Contract
Exhibit
1.2
THIS
COMMON STOCK PURCHASE WARRANT AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION
OF SUCH
ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS COMMON
STOCK
PURCHASE WARRANT.
Number
of
Shares of Common Stock: ______________
Warrant
No. ______________
To
Purchase Common Stock of
Energy
Focus, Inc.
This
Is
To Certify That
__________________, or its registered assign, is entitled, at any time from
the
Issuance Date (as hereinafter defined) to the Expiration Date (as hereinafter
defined) to purchase from Energy Focus, Inc., a Delaware corporation (the
“Company”),
__________________ (_________) shares of Common Stock (as hereinafter defined
and subject to adjustment as provided herein), in whole or in part, including
fractional parts, at a purchase price of equal to $3.08 (subject to adjustment
as provided herein, the “Exercise
Price”),
all
on the terms and conditions and pursuant to the provisions hereinafter set
forth.
This
Warrant is issued pursuant, and the Holder is entitled to the benefits of,
to
that certain Securities Purchase Agreement dated as of March 14, 2008 by and
between the Company and the investors party thereto (the “Securities
Purchase Agreement”).
Capitalized terms used herein without definition are used with the definitions
assigned thereto in such Securities purchase Agreement.
| 1. |
DEFINITIONS
|
As
used
in this Common Stock Purchase Warrant (this “Warrant”),
the
following terms shall have the respective meanings set forth below:
“Business
Day”
shall
mean any day that is not a Saturday or Sunday or a day on which banks in New
York City, New York are required or permitted to be closed in the City of New
York.
“Issuance
Date”
shall
mean March 14, 2008.
“Commission”
shall
mean the Securities and Exchange Commission or any other federal agency then
administering the Securities Act and other federal securities laws.
“Common
Stock”
shall
mean (except where the context otherwise indicates) the Common Stock, par value
$0.0001 per share, of the Company as constituted on the Issuance Date, and
any
capital stock into which such Common Stock may thereafter be changed, and shall
also include (i) capital stock of the Company of any other class (regardless
of
how denominated) issued to the holders of shares of Common Stock upon any
reclassification thereof which is also not preferred as to dividends or assets
over any other class of stock of the Company and which is not subject to
redemption and (ii) shares of common stock of any successor or acquiring Company
received by or distributed to the holders of Common Stock of the Company in
the
circumstances contemplated by Section 4.5.
1
“Convertible
Securities”
shall
mean options, evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable, with or without payment of
additional consideration in cash or property, for shares of Common Stock, either
immediately or upon the occurrence of a specified date or a specified
event.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, or any successor federal
statute, and the rules and regulations of the Commission thereunder, all as
the
same shall be in effect from time to time.
“Exercise
Period”
shall
mean the period during which this Warrant is exercisable pursuant to Section
2.1.
“Expiration
Date”
shall
mean the fifth anniversary hereof.
“Fundamental
Corporate Change”
shall
have the meaning set forth in Section 4.5.
“Holder”
shall
mean the Person in whose name the Warrant or Warrant Shares set forth herein
is
registered on the books of the Company maintained for such purpose.
“Market
Price”
shall
mean, on any date of determination, (i) the closing price of a share of Common
Stock on such day as reported on the principal Trading Market on which the
Common Stock is listed or traded, or (ii) if the Common Stock is not listed
on a
Trading Market, the closing bid price for a share of Common Stock on such day
in
the over-the-counter market, as reported by the OTC Bulletin Board, or (iii)
if
the Common Stock is not then
listed or quoted on the OTC Bulletin Board,
the
closing bid price for a share of Common Stock on such day in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices).
“Other
Property”
shall
have the meaning set forth in Section 4.5.
“Person”
shall
mean any individual, sole proprietorship, partnership, joint venture, trust,
incorporated organization, association, Company, institution, public benefit
Company, entity or government (whether federal, state, county, city, municipal
or otherwise, including, without limitation, any instrumentality, division,
agency, body or department thereof).
