SUBSCRIPTION AGREEMENT
Exhibit
10.1
00 Xxxxx
Xxxxxx
Xxxxxxx,
Xxxxxxxxxxxxx 00000
Gentlemen:
The undersigned (the “Investor”) hereby confirms its
agreement with American DG Energy Inc., a Delaware corporation (the “Company”), as
follows:
1. This
Subscription Agreement, including the Terms and Conditions for Purchase of Units
attached hereto as Annex I
(collectively, this “Agreement”) is made as of the
date set forth below between the Company and the Investor.
2. The
Company has authorized the sale and issuance to certain investors of up to an
aggregate of 500,000 units (the “Units”), with each Unit
consisting of (i) one share (a “Share,” collectively, the
“Shares”) of its Common
Stock, par value $0.001 per share (the “Common Stock”) and (ii) one
warrant (a “Warrant,”
collectively, the “Warrants”) to purchase one
share of Common Stock (and the fractional amount being the “Warrant Ratio”) in
substantially the form attached hereto as Exhibit B, subject to
adjustment by the Company’s Board of Directors or a committee thereof, for a
purchase price of $2.50 per Unit (the “Purchase
Price”). Units will not be issued or
certificated. The Shares and Warrants are immediately separable and
will be issued separately. The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the “Warrant Shares” and, together
with the Units, the Shares and the Warrants, are referred to herein as the
“Offered
Securities”).
3. The
offering and sale of the Units (the “Offering”) are being made
pursuant to (a) an effective Registration Statement on Form S-3 (File No.
333-167392) (the “Registration
Statement”) filed by the Company with the Securities and Exchange
Commission (the “Commission”), including the
Prospectus dated October 6, 2010 filed pursuant to Rule 424(b)(3) under the
Securities Act of 1933, as amended (the “Act”) (the “Base Prospectus”), (b) if
applicable, certain “free writing prospectuses” (as that term is defined in Rule
405 under the Act), that have been or will be filed with the Commission and
delivered to the Investor on or prior to the date hereof (the “Issuer Free Writing
Prospectus”), containing certain supplemental information regarding the
Units, the terms of the Offering and the Company, and (c) a Prospectus
Supplement (the “Prospectus
Supplement” and, together with the Base Prospectus, the “Prospectus”) containing
certain supplemental information regarding the Units and terms of the Offering
that has been or will be filed with the Commission and delivered to the Investor
(or made available to the Investor by the filing by the Company of an electronic
version thereof with the Commission).
4. The
Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor the Units set forth below
for the aggregate purchase price set forth below. The Units shall be
purchased pursuant to the Terms and Conditions for Purchase of Units attached
hereto as Annex
I and incorporated herein by this reference as if fully set forth
herein. The Investor acknowledges that the Offering is not being
underwritten by the placement agent (the “Placement Agent”) named in the
Prospectus Supplement and that there is no minimum offering
amount.
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5. The
manner of settlement of the Shares included in the Units purchased by the
Investor shall be determined by such Investor as follows (check
one):
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[____]
A.
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Delivery
versus payment (“DVP”) through The
Depository Trust & Clearing Corporation (“DTC”) (i.e., on the
Closing Date (as defined in Section 3.1 of Annex I), the Company shall
deliver Shares registered in the Investor’s name and address as set forth
below and released by the Transfer Agent to the Investor through DTC at
the Closing directly to the account at Canaccord Genuity Inc. (“Canaccord”) identified
by the Investor; upon receipt of such
Shares, Canaccord shall promptly electronically
deliver such Shares to the Investor, and simultaneously therewith payment
shall be made by Canaccord by wire transfer to the
Company). NO
LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY
THE INVESTOR AND THE COMPANY, THE INVESTOR
SHALL:
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(I)
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NOTIFY
CANACCORD OF THE ACCOUNT OR ACCOUNTS AT CANACCORD TO BE
CREDITED WITH THE SHARES BEING PURCHASED BY SUCH INVESTOR,
AND
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(II)
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CONFIRM
THAT THE ACCOUNT OR ACCOUNTS AT CANACCORD TO BE CREDITED WITH THE UNITS
BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE
AGGREGATE PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE
INVESTOR.
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— OR
—
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[____]
B.
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Delivery
by wire transfer to the Company. NO LATER THAN ONE (1) BUSINESS
DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY,
THE INVESTOR SHALL REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE
AGGREGATE PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR TO
THE ACCOUNT DESIGNATED BY THE COMPANY IN ACCORDANCE WITH THE WIRE
INSTRUCTIONS PROVIDED TO THE
INVESTOR.
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IT IS THE INVESTOR’S
RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE PROPER
ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DVP
OR WIRE TRANSFER TO THE COMPANY IN A TIMELY MANNER. IF THE INVESTOR
DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE
PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE UNITS MAY NOT BE
DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE
CLOSING ALTOGETHER.
