DIGITAL POWER CORPORATION REDEEMABLE COMMON STOCK PURCHASE WARRANT OCTOBER 21, 2016
Exhibit 10.3
Warrant CS-2
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
DIGITAL POWER CORPORATION
REDEEMABLE COMMON STOCK PURCHASE WARRANT
OCTOBER 21, 2016
THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) of Digital Power Corporation, a corporation duly organized and validly existing under the laws of California (the “Company”), is issued to the Holder (as defined below) in connection with a 12% Secured Convertible Promissory Note (the “Note”) and another warrant (the “Warrant-CS1”) that the Holder is also simultaneously acquiring from the Company. This Warrant is exercisable for up to an aggregate 265,000 shares of Common Stock, as defined below, subject to adjustment pursuant to the anti dilution provisions therein.
FOR VALUE RECEIVED, the Company hereby certifies that the registered holder hereof, the [●], with an address at [●], and its successors and assigns (the “Holder”), is entitled to purchase from the Company 265,000 duly authorized, validly issued, fully paid and nonassessable shares of common stock, no par value (the “Common Stock”), at a purchase price equal to $0.90 per share, as may be adjusted pursuant to the anti-dilution provisions set forth herein (the “Warrant Price”). The Holder is registered on the records of the Company regarding registration and transfer of the Warrant (the “Warrant Register”) and is the owner and Holder thereof for all purposes, except as described in Section 13 hereof.
1. Warrant. Subject to the Company complying with Rule 713(a) of the NYSE Mkt, if applicable, this Warrant shall become exercisable six months after the date hereof.
2. Expiration of Warrant. This Warrant shall expire on October 20, 2019 (the “Expiration Date”).
3. Exercise of Warrant. This Warrant shall be exercisable pursuant to the terms of Section 1 and this Section 3 hereof.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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hours on any day other than a Saturday or a Sunday or a day on which commercial banking institutions in New York, New York are authorized by law to be closed (a “Business Day”) on or prior to the Expiration Date with respect to such portion of this Warrant, by surrender of this Warrant to the Company at its office maintained pursuant to Section 13.2(a) hereof, accompanied by an exercise notice (the “Exercise Notice”) in substantially the form attached to this Warrant as Exhibit A (or a reasonable facsimile thereof) duly executed by the Holder, together with the payment of the Warrant Price. The Holder also shall have the right, at its election exercised in its sole discretion, when exercising the Warrant, in whole or in part, 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 Common Stock determined according to the following formula (a "Cashless Exercise"):
Net Number = (A x B) - (A x C)
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B
For purposes of the foregoing formula:
A = the total number of shares with respect to which this Warrant is then being exercised.
B = the Closing Price, as defined in Paragraph (e) of Section 4, of the Common Stock on the trading day immediately preceding the date of the Exercise Notice.
C = the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
Anything to the contrary notwithstanding, in no event shall the Holder be entitled to exercise any portion of this Warrant in excess of that portion of this Warrant upon exercise of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and the Holder’s affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of the Warrant or the unexercised or unconverted portion of any other of the Company’s securities subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the exercise of the portion of this Warrant with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock (“Ownership Limitation”). Beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Regulations 13D - G thereunder, provided, further, however, that the limitations on exercised may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Company, and the provisions of the exercise limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver).
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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The Warrant Price and the number of shares purchasable upon exercise of this Warrant shall be subject to adjustment with respect to events after the date hereof as follows:
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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(b) [Intentionally Deleted]
(c) [Intentionally Deleted]
(d) [Intentionally Deleted]
(e) [Intentionally Deleted]
(f) [Intentionally Deleted]
(i) Action to Permit Valid Issuance of Common Stock. Before taking any action which would cause an adjustment reducing the Warrant Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of this Warrant, the Company will take all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue shares of such Common Stock at such adjusted Warrant Price.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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(m) [Intentionally Deleted]
(n) [Intentionally Deleted]
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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5. Fractional Shares. If the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted pursuant to Section 4 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. Instead the Company will issue cash in the amount equal to the fractional share times the Current Market Price calculated to the nearest xxxxx.
6. Right to Registration. The Holder has the right to require the Company to register the Warrant Shares under the Act in accordance with the terms of an agreement (the “Registration Rights Agreement”) dated as of the date hereof between the Company and the Holders. The date that the first Registration Statement filed pursuant to the Registration Rights Agreement is declared effective by the Commission is herein referred to as the “Effective Date.”
7. Redemption.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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(d) Delivery of Redemption Price and Expiration of the Warrants. From and after the Redemption Date, the Company shall, at the place specified in the notice of redemption, upon presentation and surrender to the Company by or on behalf of the Holder of its Warrants to be redeemed, deliver or cause to be delivered to or upon the written order of the Holder a sum in cash equal to the Redemption Price of of its Warrants to be redeemed. From and after the Redemption Date and upon the deposit or setting aside by the Company of a sum sufficient to redeem all of the Warrants called for redemption, the Warrants to be redeemed, shall expire and become void and all rights hereunder, except the right to receive payment of the Redemption Price, shall cease.