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, or any successor federal statute,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market, or (ii)
if
the Common Stock is not listed on a Trading Market, a day on which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not then
quoted on the OTC Bulletin Board, a
day on
which the Common Stock is quoted in the over-the-counter market as reported
by
the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding to its functions of reporting prices); provided,
that in
the event that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then the term “Trading Day” shall mean a Business
Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market, or the Nasdaq Bulletin Board on which the Common Stock
is listed or quoted for trading on the date in question.
2
“Transfer”
shall
mean any disposition of any Warrant or Warrant Shares or of any interest in
either thereof, which would constitute a sale thereof within the meaning of
the
Securities Act.
“Warrant
Shares”
shall
mean the shares of Common Stock issued or issuable to the Holder of this Warrant
upon the exercise thereof.
“Warrants”
shall
mean this Warrant and all warrants issued upon transfer, division or combination
of, or in substitution for, any thereof. All Warrants shall at all times be
identical as to terms and conditions and date, except as to the number of shares
of Common Stock for which they may be exercised.
| 2. |
EXERCISE
OF WARRANT
|
| 2.1 |
Manner
of Exercise
|
From
and
after the Issuance Date and until 5:00 p.m., Eastern Standard Time, on the
Expiration Date, the Holder may exercise this Warrant, on any Business Day,
for
all or any part of the number of shares of Common Stock purchasable
hereunder.
In
order
to exercise this Warrant, in whole or in part, the Holder shall surrender this
Warrant to the Company at its principal office at 00000 Xxxxxx Xxxx, Xxxxx,
Xxxx
00000, or at the office or agency designated by the Company pursuant to Section
12, together with a written notice of the Holder’s election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to
be
purchased, and shall be accompanied by payment of the Exercise Price in cash
or
wire transfer or cashier’s check drawn on a United States bank. Such notice
shall be substantially in the form of the subscription form appearing at the
end
of this Warrant as Exhibit A, duly executed by the Holder or his agent or
attorney. Upon receipt of the items referred to above, the Company shall, as
promptly as practicable, execute or cause to be executed and deliver or cause
to
be delivered to the Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock issuable upon such exercise,
together with cash in lieu of any fraction of a share, as hereinafter provided.
The stock certificate or certificates so delivered shall be, to the extent
possible, in such denomination or denominations as the Holder shall request
in
the notice and shall be registered in the name of the Holder or, subject to
Section 9, such other name as shall be designated in the notice. This Warrant
shall be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and the Holder or any other Person so
designated to be named therein shall be deemed to have become the holder of
record of such shares for all purposes, as of the date the notice, together
with
the cash or check or wire transfer of funds and this Warrant is received by
the
Company as described above and all taxes required to be paid by the Holder,
if
any, pursuant to Section 2.2 prior to the issuance of such shares have been
paid, provided that if the Warrant is exercised in connection with a merger,
reorganization or other Fundamental Corporate Change, such exercise may be
made
conditional upon the consummation of such event. If this Warrant shall have
been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant and the same returned to the Holder.
Notwithstanding any provision herein to the contrary, the Company shall not
be
required to register shares in the name of any Person who acquired this Warrant
(or part hereof) or any Warrant Shares otherwise than in accordance with this
Warrant.
3
| 2.2 |
Payment
of Taxes and Charges
|
All
shares of Common Stock issuable upon the exercise of this Warrant pursuant
to
the terms hereof shall be validly issued, fully paid and nonassessable, freely
tradable and without any preemptive rights. The Company shall pay all expenses
in connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issuance or delivery thereof, unless such tax
or
charge is a tax on income imposed by law upon the Holder in connection with
the
issuance of the Common Stock to a person other than the Holder, in which case
such taxes or charges shall be paid by the Holder.
| 2.3 |
Fractional
Shares
|
The
Company shall not be required to issue a fractional share of Common Stock upon
exercise of any Warrant. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such exercise, the Company shall pay
a
cash adjustment in respect of such fraction in an amount equal to the same
fraction of the Market Price per share of Common Stock as of the date of
exercise of the Warrant giving rise to such fraction of a share.