6. The
executed Warrant shall be delivered in accordance with the terms
thereof.
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7. The
Investor represents that, except as set forth below, (a) it has had no position,
office or other material relationship within the past three years with the
Company or persons known to it to be affiliates of the Company, (b) it is not a
FINRA member or an Associated Person (as such term is defined under the NASD
Membership and Registration Rules Section 1011) as of the Closing, and (c)
neither the Investor nor any group of Investors (as identified in a public
filing made with the Commission) of which the Investor is a part in connection
with the Offering of the Units, acquired, or obtained the right to acquire, 20%
or more of the Common Stock (or securities convertible into or exercisable for
Common Stock) or the voting power of the Company on a post-transaction
basis. Exceptions:
(If no
exceptions, write “none.” If left blank, response will be deemed to be
“none.”)
8. The
Investor represents that it has received (or otherwise had made available to it
by the filing by the Company of an electronic version thereof with the
Commission) the Base Prospectus, the documents incorporated by reference therein
and any free writing prospectus (collectively, the “Disclosure Package”), prior to
or in connection with the receipt of this Agreement. The Investor
acknowledges that, prior to the delivery of this Agreement to the Company, the
Investor will receive certain additional information regarding the Offering,
including pricing information (the “Offering Information”). Such
information may be provided to the Investor by any means permitted under the
Act, including the Prospectus Supplement, a free writing prospectus and oral
communications.
9. No
offer by the Investor to buy Units will be accepted and no part of the Purchase
Price will be delivered to the Company until the Investor has received the
Offering Information and the Company has accepted such offer by countersigning a
copy of this Agreement, and any such offer may be withdrawn or revoked, without
obligation or commitment of any kind, at any time prior to the Company (or
Placement Agent on behalf of the Company) sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer. An
indication of interest will involve no obligation or commitment of any kind
until the Investor has been delivered the Offering Information and this
Agreement is accepted and countersigned by or on behalf of the
Company.
[Remainder of Page Left Blank
Intentionally. Signature Page Follows.]
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Number of Units:
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Purchase Price Per Unit: $
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Aggregate Purchase Unit: $
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Please confirm that the foregoing
correctly sets forth the agreement between us by signing in the space provided
below for that purpose.
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Dated
as of: December __, 2010
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INVESTOR
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By:
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Print Name:
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Title:
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Address:
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Agreed
and Accepted
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this
___ day of December, 2010:
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By:
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Title:
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4
ANNEX I
TERMS
AND CONDITIONS FOR PURCHASE OF UNITS
1. Authorization and Sale of the
Units. Subject to the terms and conditions of this Agreement,
the Company has authorized the sale of the Units.
2. Agreement
to Sell and Purchase the Units; Placement Agent.
2.1 At
the Closing (as defined in Section 3.1), the
Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and conditions set forth herein, the number of Units set
forth on the last page of the Agreement to which these Terms and Conditions for
Purchase of Units are attached as Annex I (the “Signature Page”) for the
aggregate purchase price therefor set forth on the Signature Page.
2.2 The
Company proposes to enter into substantially this same form of Subscription
Agreement with certain other investors (the “Other Investors”) and expects to complete
sales of Units to them. The Investor and the Other Investors are
hereinafter sometimes collectively referred to as the “Investors,” and this Agreement
and the Subscription Agreements executed by the Other Investors are hereinafter
sometimes collectively referred to as the “Agreements.”
2.3 Investor
acknowledges that the Company has agreed to pay Canaccord Genuity Inc. (the
“Placement Agent”) a fee
(the “Placement Fee”) in
respect of the sale of Units to the Investor.
2.4 The
Company has entered into a Placement Agency Agreement, dated December 9, 2010
(the “Placement
Agreement”), with the Placement Agent that contains certain
representations, warranties, covenants and agreements of the Company that may be
relied upon by the Investor, which shall be a third party beneficiary
thereof. Except with respect to the material terms and conditions of
the transactions contemplated by this Agreement, the Placement Agreement and any
other documents or agreements contemplated hereby or thereby, the Company
confirms that neither it nor any other person acting on its behalf has provided
the Investor or any Other Investor or its respective agents or counsel with any
information that it believes constitutes or might constitute material,
non-public information which is not otherwise disclosed in or incorporated by
reference into the Prospectus Supplement.
3. Closings
and Delivery of the Units and Funds.