8.1 Actions to Permit Issuance of Warrant Shares. The Company will not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in good faith assist in the carrying out of all of the terms and in the taking of all actions necessary or appropriate in order to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (a) will not permit the par value of any shares of Common Stock receivable upon the exercise of the Warrants to exceed the amount payable therefor upon exercise, (b) will take all actions necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of the Warrants, and (c) will not take any action which results in any adjustment of the Warrant Price if the total number of shares of Common Stock issuable after the action upon the exercise of the Warrant would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purpose of issuance upon exercise.
8.2 Acknowledgement of Company’s Obligations. The Company acknowledges that its obligation to issue shares of Common Stock issuable upon exercise of the Warrants is binding upon it and enforceable regardless of the dilution that such issuance may have on the ownership interests of other stockholders.
9. Chief Financial Officer’s Report as to Adjustments. In the case of any adjustment or re-adjustment in the shares of Common Stock issuable upon the exercise of the Warrants, the Company at its expense will promptly compute the adjustment or re-adjustment in accordance with the terms of the Warrants and cause its Chief Financial Officer to certify the computation (other than any computation of the fair value of property as determined in good faith by the Board of Directors of the Company) and prepare a report setting forth the adjustment or re-adjustment and showing in reasonable detail the method of calculation thereof and the facts upon which the adjustment or re-adjustment is based, including a statement of (a) the number of shares of Common Stock outstanding or deemed to be outstanding and (b) the Warrant Price in effect immediately prior to the deemed issuance or sale and as adjusted and re-adjusted (if required by Section 4 hereof) on account thereof. The Company will forthwith mail a copy of each report to the Holder and will, upon the written request at any time of the Holder, furnish to the Holder a like report setting forth the Warrant Price at the time in effect and showing in reasonable detail how it was calculated. The Company will also keep copies of all reports at its office maintained pursuant to Section 13.2(a) hereof and will cause them to be available for inspection at the office during normal business hours upon reasonable notice by the Holder or any prospective purchaser of the Warrants designated by the Holder.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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10. Reservation of Shares. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, free from all taxes, liens and charges with respect to the issue thereof and not be subject to preemptive rights or other similar rights of stockholders of the Company, solely for the purpose of effecting the exercise of the Warrants, such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise thereof, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of the Warrants, in addition to such other remedies as shall be available to the Holder, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase the number of authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including without limitation, using its best efforts to obtain the requisite stockholder approval necessary to increase the number of authorized shares of the Company’s Common Stock. All shares of Common Stock issuable upon exercise of the Warrants shall be duly authorized and, when issued upon exercise, shall be validly issued and, in the case of shares, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, and that upon issuance such shares shall be listed on each securities exchange, if any, on which the other shares of outstanding Common Stock of the Company are then listed.
11. Listing. The Company shall at all times comply in all respects with the Company’s reporting, filing and other obligations under the by-laws or rules of each national securities exchange or inter-dealer quotation system upon which shares of Common Stock are then listed and shall list the shares issuable upon the exercise of the Warrants on such national securities exchange or inter-dealer quotation system.
12. Investment Representations: Restrictions on Transfer.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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These securities have not been registered under the Securities Act of 1933 or qualified under any state securities laws. They may not be sold, hypothecated or otherwise transferred in the absence of an effective registration statement under that Act or qualification under applicable state securities laws without an opinion counsel reasonably acceptable to the Company that such registration and qualification are not required.
(i) If in the opinion of counsel for the Holder reasonably satisfactory to the Company the proposed transfer (i.e. private sale of Restricted Securities) may be effected without registration of Restricted Securities under the Act (which opinion shall state the bases for the legal conclusions reached therein), the Holder shall thereupon be entitled to transfer the Restricted Securities in accordance with the terms of the notice delivered by the Holder to the Company. Each certificate representing the Restricted Securities issued upon or in connection with any transfer shall bear the restrictive legends required by Section 12.1 hereof.
(ii) If the opinion called for in (i) above is not delivered, the Holder shall not be entitled to transfer the Restricted Securities until either (x) receipt by the Company of a further notice from such Holder pursuant to the foregoing provisions of this Section 12.2 and fulfillment of the provisions of clause (i) above, or (y) such Restricted Securities have been effectively registered under the Act.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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13. Ownership, Transfer and Substitution of Warrant.
13.2 Office; Transfer and Exchange of Warrant.
(a) The Company will maintain an office (which may be an agency maintained at a bank) at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxxxx, XX 00000 (until the Company notifies the Holder of any change of location of the office) where notices, presentations and demands in respect of the may be made upon it.