| 2.4 |
Cashless
Exercise During Event
|
Notwithstanding
any other provision contained herein to the contrary, from and after the
six-month anniversary of the Closing Date, whenever an Event has occurred and
is
continuing and at any time after the expiration of the Effectiveness Period,
the
Holder may elect to receive, without the payment by the Holder of the aggregate
Exercise Price in respect of the shares of Common Stock to be acquired, shares
of Common Stock of equal value to the value of this Warrant, or any specified
portion hereof, by the surrender of this Warrant (or such portion of this
Warrant being so exercised) together with a subscription form in the form
attached hereto as Exhibit A, with appropriate modification to reflect such
cashless exercise, duly executed, to the Company. Thereupon, the Company shall
issue to the Holder such number of fully paid, validly issued and nonassessable
shares of Common Stock as is computed using the following formula:
X
=
Y
(A -
B)
A
where
X
= the
number of shares of Common Stock to which the Holder is entitled upon such
cashless exercise;
Y
= the
total
number of shares of Common Stock covered by this Warrant for which the Holder
has surrendered purchase rights at such time for cashless exercise (including
both shares to be issued to the Holder and shares as to which the purchase
rights are to be canceled as payment therefor);
A
= the
Market Price of one share of Common Stock as at the date the net issue election
is made; and
B
= the
Warrant Price in effect under this Warrant at the time the net issue election
is
made.
4
| 2.5 |
Buy-In
|
If
at any
time when the a Registration Statement is in effect or required to be in effect
with respect to the Warrant Shares, as provided for by the Securities Purchase
Agreement, (a) a certificate representing the Warrant Shares is not delivered
to
the Holder within three (3) Business Days of the due exercise of this Warrant
by
the Holder and (b) prior to the time such certificate is received by the Holder,
the Holder, or any third party on behalf of the Holder or for the Holder’s
account, purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of shares represented
by such certificate (a “Buy-In”),
then
the Company shall pay in cash to the Holder (for costs incurred either directly
by such Holder or on behalf of a third party) the amount by which the total
purchase price paid for Common Stock as a result of the Buy-In (including
brokerage commissions, if any) exceeds the proceeds received by such Holder
as a
result of the sale to which such Buy-In relates. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In.
| 3. |
TRANSFER,
DIVISION AND COMBINATION
|
| 3.1 |
Transfer
|
Subject
to compliance with Section 9, 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 principal
office of the Company referred to in Section 2.1 or the office or agency
designated by the Company pursuant to Section 12, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by the Holder or his agent or attorney and funds sufficient to pay
any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall, subject to Section 9, execute
and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denomination specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant
not
so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance with Section 9, may be exercised by a new Holder for
the
purchase of shares of Common Stock without having a new warrant
issued.
| 3.2 |
Division
and Combination
|
Subject
to Section 9, this Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company, together
with a written notice specifying the names and denominations in which new
Warrants are to be issued, signed by the Holder or his agent or attorney.
Subject to compliance with Sections 3.1 and 9, as to any transfer which may
be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
| 3.3 |
Expenses
|
The
Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 3.
| 3.4 |
Maintenance
of Books
|
The
Company agrees to maintain, at its aforesaid office or agency, books for the
registration and the registration of transfers of the Warrants.
5
| 4. |
ADJUSTMENTS
|
The
number of shares of Common Stock for which this Warrant is exercisable, or
the
price at which such shares may be purchased upon exercise of this Warrant,
shall
be subject to adjustment from time to time as set forth in this Section 4.
