder of the
        Company or any right to vote for the election of directors or upon any matter
        submitted to stockholders at any meeting thereof, or to give or withhold
        consent
        to any corporate action (whether upon any recapitalization, issue or
        reclassification of stock, change of par value or change of stock to no par
        value, consolidation, merger or conveyance or otherwise), or to receive notice
        of meetings, or subscription rights, until such Holder shall have exercised
        this
        Warrant and been issued Warrant Shares or deemed to have been issued Warrant
        Shares in accordance with the provisions hereof.

      

      8.    Notices.  Any
        notice which is
        required to be given by this Warrant must be in writing, and shall be given
        or
        served, unless otherwise expressly provided herein, by depositing the same
        in
        the United States Mail, postpaid and certified and addressed to the party
        to be
        notified, with return receipt requested, or by delivering the same by courier
        or
        in person to such party (or, if the party or parties to be notified be
        incorporated, to an officer of such party). Notice deposited in the mail,
        postpaid and certified with return receipt requested, shall be deemed received
        and effective upon the deposit in a proper United States depository. Notice
        given in any other manner shall be effective only if and when received by
        the
        party to be notified. For the purposes of notice, the addresses of the parties
        for the receipt of notice hereunder are:

      

      If
        to
        the Company:

      LaPolla
        Industries, Inc.

      15402
        Vantage Parkway East, Suite 322

      Houston,
        Texas 77032

      Telephone:
        (281) 219-4700

      Fax:
        (281) 219-4710

      Attention:
        Michael T. Adams, EVP and Secretary

       

      If
        to
        the Holder:

      ComVest
        Capital, LLC

      One
        North
        Clematis, Suite 300

      West
        Palm
        Beach, Florida 33401

      Attention:
        Chief Financial Officer

      Telephone:
        (281) 468-0434

      e-mail:
        larryl@comvest.com

       

      Any
        party
        shall have the right from time to time, and at any time, to change its address
        for the receipt of notice by giving at least five (5) days’ prior written notice
        of the change of its address to the other parties in the manner specified
        herein. 

      

      9.    Successors.  All
        the
        covenants, agreements, representations and warranties contained in this Warrant
        shall bind the parties hereto and their respective heirs, executors,
        administrators, distributees, successors, assigns and
        transferees.

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      10.    Law
        Governing.  THIS
        WARRANT SHALL BE
        CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
        WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

      

      11.    Entire
        Agreement; Amendments and Waivers.  This
        Warrant, together with the Registration Rights Agreement of even date herewith
        executed by the Company for the benefit of the Holder, sets forth the entire
        understanding of the parties with respect to the subject matter hereof. The
        failure of any party to seek redress for the violation or to insist upon
        the
        strict performance of any term of this Warrant shall not constitute a waiver
        of
        such term and such party shall be entitled to enforce such term without regard
        to such forbearance. This Warrant may be amended, and any breach of or
        compliance with any covenant, agreement, warranty or representation may be
        waived, only if the Company has obtained the written consent or written waiver
        of the Holder, and then such consent or waiver shall be effective only in
        the
        specific instance and for the specific purpose for which given.

      

      12.    Severability;
        Headings.  If
        any
        term of this Warrant as applied to any person or to any circumstance is
        prohibited, void, invalid or unenforceable in any jurisdiction, such term
        shall,
        as to such jurisdiction, be ineffective to the extent of such prohibition
        or
        invalidity without in any way affecting any other term of this Warrant or
        affecting the validity or enforceability of this Warrant or of such provision
        in
        any other jurisdiction. The Section headings in this Warrant have been inserted
        for purposes of convenience only and shall have no substantive
        effect.

      

      IN
        WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
        as of
        the 21st
        day of
        February, 2007.

      

      
        	 	
                LAPOLLA
                  INDUSTRIES, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/ Michael T. Adams, EVP

              
	 	
                Name:
                  Michael T. Adams

              
	 	
                Title:
                  Executive Vice President

              

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      ANNEX A

      

      NOTICE
        OF EXERCISE

      

      (To
        be executed upon partial or full

      exercise
        of the within Warrant)

      

      The
        undersigned hereby irrevocably elects to exercise the right to purchase
        __________ shares of Common Stock of LaPolla Industries, Inc. covered by
        the
        within Warrant according to the conditions hereof and herewith makes payment
        of
        the Exercise Price of such shares in full in the amount of
        $______________.

      

      
        	 	 	 	
                By: 
                  

              	 	 
	 	 	 	 	
                (Signature
                  of Registered Holder)

              
	 	 	 	 	 	 
	 	 	 	 	 	 
	
                Dated:

              	 	 	 	 	 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ANNEX
        B

      

      CASHLESS
        EXERCISE FORM

      

      (To
        be executed upon partial or full

      exercise
        of Warrants pursuant to Section 1.3 of the Warrant)

      

      The
        undersigned hereby irrevocably elects to surrender ____________ shares of
        Common
        Stock of LaPolla Industries, Inc. purchasable under the Warrants for such
        shares
        of Common Stock issuable in exchange therefor pursuant to the Cashless Exercise
        provisions of the within Warrants, as provided for in Section 1.3 of such
        Warrant.

      

      Please
        issue a certificate or certificates for such Common Stock in the name of,
        and
        pay cash for fractional shares in the name of:

      

      (Please
        print name, address, and social security number/tax identification
        number:)

      

      

      and,
        if
        said number of shares of Common Stock shall not be all the shares of Common
        Stock purchasable thereunder, that a new Warrant for the balance remaining
        of
        the shares of Common Stock purchasable under the within Warrants be registered
        in the name of the undersigned Holder or its transferee as below indicated
        and
        delivered to the address stated below.

      

      
        	
                Dated:

              	 	 

      

      

      
        	
                Name
                  of Warrant Holder

              	 
	
                or
                  transferee:

              	 	 
	 	
                (Please
                  print)

              	 

      

      

      
        	
                Address:

              	 	 
	 	 	 
	
                Signature:

              	 	 

      

      

      
        	
                NOTICE:

              	
                The
                  signature on this form must correspond with the name as written
                  upon the
                  face of this Warrant in every particular, without alteration or
                  enlargement or any change
                  whatsoever.

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ANNEX C

      

      ASSIGNMENT
        FORM

      

      FOR
        VALUE
        RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns
        and transfers unto the Assignee named below all of the rights of the undersigned
        under this Warrant, with respect to the number of shares of Common Stock
        set
        forth below:

      

      
        	
                Name
                  and Address of Assignee

              	
                No.
                  of Shares of 

                Common
                  Stock

              
	 	 
	 	 

      

      

      and
        does
        hereby irrevocably constitute and appoint _______________________
        attorney-in-fact to register such transfer onto the books of LaPolla Industries,
        Inc. maintained for the purpose, with full power of substitution in the
        premises.

      

      
        	
                Dated:
                  

              	 	 	
                Print
                  Name:

              	 	 
	 	 	 	 	 	 
	 	 	 	
                Signature:

              	 	 
	 	 	 	 	 	 
	 	 	 	
                Witness:

              	 	 

      

      

      

      
        	
                NOTICE:

              	
                The
                  signature on this assignment must correspond with the name as written
                  upon
                  the face of this Warrant in every particular, without alteration
                  or
                  enlargement or any change
                  whatsoever.

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