(b) The Company shall cause to be kept at its office maintained pursuant to Section 13.2(a) hereof a Warrant Register for the registration and transfer of the Warrants. The names and addresses of holders of the Warrants, the transfers thereof and the names and addresses of transferees of the Warrants shall be registered in such Warrant Register. The Person in whose name any Warrant shall be so registered shall be deemed and treated as the owner and holder thereof for all purposes of such Warrant, and the Company shall not be affected by any notice or knowledge to the contrary.
(c) Upon the surrender of a Warrant, properly endorsed, for registration of transfer or for exchange at the office of the Company maintained pursuant to Section 13.2(a) hereof, the Company at its expense will (subject to compliance with Section 12 hereof, if applicable) execute and deliver to or upon the order of the Holder thereof a new Warrant of like tenor, in the name of such holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, calling in the aggregate on the face thereof for the number of shares of Common Stock called for on the face of the Warrant so surrendered.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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14. No Rights or Liabilities as Stockholder. Except as may otherwise be provided herein, no Holder shall be entitled to vote or receive dividends or be deemed the holder of any shares of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, 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, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until such Holder’s Warrant shall have been exercised and the shares of Common Stock purchasable upon the exercise hereof shall have become deliverable, as provided herein. The Holder will not be entitled to share in the assets of the Company in the event of liquidation, dissolution or the winding up of the Company.
15. Notices. Any notice or other communication in connection with this Warrant shall be deemed to be given if in writing addressed as hereinafter provided and actually delivered at such address: (a) if to any Holder, at the registered address of such holder as set forth in the Warrant Register kept at the office of the Company maintained pursuant to Section 13.2(a) hereof, or (b) if to the Company, to the attention of its Chief Financial Officer at its office maintained pursuant to Section 13.2(a) hereof; provided, however, that the exercise of any Warrant shall be effective in the manner provided in Section 3 hereof.
16. Payment of Taxes. The Company will pay all documentary stamp taxes attributable to the issuance of shares of Common Stock underlying this Warrant upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificate for shares of Common Stock underlying this Warrant in a name other that of the Holder. The Holder is responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving shares of Common Stock underlying this Warrant upon exercise hereof.
17. Warrant Agent. The Company shall serve as warrant agent under for the Warrants. Upon 30 days notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholders services business shall be successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
Page 13
18. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. This Warrant shall be construed and enforced in accordance with and governed by the laws of Nevada applicable to contracts made and to be performed entirely within such State. Any action, suit or proceeding in connection with this Warrant may be brought in a federal or state court of record located in Xxxxx County, Nevada, and Holder and Company each agrees to submit to the personal jurisdiction of such court and waives any objection which either may have, based on improper venue or forum non conveniens, to the conduct of any proceeding in any such court and waives personal service of any and all process upon it, and consents that all such service of process be made by mail or messenger directed to it at the address referred to in Section 15 above and that service so made shall be deemed to be completed upon the earlier of actual receipt or five days after the same shall have been posted to its address. The section headings in this Warrant are for purposes of convenience only and shall not constitute a part hereof. The use herein of the masculine pronouns or similar terms shall be deemed to include the feminine and neuter genders as well and vice versa and the use of the singular pronouns shall be deemed to include the plural as well and vice versa.
(signature page to follow)
Redeemable Common Stock Purchase Warrant-$0.90
issued by Digital Power Corporation
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DIGITAL POWER CORPORATION
By: ___________________________________
Name: Xxxx Xxxx
Title: President and Chief Executive Officer
Agreed and Accepted:
[●]
___________________________
[●]
Warrant – CS2
$0.90 Exercise Price
EXHIBIT A
EXERCISE NOTICE
To Be Executed by the Holder
In Order to Exercise Warrants
TO: Digital Power Corporation
(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
□ in lawful money of the United States; or
□ the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 3.1 to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 3.1.
(3) Please issue a certificate or certificates representing the Warrant Shares in the name of the undersigned or in such other name as is specified below:
_________________________________________________________
The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:
_________________________________________________________
_________________________________________________________
Dated: |
________________________________ |
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________________________________ |
________________________________ | |
Address | |
________________________________ | |
Taxpayer Identification Number | |
________________________________ | |
Signature | |
Warrant – CS-2
$0.90 Exercise Price
EXHIBIT B
[FORM OF ASSIGNMENT]
To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.
FOR VALUE RECEIVED hereby sells, assigns and transfers unto
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(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ________________ Attorney, to transfer the within Warrant Certificate on the books of the within-named Company, with full power of substitution.
Dated: ________________
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Signature |
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(Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.) | |
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(Insert Social Security or Other Identifying Number of Holder) | ||
Signature Guaranteed |