3.1 Closing. The completion of
the purchase and sale of the Units (the “Closing”) shall occur at a
place and time (the “Closing
Date”) to be specified by the Company and the Placement Agent, and of
which the Investors will be notified in advance by the Placement Agent, in
accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange
Act”). At the Closing, (a) the Company shall cause the
Transfer Agent to deliver to the Investor the number of Shares included in the
Units as set forth on the Signature Page registered in the name of the Investor
or, if so indicated on the Investor Questionnaire attached hereto as Exhibit A, in the
name of a nominee designated by the Investor, (b) the Company shall cause to be
delivered to the Investor a Warrant to purchase a number of whole Warrant Shares
determined by multiplying the number of Shares included in the Units as set
forth on the signature page by the Warrant Ration and rounding down to the
nearest whole number and (c) the aggregate purchase price for the
Units being purchased by the Investor will be delivered by or on behalf of the
Investor to the Company.
I-1
3.2 Conditions to the
Obligations of the Parties.
(a) Conditions
to the Company’s Obligations. The Company’s
obligation to issue and sell the Units to the Investor shall be subject to: (i)
the receipt by the Company of the purchase price for the Units being purchased
hereunder as set forth on the Signature Page and (ii) the accuracy of the
representations and warranties made by the Investor and the fulfillment of those
undertakings of the Investor to be fulfilled prior to the Closing
Date.
(b) Conditions
to the Investor’s Obligations. The Investor’s
obligation to purchase the Units will be subject to the accuracy of the
representations and warranties made by the Company and the fulfillment of those
undertakings of the Company to be fulfilled prior to the Closing Date, including
without limitation, those contained in the Placement Agreement, and to the
condition that the Placement Agent shall not have: (i) terminated the Placement
Agreement pursuant to the terms thereof or (ii) determined that the conditions
to the closing in the Placement Agreement have not been
satisfied. The Investor’s obligations are expressly not conditioned
on the purchase by any or all of the Other Investors of the Units that they have
agreed to purchase from the Company. The Investor understands and
agrees that, in the event that the Placement Agent in its sole discretion
determines that the conditions to closing in the Placement Agreement have not
been satisfied or if the Placement Agreement may be terminated for any other
reason permitted by such Agreement, then the Placement Agent may, but shall not
be obligated to, terminate such Agreement, which shall have the effect of
terminating this Subscription Agreement pursuant to Section 14
below.
3.3 Delivery
of Funds.
(a) Delivery Versus Payment
through DTC. If the Investor elects to settle the Shares
included in the Units purchased by such Investor by delivery versus payment
through DTC, no later
than one (1) business day after the execution of this Agreement by the Investor
and the Company, the Investor shall confirm that the account at Canaccord
Genuity Inc. (“Canaccord”) to be credited
with the Units being purchased by the Investor have a minimum balance equal to
the aggregate purchase price for the Units being purchased by the
Investor.
(b) Wire Transfer
Delivery. If the Investor elects to settle the Shares included
in the Units purchased by such Investor through wire transfer to the Company,
no
later than one (1) business day after the execution of this Agreement by the
Investor and the Company, the Investor shall confirm the remittance by
wire transfer of the amount of funds equal to the aggregate purchase price for
the Units being purchased by the Investor to the account designated by the
Company in accordance with the wire instructions provided to the
Investor.
I-2
3.4 Delivery
of Shares included in the Units.
(a) Delivery Versus Payment
through DTC. If the Investor elects to settle the Shares
included in the Units purchased by such Investor by delivery versus payment
through DTC, no later
than one (1) business day after the execution of this Agreement by the Investor
and the Company, the Investor shall notify Canaccord of the account at
Canaccord to be credited with the Shares included in the Units being purchased
by such Investor. On the Closing Date, the Company shall deliver the
Shares to the Investor through DTC directly to the account at Canaccord
identified by Investor and simultaneously therewith payment shall be made by
Canaccord by wire transfer to the Company.
(b) Wire Transfer
Delivery. If the Investor elects to settle the Shares included
in the Units purchased by such Investor through wire transfer delivery, no later
than one (1) business day after the execution of this Agreement by the Investor
and the Company, the Investor shall notify the Company of the account to
be credited with the Shares included in the Units being purchased by such
Investor. On the Closing Date, the Company shall deliver the Shares
to the Investor directly to the account identified by the Investor upon
confirmation by the Company of the remittance to it of the funds equal to the
aggregate purchase price for the Units being purchased.
4. Representations,
Warranties and Covenants of the Investor.
The Investor acknowledges, represents
and warrants to, and agrees with, the Company and the Placement Agent
that:
4.1 The
Investor (a) is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to, investments in securities
presenting an investment decision like that involved in the purchase of the
Units, including investments in securities issued by the Company and investments
in comparable companies, (b) has answered all questions on the Signature Page
and the Investor Questionnaire and the answers thereto are true and correct as
of the date hereof and will be true and correct as of the Closing Date and (c)
in connection with its decision to purchase the number of Units set forth on the
Signature Page, has received and is relying only upon the Disclosure Package and
the documents incorporated by reference therein and the Offering
Information.