The
Company shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 at the time of such event.
| 4.1 |
Stock
Dividends, Subdivisions and
Combinations
|
If
at any
time the Company shall:
(a) declare
or pay to the holders of its Common Stock a dividend payable in, or other
distribution of, shares of Common Stock or in Convertible
Securities;
(b) subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock; or
(c) combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock;
then
(i)
the number of shares of Common Stock for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number
of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the occurrence of such event would own or be entitled to receive after the
occurrence of such event, and (ii) the then-current Exercise Price shall be
adjusted to equal (A) the then-current Exercise Price multiplied by the number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares for which this
Warrant is exercisable immediately after such adjustment.
| 4.2 |
Certain
Other Distributions
|
If
at any
time the Company shall declare or pay to the holders of its Common Stock any
dividend or other distribution of:
(a) cash;
(b) any
evidences of its indebtedness, any shares of its stock or any other securities
or property of any nature whatsoever (other than cash, Convertible Securities
or
additional shares of Common Stock); any warrants or other rights to subscribe
for or purchase any evidences of its indebtedness, any shares of its stock
or
any other securities or property of any nature whatsoever (other than cash,
Convertible Securities or additional shares of Common Stock);
then,
upon exercise of this Warrant, the Holder shall be entitled to receive such
dividend or distribution as if the Holder had exercised this Warrant prior
to
the date of such dividend or distribution. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value
or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Common Stock of such shares of such other class of stock within
the meaning of this Section 4.2 and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock
as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
6
| 4.3 |
Dilutive
Issuances
|
If
at any
time after the Issuance Date the Company shall issue
or
sell shares of Common Stock or Convertible Securities (other than (i) securities
issued or issuable in Excluded Issuances or (ii) shares of Common Stock issued
as a result of a dividend or other distribution on the Common Stock payable
in
Common Stock or (iii) a subdivision of outstanding shares of Common Stock),
without consideration or for a consideration per share less than $3.08, the
Exercise Price shall be reduced to a price (calculated to the nearest cent)
(i)
determined in accordance with the following formula:
P1
Q1 +
P2 Q2
New
Exercise Price = ---------------------
Q1
+
Q2
where:
|
P1
=
|
Applicable
Exercise Price in effect immediately prior to such new issue or
sale.
|
|
Q1
=
|
Number
of shares of Common Stock outstanding plus the number of shares of
Common
Stock issuable upon conversion or exercise of Convertible Securities
outstanding immediately prior to such new issue or
sale.
|
|
P2
=
|
100%
of the weighted average price per share of Common Stock received
or deemed
by the Company upon such new issue or
sale.
|
|
Q2
=
|
Number
of shares of Common Stock issued or sold, or deemed to have been
issued,
in the subject transaction.
|
For
purposes of this Section 4.3, upon the sale or issuance of Convertible
Securities, the maximum number of shares of Common Stock issuable upon the
exercise, conversion or exchange of such Convertible Securities (as set forth
in
the instrument relating thereto without regard to any provisions contained
therein for a subsequent adjustment of such number) shall be deemed to be issued
as of the time of such issue or sale and the consideration deemed received
for
such shares of Common Stock shall be the consideration actually received by
the
Company for the issue of such Convertible Securities plus the minimum additional
consideration to be received by the Company upon the full exercise, conversion
or exchange of such Convertible Securities. Insofar as any consideration
received, or to be received, by the Company consists of property other than
cash, such consideration shall be computed at the fair value thereof at the
time
of such issue or sale, as determined in good faith by the Board.
| 4.4 |
Other
Provisions Applicable to Adjustments under this
Section
|
The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and
the
current Exercise Price provided for in this Section 4:
(a) When
Adjustments to be Made.
The
adjustments required by this Section 4 shall be made whenever and as often
as
any specified event requiring an adjustment shall occur. For the purpose of
any
adjustment, any specified event shall be deemed to have occurred at the close
of
business on the date of its occurrence.
(b) Fractional
Interests.
In
computing adjustments under this Section 4, fractional interests in Common
Stock
shall be taken into account to the nearest 1/10th of a share.
7
(c) When
Adjustment not Required.
