ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
WARRANT FOR THE PURCHASE OF COMMON STOCK
34,375 Shares Rancho Cucamonga, California
THIS IS TO CERTIFY that for value received, JAMES W. MOLDERMAKER (the
"Holder") is entitled at any time from the date hereof, but prior to 5:00 p.m.,
Rancho Cucamonga, California
time on January 23, 2009, or 18 months after the
effectiveness of a Registration Statement (hereinafter defined) subsequent to
the issuance hereof, whichever is longer, subject to and upon the terms and
conditions contained herein, to purchase up to 34,375 fully paid and
non-assessable shares of the common stock, par value $0.001 per share (the
"Common Stock") of ENTECH ENVIRONMENTAL TECHNOLOGIES, INC., a Florida
corporation (the "Company"), at a purchase price of $1.10 per share of the
Common Stock (the "Exercise Price") such number of the shares and the Exercise
Price being subject to adjustment as provided herein.
This Warrant shall be void and of no effect and all rights hereunder
shall cease at 5:00 p.m., Rancho Cucamonga, California
time on January 23, 2009,
or 18 months after the effectiveness of a Registration Statement subsequent to
the issuance hereof, whichever is longer, except to the extent theretofore
exercised; provided that in the case of the earlier dissolution of the Company,
this Warrant shall become void on the date fixed for such dissolution. As used
herein, "Registration Statement" means a registration statement filed by the
Company on Form S-1, SB-2, or S-3, or some other similar form pursuant to the
Securities Act of 1933, as amended (the "Securities Act") to register the resale
of the shares of the Common Stock upon the exercise of this Warrant.
1. REGISTRATION OF THIS WARRANT. The Company shall register this
Warrant upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, and the Company shall not be affected
by notice to the contrary.
2. INVESTMENT REPRESENTATION. The Holder by accepting this Warrant
represents that the Holder is acquiring this Warrant for its own account for
investment purposes and not with the view to any offering or distribution and
that the Holder will not sell or otherwise dispose of this Warrant or the
underlying Common Stock in violation of applicable securities laws. The Holder
acknowledges that the certificates representing any shares of the Common Stock
will bear a legend indicating that they have not been registered under the
Securities Act and may not be sold by the Holder except pursuant to an effective
Registration Statement or pursuant to an exemption from registration
requirements of the Securities Act and in accordance with federal and state
3. VALIDITY OF WARRANT AND ISSUANCE OF THE COMMON STOCK. The Company
represents and warrants that this Warrant has been duly authorized and validly
issued and warrants and agrees that the Common Stock that may be issued upon the
exercise of the rights represented by this Warrant will, when issued upon such
exercise, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of the Common
Stock to provide for the exercise of the rights represented by this Warrant.
4. REGISTRATION OF TRANSFERS AND EXCHANGE OF THIS WARRANT.
(a) Subject to compliance with the legend set forth on the
face of this Warrant, the Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant with the
Form of Assignment attached hereto duly completed and signed, to the Company at
the office specified in this Agreement. Upon any such registration or transfer,
a new warrant to purchase the Common Stock, in substantially the form of this
Warrant (any such new warrant, a "New Warrant"), evidencing the portion of this
Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
transferee thereof shall be deemed the acceptance of such transferee of all of
the rights and obligations of the Holder.
(b) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in this Agreement for one or
more New Warrants, evidencing in the aggregate the right to purchase the number
of shares of the Common Stock which may then be purchased hereunder. Any such
New Warrant will be dated the date of such exchange.