4.2 (a)
No action has been or will be taken in any jurisdiction outside the United
States by the Company or the Placement Agent that would permit an offering of
the Units, or possession or distribution of offering materials in connection
with the issue of the Units in any jurisdiction outside the United States where
action for that purpose is required, (b) if the Investor is outside the United
States, it will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Offered Securities
or has in its possession or distributes any offering material, in all cases at
its own expense and (c) the Placement Agent is not authorized to make or has not
made any representation, disclosure or used any information in connection with
the issue, placement, purchase and sale of the Units, except as set forth in the
Disclosure Package and the documents incorporated by reference therein and the
Offering Information.
I-3
4.3 (a)
The Investor has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and (b) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
to the enforceability of any rights to indemnification or contribution that may
be violative of the public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or
regulation).
4.4 The
Investor understands that nothing in this Agreement, the Prospectus or any other
materials presented to the Investor in connection with the purchase and sale of
the Units constitutes legal, tax or investment advice. The Investor
has consulted such legal, tax and investment advisors and made such
investigation as it, in its sole discretion, has deemed necessary or appropriate
in connection with its purchase of Units.
4.5 Since
the first date on which the Placement Agent contacted the Investor about the
Offering, the Investor has not disclosed any information regarding the Offering
to any third parties (other than its legal, accounting and other advisors) and
has not engaged in any transactions involving the securities of the Company
(including, without limitation, any Short Sales (as defined herein) involving
the Company’s securities). The Investor covenants that it will not
engage in any transactions in the securities of the Company (including Short
Sales) prior to the time that the transactions contemplated by this Agreement
are publicly disclosed. The Investor agrees that it will not use any
of the Shares or Warrants acquired pursuant to this Agreement to cover any short
position in the Common Stock if doing so would be in violation of applicable
securities laws. For purposes hereof, “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act, whether or not against the box, and all
types of direct and indirect stock pledges, forward sales contracts, options,
puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule
16a-1(h) under the Exchange Act) and similar arrangements (including on a total
return basis), and sales and other transactions through non-US broker dealers or
foreign regulated brokers.
5. Survival of Representations,
Warranties and Agreements; Third Party
Beneficiary. Notwithstanding any investigation made by any
party to this Agreement or by the Placement Agent, all covenants, agreements,
representations and warranties made by the Company and the Investor herein will
survive the execution of this Agreement, the delivery to the Investor of the
Shares and Warrants included in the Units being purchased and the payment
therefor. The Placement Agent shall be a third party beneficiary with
respect to the representations, warranties and agreements of the Investor in
Section 4 hereof.
I-4
6. Notices. All
notices, requests, consents and other communications hereunder will be in
writing, will be mailed (a) if within the domestic United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile or (b) if delivered from outside the
United States, by International Federal Express or facsimile, and (c) will be
deemed given (i) if delivered by first-class registered or certified mail
domestic, three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express, two business days after so mailed
and (iv) if delivered by facsimile, upon electric confirmation of receipt and
will be delivered and addressed as follows:
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(a)
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if to the Company,
to:
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00 Xxxxx
Xxxxxx
Xxxxxxx,
Xxxxxxxxxxxx 00000
Attention: Xxxxx
X. Xxxxxxx, President and COO
Facsimile:
(000) 000-0000
with copies
to:
Xxxxxxxx
& Worcester LLP
Xxx Xxxx
Xxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention:
Xxxxx X. Xxxxxx, Xx., Esq.
Facsimile:
(000) 000-0000
(b) if
to the Investor, at its address on the Signature Page hereto, or at such other
address or addresses as may have been furnished to the Company in
writing.
7. Changes. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.
8. Headings. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and will not be deemed to be part of this
Agreement.
9. Severability. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein will not in any way be affected or
impaired thereby.
10. Governing Law. This
Agreement will be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other
jurisdiction.
11. Counterparts. This
Agreement may be executed in two or more counterparts, each of which will
constitute an original, but all of which, when taken together, will constitute
but one instrument, and will become effective when one or more counterparts have
been signed by each party hereto and delivered to the other
parties. The Company and the Investor acknowledge and agree that the
Company shall deliver its counterpart to the Investor along with the Prospectus
Supplement (or the filing by the Company of an electronic version thereof with
the Commission).
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12. Confirmation of
Sale. The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s signed counterpart to this Agreement,
together with the Prospectus Supplement (or the filing by the Company of an
electronic version thereof with the Commission), shall constitute written
confirmation of the Company’s sale of Units to such Investor.
13. Press Release. The
Company and the Investor agree that the Company shall issue a press release
announcing the Offering and disclosing all material information regarding
the Offering prior to the opening of the financial markets in New
York City on the business day immediately after the date hereof; provided that
the Company shall not issue any press release or other announcement naming the
Investor without the Investor’s prior approval.