If the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or distribution or subscription or
purchase rights and shall, thereafter and before the distribution to the holders
thereof, legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
| 4.5 |
Reorganization,
Reclassification, Merger, Consolidation or Disposition of
Assets
|
In
case
the Company shall reorganize its capital, reclassify its capital stock,
consolidate or merge with or into another Person (where the Company is not
the
survivor or where there is a change in or distribution with respect to the
Common Stock of the Company), or sell, convey, transfer or otherwise dispose
of
all or substantially all its property, assets or business to another Person,
or
effectuate a transaction or series of related transactions in which more than
50% of the voting power of the Company is disposed of (each, a “Fundamental
Corporate Change”)
and,
pursuant to the terms of such Fundamental Corporate Change, shares of common
stock of the successor or acquiring Company, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights) in addition to or in lieu of common
stock
of the successor or acquiring Company (“Other
Property”),
are
to be received by or distributed to the holders of Common Stock, then the Holder
shall have the right thereafter to receive, upon exercise of the Warrant, such
number of shares of common stock of the successor or acquiring Company or of
the
Company, if it is the surviving Company, and Other Property as is receivable
upon or as a result of such
Fundamental Corporate Change by a holder of the number of shares of Common
Stock
for which this Warrant is exercisable immediately prior to such Fundamental
Corporate Change. In case of any such Fundamental Corporate Change, this Warrant
shall expire and be of no further force and effect on the closing date of such
Fundamental Corporate Change and, in lieu of any other rights of the Holder
hereunder, the Holder shall have the right to receive, with within five Business
Days of the closing of such Fundamental Corporate Change, cash in an amount
equal to the Black Scholes Value of the remaining unexercised portion of this
Warrant on the date of such Fundamental Corporate Change. In the event the
Company and the Holder are unable to agree on the Black Scholes Value, the
parties shall submit the matter to a mutually agreeable accounting firm of
regional or national stature for the purpose of making a binding determination
of the Black Scholes Value.
| 4.6 |
Other
Action Affecting Common
Stock
|
In
case
at any time or from time to time the Company shall take any action in respect
of
its Common Stock, other than any action described in this Section 4, or any
other event occurs, which would have a materially adverse effect upon the rights
of the Holder, the number of shares of Common Stock and/or the purchase price
thereof shall be adjusted in such manner as may be equitable in the
circumstances, as determined in good faith by the Board of Directors of the
Company.
4.7
Nasdaq Limitation; Par Value Limitation
(a)
Notwithstanding any other provision in Sections 4.3 or 4.6 to the contrary,
if a
reduction in the Exercise Price pursuant to Sections 4.3 or 4.6 would require
the Company to obtain stockholder approval of the transactions contemplated
by
the Purchase Agreement pursuant to Nasdaq Marketplace Rule 4350(i) and such
stockholder approval has not been obtained, (i) the Exercise Price shall be
reduced under Section 4.3, or may be reduced under Section 4.6, to the maximum
extent that would not require stockholder approval under such Rule, and (ii)
the
Company shall under Section 4.3, or may under Section 4.6, use its commercially
reasonable efforts to obtain such stockholder approval as soon as reasonably
practicable, including by calling a special meeting of stockholders to vote
on
such Exercise Price adjustment. This provision shall not restrict the number
of
shares of Common Stock which a Warrantholder may receive or beneficially own
in
order to determine the amount of securities or other consideration that such
Holder may receive in the event of a Fundamental Corporate Change.
8
(b)
Notwithstanding anything herein to the contrary, the Company agrees not to
enter
into any transaction which, by reason of any adjustment hereunder, would cause
the Exercise Price to be less than the par value per share of Common
Stock.
| 5. |
NOTICES
TO THE HOLDER
|
| 5.1 |
Notice
of Adjustments
|
Whenever
the number of shares of Common Stock for which this Warrant is exercisable,
or
whenever the price at which a share of such Common Stock may be purchased upon
exercise of the Warrants, shall be adjusted pursuant to Section 4, the Company
shall forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event requiring
the adjustment and the method by which such adjustment was calculated (including
a description of the basis on which the Board of Directors of the Company
determined the fair value of any evidences of indebtedness, shares of stock,
other securities or property or warrants or other subscription or purchase
rights referred to in Section 4.2), specifying the number of shares of Common
Stock for which this Warrant is exercisable and (if such adjustment was made
pursuant to Section 4.2 or 4.5) describing the number and kind of any other
shares of stock or Other Property for which this Warrant is exercisable, and
any
change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly cause a signed copy of such
certificate to be delivered to the Holder in accordance with Section 14.2.