5. EXERCISE OF THIS WARRANT.
(a) Upon surrender of this Warrant with the Form of Election
to Purchase attached hereto duly completed and signed to the Company, at its
address set forth in this Agreement, and upon payment and delivery of the
Exercise Price multiplied by the number of shares of the Common Stock that the
Holder intends to purchase hereunder, in lawful money of the United States of
America, in cash or by certified or official bank check or checks, to the
Company, all as specified by the Holder in the Form of Election to Purchase, the
Company shall promptly but in no event later than five business days after the
Date of Exercise (as defined herein) issue or cause to be issued and delivered
to or upon the written order of the Holder and in such name or names as the
Holder may designate (subject to the restrictions on transfer described in the
legend set forth on the face of this Warrant), a certificate for the shares of
the Common Stock issuable upon such exercise, with such restrictive legend as
required by the Securities Act. Any person so designated by the Holder to
receive the shares of the Common Stock shall be deemed to have become holder of
record of the Common Stock as of the Date of Exercise of this Warrant.
(b) "Date of Exercise" means the date on which the Company
shall have received (i) this Warrant (or any New Warrant, as applicable), with
the Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of shares of the Common Stock so indicated by the
Holder to be purchased.
(c) This Warrant shall be exercisable at any time and from
time to time for such number of shares of the Common Stock as is indicated in
the attached Form of Election to Purchase. If less than all of the shares of the
Common Stock which may be purchased under this Warrant are purchased at any
time, the Company shall issue or cause to be issued, at its expense, a New
Warrant evidencing the right to purchase the remaining number of shares of the
Common Stock for which no exercise has been evidenced by this Warrant.
(d) Notwithstanding anything contained herein to the contrary,
the holder of this Warrant may, at its election exercised in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Exercise Price, elect instead to receive upon such exercise
the "Net Number" of shares of the Common Stock determined according to the
following formula (a "Cashless Exercise"):
Net Number = (A x B) - (A x C)
For purposes of the foregoing formula:
A = the total number shares with respect to which
this Warrant is then being exercised.
B = the last reported sale price (as reported by
Bloomberg) of the Common Stock on the date
immediately preceding the date of the notice of
exercise of this Warrant.
C = the Exercise Price then in effect at the time
of such exercise.
Provided, however, notwithstanding anything herein contained to the
contrary, the Holder may not affect a Cashless Exercise of this Warrant until
after July 23, 2004, and thereafter so long as there is an effective
Registration Statement with respect to the shares of the Common Stock.
6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The shares of the
Common Stock or other securities at the time issuable upon exercise of this
Warrant and the Exercise Price therefor, are subject to adjustment upon the
occurrence of the following events:
(a) ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS,
RECAPITALIZATIONS, ETC. The Exercise Price of this Warrant and the number of
shares of the Common Stock or other securities at the time issuable upon the
exercise of this Warrant shall be appropriately adjusted to reflect any stock
dividend, stock split, combination of shares, reclassification, recapitalization
or other similar event affecting the number of outstanding shares of the Common
Stock or other securities of the Company.
(b) ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
In case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being referred to
as a "Reorganization"), then, in each case, the Holder, on exercise hereof at
any time after the consummation or effective date of such Reorganization (the
"Effective Date"), shall receive, in lieu of the shares of the Common Stock or
other securities of the Company at any time issuable upon the exercise of this
Warrant prior to the Effective Date, the shares of the Common Stock and other
securities of the Company and property (including cash) to which the Holder
would have been entitled upon the Effective Date if the Holder had exercised
this Warrant immediately prior thereto (all subject to further adjustment as
provided in this Warrant).
(c) CERTIFICATE AS TO ADJUSTMENTS. In case of any adjustment
or readjustment in the price or kind of securities issuable on the exercise of
this Warrant, the Company will promptly give written notice thereof to the
Holder in the form of a certificate, certified and confirmed by the Board of
Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
7. COVENANTS OF THE HOLDER. The Holder covenants that this Warrant has
not been registered under the Securities Act, or any other applicable securities
law. This Warrant has been purchased for investment only and not with a view to
distribution or resale, and may not be sold, pledged, hypothecated or otherwise
transferred unless this Warrant or the shares of the Common Stock represented
hereby are registered under the Securities Act, and any other applicable
securities law, or the Company has received an opinion of counsel satisfactory
to it that registration is not required. A legend in substantially the following
form will be placed on any certificates or other documents evidencing the shares
of the Common Stock to be issued upon any exercise of this Warrant:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE.
WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE
COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE
SECURITIES ACT OF 1933, AS AMENDED, THE SECURITIES LAW OF ANY STATE, OR
ANY RULE OR REGULATION PROMULGATED THEREUNDER.
Further, stop transfer instructions to the transfer agent of the shares
of the Common Stock have been or will be placed with respect to the shares of
the Common Stock so as to restrict the resale, pledge, hypothecation or other
transfer thereof, subject to the further items hereof, including the provisions
of the legend set forth in this paragraph.
8. FRACTIONAL SHARES. The Company shall not be required to issue or
cause to be issued fractional shares of the Common Stock on the exercise of this
Warrant. The number of full shares of the Common Stock that
shall be issuable upon the exercise of this Warrant shall be computed on the
basis of the aggregate number of shares of the Common Stock purchasable on
exercise of this Warrant so presented. If any fraction of shares of the Common
Stock would, except for the provisions of this Paragraph, be issuable on the
exercise of this Warrant, the Company shall, at its option, (a) pay an amount in
cash equal to the Exercise Price multiplied by such fraction or (b) round the
number of shares of the Common Stock issuable, up to the next whole number.
9. NOTICE. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to have been duly given at the time of
receipt if delivered by hand or communicated by electronic transmission, or, if
mailed, four days after deposit in the United States mail, registered or
certified, return receipt requested, with postage prepaid and addressed to the
party to receive same, if to the Company at 8513 Rochester Avenue, Rancho
91730; and if to the Holder, addressed as shown of the
signature page of this Warrant; provided, however, that if either party shall
have designated a different address by notice to the other given as provided
above, then any subsequent notice shall be addressed to such party at the last
address so designated.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
This Warrant may be amended only in writing and signed by the Company and the
(b) Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the Holder any legal or
equitable right, remedy or cause of action under this Warrant. This Warrant
shall be for the sole and exclusive benefit of the Company and the Holder.
(c) This Warrant shall be governed by and construed in
accordance with the laws of the State of California
, without regard to any
conflicts of laws provisions thereof. Each party hereby irrevocably submits to
the personal jurisdiction of the United States District Court for the Central
District of California
, as well as of the Superior Courts of the State of
in Riverside County, California
over any suit, action or proceeding
arising out of or relating to this Agreement. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such mediation, arbitration,
suit, action or proceeding brought in any such county and any claim that any
such mediation, arbitration, suit, action or proceeding brought in such county
has been brought in an inconvenient forum.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonably substitute therefore, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
(f) The Holder shall not, by virtue hereof, be entitled to any
voting or other rights of a shareholder of the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of January 23, 2004.
ENTECH ENVIRONMENTAL TECHNOLOGIES, INC.
By /s/ Steven D. Rosenthal
Steven D. Rosenthal
, Chief Executive Officer
Street Address or P.O. Box
City, State, and Zip Code
Attachment 1 - Form of Election to Purchase
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of the
Common Stock under the foregoing Warrant)
To: Entech Environmental Technologies, Inc.
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase ________________
shares of the Common Stock (the "Common Stock"), $0.001 par value, of Entech
Environmental Technologies, Inc. and encloses this Warrant and $____________ for
each share of the Common Stock being purchased or an aggregate of $____________
in cash or certified or official bank check or checks, which sum represents the
aggregate Exercise Price (as defined in the Warrant) together with any
applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of the Common
Stock issuable upon this exercise be issued in the name of:
(Please print name and address)
(Please insert Social Security or Tax Identification Number
If the number of shares of the Common Stock issuable upon this exercise
shall not be all of the shares of the Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the undersigned
requests that a new Warrant evidencing the right to purchase the shares of the
Common Stock not issuable pursuant to the exercise evidenced hereby be issued in
the name of and delivered to:
(Please print name and address)
Dated:____________________ Name of Holder:
Signature must conform in all respects to
name of Holder as specified on the face
of the Warrant