14. Termination. In the
event that the Placement Agreement is terminated by the Placement Agent pursuant
to the terms thereof, this Agreement shall terminate without any further action
on the part of the parties hereto.
I-6
Exhibit
A
INVESTOR
QUESTIONNAIRE
Pursuant
to Section 3 of
Annex I to the
Agreement, please provide us with the following information:
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1.
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The
exact name that your Shares and Warrants are to be registered in.
You
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2.
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The
relationship between the Investor and the registered holder listed in
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3.
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The
mailing address of the registered holder listed
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4.
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The
Social Security Number or Tax Identification Number of the registered
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5.
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Name
of DTC Participant (broker-dealer at which the account or accounts to
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6.
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DTC
Participant Number:
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7.
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Name
of Account at DTC Participant being credited with the
Shares:
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8.
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Account
Number at DTC Participant being credited with the Shares:
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A-1
Exhibit
B
FORM OF
WARRANT
WARRANT
TO PURCHASE COMMON STOCK
To
Purchase [_______] Shares of Common Stock
Date of
Issuance: December 14, 2010
VOID AFTER DECEMBER 14,
2015
THIS
CERTIFIES THAT, for value received, [______________], or permitted registered
assigns (the “Holder”),
is entitled to subscribe for and purchase at the Exercise Price (defined below)
from American DG Energy Inc., a Delaware corporation (the “Company”), up to
[____________] shares of the common stock of the Company, par value $0.001 per
share (the “Common
Stock”). This warrant is one of a series of warrants issued by
the Company as of the date hereof (individually a “Warrant”; collectively, the
“Warrants”) pursuant to
those certain subscription agreements between the Company and the investors
identified therein, dated as of December 9, 2010 (collectively, the “Subscription
Agreement”).
1. DEFINITIONS. Capitalized
terms used herein but not otherwise defined herein shall have their respective
meanings as set forth in the Subscription Agreement. As used herein,
the following terms shall have the following respective meanings:
(A) “Eligible Market” means any of
the New York Stock Exchange, the NYSE Amex, The NASDAQ Global Market, The NASDAQ
Global Select Market or The NASDAQ Capital Market.
(B) “Exercise Period” shall mean
the period commencing six (6) months after the date hereof and ending 5:00 P.M.
New York City time on December 14, 2010, unless sooner terminated as provided
below.
(C) “Exercise Price” shall mean
$3.25 per share, subject to adjustment pursuant to Section 4
below.
(D) “Exercise Shares” shall mean
the shares of Common Stock issuable upon exercise of this Warrant.
(E) “Trading Day” shall mean (a)
any day on which the Common Stock is listed or quoted and traded on its primary
Trading Market, (b) if the Common Stock is not then listed or quoted and traded
on any Eligible Market, then a day on which trading occurs on the OTC Bulletin
Board (or any successor thereto), or (c) if trading does not occur on the OTC
Bulletin Board (or any successor thereto), any Business Day.
B-1
(F) “Trading Market” shall mean the
NYSE Amex or any other Eligible Market, or any national securities exchange,
market or trading or quotation facility on which the Common Stock is then listed
or quoted.
2. EXERCISE OF
WARRANT. The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Company at its address set forth on the
signature page hereto (or at such other address as it may designate by notice in
writing to the Holder):
(A) An
executed Notice of Exercise in the form attached hereto;
(B) Payment
of the Exercise Price either (i) in cash or by check, or (ii) pursuant to Section 2.1 below;
and
(C) This
Warrant.
Execution
and delivery of the Notice of Exercise shall have the same effect as
cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Exercise Shares, if
any.
Certificates
for Exercise Shares purchased hereunder shall be transmitted by the Company’s
transfer agent (the “Transfer
Agent”) to the Holder by crediting the account of the Holder’s prime
broker with the Depository Trust & Clearing Corporation through its Deposit
Withdrawal Agent Commission system if the Company is a participant in such
system, and otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise within three (3) business days from the
delivery to the Company of the Notice of Exercise, surrender of this Warrant and
payment of the aggregate Exercise Price as set forth above. This
Warrant shall be deemed to have been exercised on the date the latest of the
Warrant, Notice of Exercise and Exercise Price are received by the
Company.
The
person in whose name any certificate or certificates for Exercise Shares are to
be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
Subject
to Section 2.4,
to the extent permitted by law, the Company’s obligations to issue and deliver
Exercise Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any person or entity or any action to enforce
the same, or any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder or any other person or entity of any
obligation to the Company or any violation or alleged violation of law by the
Holder or any other person or entity, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Exercise Shares. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver Exercise Shares upon exercise of this Warrant as required
pursuant to the terms hereof.