The
Company shall keep, along with the transfer register maintained in accordance
with Section 3.4, copies of all such certificates and cause the same to be
available for inspection at said office during normal business hours by the
Holder or any prospective purchaser of a Warrant designated by the
Holder.
| 5.2 |
Notice
of Corporate Action
|
If
at any
time:
(a) the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right
to
subscribe for or purchase any evidences of its indebtedness, any shares of
stock
of any class or any other securities or property, or to receive any other right;
or
(b) there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all
or
substantially all the property, assets or business of the Company to, another
Company; or
(c) there
shall be a voluntary or involuntary dissolution, liquidation or winding up
of
the Company;
then,
in
any one or more of such cases, the Company shall give to Holder (i) at least
10
days’ prior written notice of the date on which a record date shall be selected
for such dividend, distribution or right or for determining rights to vote
in
respect of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, and (ii)
in
the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least
10
days’ prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall
be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the Company
and delivered in accordance with Section 14.2.
9
| 6. |
NO
IMPAIRMENT
|
The
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or other
voluntary action, avoid or seek to avoid the observance or performance of any
of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may
be
necessary or appropriate to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company will (a) not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as
may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of
this Warrant, and (c) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
Upon
the
request of the Holder, the Company will at any time during the period this
Warrant is outstanding acknowledge in writing, in form satisfactory to the
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
| 7. |
RESERVATION
AND AUTHORIZATION OF COMMON
STOCK
|
From
and
after the Issuance Date, the Company shall at all times reserve and keep
available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable and not subject to preemptive
rights.
Before
taking any action which would cause an adjustment reducing the then-current
Exercise Price below the then par value, if any, of the shares of Common Stock
issuable upon exercise of the Warrants, the Company shall take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Exercise Price.
Before
taking any action which would result in an adjustment in the number of shares
of
Common Stock for which this Warrant is exercisable or in the then-current
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
10
| 8. |
TAKING
OF RECORD; STOCK AND WARRANT TRANSFER
BOOKS
|
In
the
case of all dividends or other distributions by the Company to the holders
of
its Common Stock with respect to which any provision of Section 4 refers to
the
taking of record of such holders, the Company will in each case take such a
record and will take such record as of the close of business on a Business
Day.
The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of
any
Warrant.
| 9. |
RESTRICTIONS
ON TRANSFERABILITY
|
The
Warrants and the Warrant Shares shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in the legend affixed
to the first page of this Warrant, which conditions are intended, in part,
to
ensure compliance with the provisions of the Securities Act with respect to
the
Transfer of any Warrant or any Warrant Shares. The Holder, by acceptance of
this
Warrant, agrees to be bound by the provisions of this Section 9.
| 10. |
LIMITATIONS
ON EXERCISE.
|
(a) Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that
may
be acquired by the Warrantholder upon any exercise of this Warrant (or otherwise
in respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Warrantholder and its Affiliates
and any other Persons whose beneficial ownership of Common Stock would be
aggregated with the Warrantholder's for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), does not
exceed 19.9% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon
such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. This provision shall not restrict the number of shares
of Common Stock which a Warrantholder may receive or beneficially own in order
to determine the amount of securities or other consideration that such Holder
may receive in the event of a Fundamental Corporate Change.
| 11. |
LOSS
OR MUTILATION
|
Upon
receipt by the Company from the Holder of evidence reasonably satisfactory
to it
of the ownership of and the loss, theft, destruction or mutilation of this
Warrant and indemnity reasonably satisfactory to it (it being understood that
the written agreement of the Holder shall be sufficient indemnity), and in
case
of mutilation upon surrender and cancellation hereof, the Company will execute
and deliver in lieu hereof a new Warrant of like tenor to the Holder;
provided,
in the
case of mutilation no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation.