B-2
2.1 NET
EXERCISE. If during the Exercise Period, the Holder is not
permitted to sell Exercise Shares pursuant to the Registration Statement (as
defined in the Subscription Agreement) or pursuant to another registration
statement that has been declared effective under Securities Act of 1933, as
amended, and the fair market value of one share of the Common Stock is greater
than the Exercise Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant by payment of cash or by check, the Holder may elect
to receive shares equal to the value (as determined below) of this Warrant (or
the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Notice of
Exercise in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
|
X =
Y (A-B)
|
|
——
|
|
A
|
Where X =
the number of Exercise Shares to be issued to the Holder
|
|
Y
=
|
the
number of shares of Common Stock purchasable under this Warrant or, if
only a portion of this Warrant is being exercised, the portion of this
Warrant being canceled (at the date of such
calculation)
|
|
|
A
=
|
the
fair market value of one share of the Company’s Common Stock (at the date
of such calculation)
|
|
|
B
=
|
Exercise
Price (as adjusted to the date of such
calculation)
|
For
purposes of the above calculation, the “fair market value” of one share of
Common Stock shall mean (i) the average of the closing sales prices for the
shares of Common Stock on the NYSE Amex or other Eligible Market where the
Common Stock is listed or traded as reported by Bloomberg Financial Markets (or
a comparable reporting service of national reputation selected by the Company
and reasonably acceptable to the Holder if Bloomberg Financial Markets is not
then reporting sales prices of such security) (collectively, “Bloomberg”) for the five (5)
consecutive trading days immediately prior to the Exercise Date, or (ii) if the
NYSE Amex is not the principal Trading Market for the shares of Common Stock,
the average of the reported sales prices reported by Bloomberg on the principal
Trading Market for the Common Stock during the same period, or, if there is no
sales price for such period, the last sales price reported by Bloomberg for such
period, or (iii) if neither of the foregoing applies, the last sales price of
such security in the over-the-counter market on the pink sheets or bulletin
board for such security as reported by Bloomberg, or if no sales price is so
reported for such security, the last bid price of such security as reported by
Bloomberg or (iv) if fair market value cannot be calculated as of such date on
any of the foregoing bases, the fair market value shall be as determined by the
Board of Directors of the Company in the exercise of its good faith
judgment.
B-3
2.2 ISSUANCE OF NEW
WARRANTS. Upon any partial exercise of this Warrant, the
Company, at its expense, will forthwith and, in any event within five business
days, issue and deliver to the Holder a new warrant or warrants of like tenor,
registered in the name of the Holder, exercisable during the balance of the
Exercise Period, in the aggregate, for the balance of the number of shares of
Common Stock remaining available for purchase under this Warrant.
2.3 PAYMENT OF TAXES AND
EXPENSES. The Company shall pay any recording, filing, stamp
or similar tax which may be payable in respect of any transfer involved in the
issuance of, and the preparation and delivery of certificates (if applicable)
representing, (i) any Exercise Shares purchased upon exercise of this Warrant
and/or (ii) new or replacement warrants in the Holder’s name or the name of any
transferee of all or any portion 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 issuance, delivery or registration of any
certificates for Exercise Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Exercise Shares upon exercise hereof.
2.4 EXERCISE LIMITATIONS;
HOLDER’S RESTRICTIONS. A Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance after
exercise, such Holder (together with such Holder’s affiliates), as set forth on
the applicable Notice of Exercise, would beneficially own in excess of 9.9% of
the number of shares of the Common Stock outstanding immediately after giving
effect to such issuance. For purposes of this Section 2.4, the
number of shares of Common Stock beneficially owned by such Holder and its
affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (A) exercise of the remaining, nonexercised portion
of this Warrant beneficially owned by such Holder or any of its affiliates and
(B) exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any other shares
of Common Stock or Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by such Holder
or any of its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2.4,
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act, it being acknowledged by a Holder that the Company is not
representing to such Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and such Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2.4 applies,
the determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of a Holder, and the submission of a
Notice of Exercise shall be deemed to be each Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by
such Holder) and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such
determination. For purposes of this Section 2.4, in
determining the number of outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company
or the Company’s Transfer Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request of a Holder, the
Company shall within two Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by such Holder or its affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. The provisions of this Section 2.4 may be
waived by such Holder, at the election of such Holder, upon not less than 61
days’ prior notice to the Company, and the provisions of this Section 2.4 shall
continue to apply until such 61st day (or such later date, as determined by such
Holder, as may be specified in such notice of waiver).
B-4
3. COVENANTS OF THE
COMPANY.
3.1 COVENANTS AS TO EXERCISE
SHARES. The Company covenants and agrees that all Exercise
Shares that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens (other than those imposed by the
Holder) and charges with respect to the issuance thereof. The Company
further covenants and agrees that the Company will at all times during the
Exercise Period, have authorized and reserved, free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant. If at any time during the
Exercise Period the number of authorized but unissued shares of Common Stock
shall not be sufficient to permit exercise of this Warrant, the Company will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes.
3.2 NO
IMPAIRMENT. Except and to the extent as waived or consented to
by the holder of the Warrants representing at least a majority of the number of
shares of Common Stock then subject to outstanding Warrants, the Company will
not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, 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 to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all such
action as may be necessary or appropriate in order to protect the exercise
rights of the Holder against impairment.
3.3 NOTICES OF RECORD DATE AND
CERTAIN OTHER EVENTS. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, the Company shall mail to the Holder, at least twenty (20)
days prior to the date on which any such record is to be taken for the purpose
of such dividend or distribution, a notice specifying such date. In
the event of any voluntary dissolution, liquidation or winding up of the
Company, the Company shall mail to the Holder, at least twenty (20) days prior
to the date of the occurrence of any such event, a notice specifying such
date. In the event the Company authorizes or approves, enters into
any agreement contemplating, or solicits stockholder approval for any
Fundamental Transaction, as defined in Section 6 herein, the
Company shall mail to the Holder, at least twenty (20) days prior to the date of
the occurrence of such event, a notice specifying such date.
B-5
4. ADJUSTMENT OF EXERCISE PRICE
AND SHARES.
(A) In
the event of changes in the outstanding Common Stock of the Company by reason of
stock dividends, split-ups, recapitalizations, reclassifications, combinations
or exchanges of shares, separations, reorganizations, liquidations,
consolidation, acquisition of the Company (whether through merger or acquisition
of substantially all the assets or stock of the Company), or the like, the
number, class and type of shares available under this Warrant in the aggregate
and the Exercise Price shall be correspondingly adjusted to give the Holder of
this Warrant, on exercise for the same aggregate Exercise Price, the total
number, class, and type of shares or other property as the Holder would have
owned had this Warrant been exercised prior to the event and had the Holder
continued to hold such shares until the event requiring
adjustment. The form of this Warrant need not be changed because of
any adjustment in the number of Exercise Shares subject to this
Warrant.
(B) If
at any time or from time to time the holders of all outstanding shares of Common
Stock of the Company (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) pursuant to a dividend or
distribution declared by the Company (other than a dividend or distribution
covered in Section
4(A) above), shall have received or become entitled to receive, without
payment therefor:
(I) Common
Stock or any shares of stock or other securities which are at any time directly
or indirectly convertible into or exchangeable for Common Stock, or any rights
or options to subscribe for, purchase or otherwise acquire any of the foregoing
by way of dividend or other distribution;
(II) any
cash paid or payable otherwise than as a cash dividend; or
(III) Common
Stock or additional stock or other securities or property (including cash) by
way of spinoff, split-up, reclassification, combination of shares or similar
corporate rearrangement, then and in each such case, the Holder hereof will,
upon the exercise of this Warrant, be entitled to receive, in addition to the
number of shares of Common Stock receivable thereupon, and without payment of
any additional consideration therefor, the amount of stock and other securities
and property (including cash in the cases referred to in clauses (II) and (III)
above) which such Holder would hold on the date of such exercise had such Holder
been the holder of record of such Common Stock as of the date on which holders
of Common Stock received or became entitled to receive such shares or all other
additional stock and other securities and property.
(C) Upon
the occurrence of each adjustment pursuant to this Section 4, the
Company at its expense will, at the written request of the Holder, promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Exercise Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the
Company will promptly deliver a copy of each such certificate to the Holder and
to the transfer agent for the Warrants, if other than the
Company.
B-6
5. FRACTIONAL
SHARES. No fractional shares shall be issued upon the exercise
of this Warrant as a consequence of any adjustment pursuant
hereto. All Exercise Shares (including fractions) issuable upon
exercise of this Warrant may be aggregated for purposes of determining whether
the exercise would result in the issuance of any fractional
share. If, after aggregation, the exercise would result in the
issuance of a fractional share, the Company shall, in lieu of issuance of any
fractional share, pay the Holder otherwise entitled to such fraction a sum in
cash equal to the product resulting from multiplying the then current fair
market value of an Exercise Share by such fraction.