11
| 12. |
OFFICE
OF THE COMPANY
|
As
long
as any of the Warrants remain outstanding, the Company shall maintain an office
or agency (which may be the principal executive offices of the Company) where
the Warrants may be presented for exercise, registration of transfer, division
or combination as provided in this Warrant.
| 13. |
LIMITATION
OF LIABILITY
|
No
provision hereof, in the absence of affirmative action by the Holder to purchase
shares of Common Stock, and no enumeration herein of the rights or privileges
of
the Holder hereof, shall give rise to any liability of the Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
Nothing in the foregoing shall be construed in any manner to limit or deny
the
liability of a Holder in any other capacity, including, without limitation,
as a
director of the Company.
| 14. |
MISCELLANEOUS
|
| 14.1 |
Nonwaiver
|
No
course
of dealing or any delay or failure to exercise any right hereunder on the part
of the Holder shall operate as a waiver of such right or otherwise prejudice
the
Holder’s rights, powers or remedies. No waiver by the Holder of any right
hereunder on any one occasion shall operate as a waiver of such right on any
other occasion.
| 14.2 |
Notice
Generally
|
Except
as
may be otherwise provided herein, any and all notices or other communications
or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile
(provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 6:30
p.m. eastern time on a Business Day, (b) the next Business Day after the date
of
transmission, if such notice or communication is delivered via facsimile at
the
facsimile number specified in this Section on a day that is not a Business
Day
or later than 6:30 p.m. eastern time on any Business Day, (c) the Business
Day
following the date of transmission, if sent by a nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice
is
required to be given. The address for such notices and communications shall
be
the same as provided in the Securities Purchase Agreement; or such other address
as may be designated in writing hereafter, in the same manner, by such
addressee.
| 14.3 |
Remedies
|
The
Holder in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of
its
rights under Section 2 of this Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of Section 2 of this Warrant and hereby agrees to waive
the defense in any action for specific performance that a remedy at law would
be
adequate.
12
| 14.4 |
Successors
and Assigns
|
Subject
to the provisions of Sections 3.1 and 9, this Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors of
the
Company and the successors and assigns of the Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to time
of
this Warrant and, with respect to Section 9 hereof, the holders of Warrant
Shares, and shall be enforceable by any such holder or the holder of Warrant
Shares.
| 14.5 |
Amendment
|
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
| 14.6 |
Severability
|
Wherever
possible, each provision of this Warrant shall be interpreted in such manner
as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall only be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Warrant.
| 14.7 |
Headings
|
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
| 14.8 |
Governing
Law
|
This
Warrant shall be governed by the laws of the State of Delaware, without regard
to the provisions thereof relating to conflicts of law.
| 14.9 |
Disputes
|
In
the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the securities or other property deliverable upon
exercise of this Warrant, the Company shall promptly issue and deliver to the
Holder the securities or other properties that are not in dispute..
13
In
Witness Whereof,
the
Company has caused this Warrant to be duly executed bythe undersigned, thereunto
duly authorized, as of the date written below.
|
Energy
Focus, Inc.
|
||
| |
|
|
|
Dated:
March 14, 2008
|
By: | |
|
Name:
|
||
|
Its:
|
||
14
EXHIBIT
A
SUBSCRIPTION
FORM
[To
be
executed only upon exercise of Warrant]
The
undersigned registered owner of this Warrant irrevocably exercises this Warrant
for the purchase of __________ shares of Common Stock of Energy Focus, Inc.
and
herewith makes payment therefor, all at the price and on the terms and
conditions specified in this Warrant and requests that certificates for the
shares of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered
to
whose
address is
and,
if
such shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and
date
for the balance of the shares of Common Stock issuable hereunder be delivered
to
the undersigned.
|
(Name
of Registered Owner)
|
||
|
(Signature
of Registered Owner)
|
||
|
(Street
Address)
|
||
|
(City)
(State)
(Zip
Code)
|
||
| Notice: The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever. |
15
EXHIBIT
B
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 on the books of Energy Focus, Inc. maintained for
the
purpose, with full power of substitution in the premises.
Dated:
____________________
|
(Name
of Registered Owner)
|
||
|
(Signature
of Registered Owner)
|
||
| Notice: The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever. |
16