6. FUNDAMENTAL
TRANSACTIONS. If, at any time while this Warrant is
outstanding, (i) the Company effects any merger of the Company with or into
another entity and the Company is not the surviving entity, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (iii) any tender offer or exchange offer (whether by the
Company or by another individual or entity and approved by the Company) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares of Common Stock for other securities, cash or property or
(iv) the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property (other than
as a result of a subdivision or combination of shares of Common Stock covered by
Section 4
above) (in any such case, a “Fundamental Transaction”),
then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive the number of shares of Common Stock of the successor or
acquiring corporation or of the Company and any additional consideration (the
“Alternate
Consideration”) receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event (disregarding any limitation on exercise
contained herein solely for the purpose of such determination). For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration. Notwithstanding anything to the
contrary, in the event of a Fundamental Transaction, then the Company or any
successor entity shall at the Holder’s option, exercisable at any time
concurrently with or within thirty (30) days after the consummation of the
Fundamental Transaction, purchase this Warrant from the Holder by paying to the
Holder an amount of cash equal to the value of this Warrant as determined in
accordance with the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg L.P. using (i) a price per share of Common Stock equal to
the Volume-Weighted Average Price of the Common Stock for the Trading Day
immediately preceding the date of consummation of the applicable Fundamental
Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of the date of
consummation of the applicable Fundamental Transaction and (iii) an expected
volatility equal to the lesser of (1) the thirty (30) day volatility obtained
from the “HVT” function on Bloomberg L.P. determined as of the end of the
Trading Day immediately following the public announcement of the applicable
Fundamental Transaction or (2) 70%. The terms of any agreement pursuant to which
a Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 6 and
ensuring that this Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
B-7
7. NO STOCKHOLDER
RIGHTS. Other than as provided in Section 3.3 or
otherwise herein, this Warrant in and of itself shall not entitle the Holder to
any voting rights or other rights as a stockholder of the Company.
8. TRANSFER OF
WARRANT. Subject to applicable laws and the restriction on
transfer set forth in the Subscription Agreement, this Warrant and all rights
hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder. The transferee shall
sign an investment letter in form and substance reasonably satisfactory to the
Company and its counsel. Any proposed transfer of all or any portion of this
Warrant in violation of the provisions of this warrant or the Subscription
Agreement shall be null and void. Upon surrender of this Warrant and
delivery of an assignment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the transferee or transferees, as applicable, and in
the denomination or denominations specified in such instrument of assignment,
and shall issue to the transferor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled.
9. LOST, STOLEN, MUTILATED OR
DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated
or destroyed, the Company may, on such terms as to indemnity or otherwise as it
may reasonably impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination and tenor as
this Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall
constitute an original contractual obligation of the Company.
10. NOTICES,
ETC. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to
the Company at the address listed on the signature page hereto and to Holder at
the applicable address set forth on the applicable signature page to
the Subscription Agreement or at such other address as the Company or Holder may
designate by ten (10) days advance written notice to the other parties
hereto.
B-8
11. ACCEPTANCE. Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement to
all of the terms and conditions contained herein.
12. GOVERNING
LAW. This Warrant and all rights, obligations and liabilities
hereunder shall be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other
jurisdiction.
13. AMENDMENT OR
WAIVER. Any term of this Warrant may be amended or waived
(either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and the holders of the
Warrants representing at least two-thirds of the number of shares of Common
Stock then subject to outstanding Warrants. Notwithstanding the
foregoing, (a) this Warrant may be amended and the observance of any term
hereunder may be waived without the written consent of the Holder only in a
manner which applies to all Warrants in the same fashion and (b) the number of
Exercise Shares subject to this Warrant and the Exercise Price of this Warrant
may not be amended, and the right to exercise this Warrant may not be waived,
without the written consent of the Holder. The Company shall give
prompt written notice to the Holder of any amendment hereof or waiver hereunder
that was effected without the Holder’s written consent. No waivers of
any term, condition or provision of this Warrant, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]
B-9
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly
authorized officer as of December __, 2010.
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
00
Xxxxx Xxxxxx
|
|
|
Xxxxxxx,
Xxxxxxxxxxxxx
00000
|
|
B-10
NOTICE OF
EXERCISE
(1) [_] The
undersigned hereby elects to purchase [__________] shares of the common stock,
par value $0.001 (the “Common
Stock”), of AMERICAN DG ENERGY INC. (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.
[_] The
undersigned hereby elects to purchase [___________] shares of Common Stock of
the Company pursuant to the terms of the net exercise provisions set forth in
Section 2.1 of
the attached Warrant, and shall tender payment of all applicable transfer taxes,
if any.
(2) Please
issue the certificate for shares of Common Stock in the name of, and pay any
cash for any fractional share to:
|
Print
or type name
|
|
Social
Security or other Identifying Number
|
|
Street
Address
|
|
City
State Zip
Code
|
(3) If
such number of shares shall not be all the shares purchasable upon the exercise
of the Warrants evidenced by this Warrant, a new warrant certificate for the
balance of such Warrants remaining unexercised shall be registered in the name
of and delivered to:
Please
insert social security or other identifying
number: ———————
(Please
print name and address)
Dated:
|
(Signature)
|
|
(Print
name)
|
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
|
Name:
|
|
|
(Please
Print)
|
|
|
Address:
|
|
|
(Please
Print)
|
|
Dated:
|
|
Holder’s Signature:
|
|
Holder’s Address:
|
NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
