EXHIBIT 10.5
EXECUTION COPY
THIS WARRANT AND THE SHARES OF CAPITAL STOCK ISSUED UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH
THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE
SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM
No. W-1 Right to Purchase up to 3,000,000
Shares of Voting Common Stock of
World Energy Solutions, Inc.
WORLD ENERGY SOLUTIONS, INC.
VOTING COMMON STOCK PURCHASE WARRANT
WORLD ENERGY SOLUTIONS, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received MASSACHUSETTS CAPITAL RESOURCE
COMPANY, or assigns, is entitled, subject to the terms set forth below, to
purchase from the Company, at a purchase price per share of forty cents ($0.40)
(such purchase price per share as adjusted from time to time as herein provided
is referred to herein as the "Purchase Price"), at any time or from time to time
before 5:00 P.M., Boston time, on June 30, 2013, or such later time as may be
specified in Section 19 hereof, (A) 600,000 fully paid and nonassessable shares
of Voting Common Stock of the Company, plus (B) an additional 2,400,000 fully
paid and nonassessable shares of Voting Common Stock of the Company in the event
that the Company shall not, on or before December 31, 2006, consummate one or
more underwritten public offering of its Common Stock with aggregate gross
proceeds to the Company of at least $5,000,000 and shall not list such Common
Stock on a recognized national or regional stock exchange (which shall include
without limitation for all purposes of this Agreement any of the Alternative
Investment Market (AIM) in London, the Canadian CNQ stock exchange or the
Toronto TSX Venture stock exchange. The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein.
This Warrant is one of the Common Stock Purchase Warrants (the "Warrants")
evidencing the right to purchase shares of Voting Common Stock of the Company,
issued pursuant to a certain Note and Warrant Purchase Agreement (the
"Agreement"), dated as of November 7, 2005, between the Company and
Massachusetts Capital Resource Company, a copy of which is on file at the
principal office of the Company and the holder of this Warrant shall be entitled
to all of the benefits of the Agreement, as provided therein.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include World Energy Solutions, Inc.
and any corporation which shall succeed or assume the obligations of the
Company hereunder.
(b) The term "Common Stock" includes the Company's Voting Common
Stock, $0.0001 par value per share, as authorized on the date of the
Agreement and any other securities into which or for which any of such
Common Stock may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holders of the Warrants at any time
shall be entitled to receive, or shall have received, on the exercise of
the Warrants, in lieu of or in addition to Common Stock, or which at any
time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to section 5 or
otherwise.
1. EXERCISE OF WARRANT.
1.1. FULL EXERCISE. This Warrant may be exercised in full by the
holder hereof by surrender of this Warrant, with the form of subscription at the
end hereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, in cash or by certified or official bank check payable
to the order of the Company, in the amount obtained by multiplying the number of
shares of Common Stock for which this Warrant is then exercisable by the
Purchase Price then in effect.
1.2. PARTIAL EXERCISE. This Warrant may be exercised in part by
surrender of this Warrant in the manner and at the place provided in subsection
1.1 except that the amount payable by the holder on such partial exercise shall
be the amount obtained by multiplying (a) the number of shares of Common Stock
designated by the holder in the subscription at the end hereof by (b) the
Purchase Price then in effect. On any such partial exercise the Company at its
expense will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock for which such Warrant or Warrants may still be
exercised.
1.3. PAYMENT BY NOTES SURRENDER. Notwithstanding the payment
provisions of subsections 1.1 and 1.2, all or part of the payment due upon
exercise of this Warrant in full or in part may be made by the surrender by such
holder to the Company of any of the Company's Notes issued pursuant to the
Agreement and such Notes so surrendered shall be credited against such payment
in an amount equal to the principal amount thereof plus premium (if any) and
accrued interest to the date of surrender.
1.4. NET ISSUE ELECTION. The holder hereof may elect to receive,
without the payment by such holder of any additional consideration, shares equal
to the value of this Warrant or any portion hereof by the surrender of this
Warrant or such portion to the Company, with the form of subscription at the end
hereof duly executed by such xxxxxx, at the office of the Company. Thereupon,
the Company shall issue to such holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the following formula:
X=Y(A-B)
------
A
where X = the number of shares to be issued to such holder pursuant to this
subsection 1.4.
Y = the number of shares covered by this Warrant in respect of which the
net issue election is made pursuant to this subsection 1.4.
A = the fair market value of one share of Common Stock, as determined in
good faith by the Board of Directors of the Company, as at the time the net
issue election is made pursuant to this subsection 1.4.
B = the Purchase Price in effect under this Warrant at the time the net
issue election is made pursuant to this subsection 1.4.
The Board of Directors of the Company shall promptly respond in writing to an
inquiry by the holder hereof as to the fair market value of one share of Common
Stock.
1.5. COMPANY ACKNOWLEDGMENT. The Company will, at the time of the
exercise of the Warrant, upon the request of the holder hereof acknowledge in
writing its continuing obligation to afford to such holder any rights to which
such holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights.
1.6. TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or trust
company shall have been appointed as trustee for the holders of the Warrants
pursuant to subsection 4.2, such bank or trust company shall have all the powers
and duties of a warrant agent appointed pursuant to section 12 and shall accept,
in its own name for the account of the Company or such successor person as may
be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
section 1.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 10 days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the holder hereof, or, subject to Section 14 below, as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock (or Other Securities) to which such holder
shall be entitled on such exercise, plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share, together with any
other stock or other securities and property (including cash, where applicable)
to which such holder is entitled upon such exercise pursuant to section 1 or
otherwise.
3. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK, PROPERTY, ETC.;
RECLASSIFICATION, ETC. In case at any time or from time to time, the holders of
Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in subsection 5.4), then and in each such case the holder of this Warrant,
on the exercise hereof as provided in section 1, shall be entitled to receive
the amount of stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this section 3) which such
holder would hold on the date of such exercise if on the date hereof he had been
the holder of record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from the date hereof
to and including the date of such exercise, retained such shares and all such
other or additional stock and other securities and property (including cash in
the cases referred to in subdivisions (b) and (c) of this section 3) receivable
by him as aforesaid during such period, giving effect to all adjustments called
for during such period by sections 4 and 5.
4. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
4.1. REORGANIZATIONS, MERGERS, ETC. In case at any time or from time
to time, the Company shall (a) effect a reorganization, (b) consolidate with or
merge into any other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, the
holder of this Warrant, on the exercise hereof as provided in section 1 at any
time after the consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall receive, in
lieu of the Common Stock (or Other Securities) issuable on such exercise prior
to such consummation or such effective date, the stock and other securities and
property (including cash) to which such holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be, if
such holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in sections 3 and 5.
4.2. DISSOLUTION. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the effective date
of such dissolution pursuant to this section 4 to a bank or trust company having
its principal office in Boston, Massachusetts, as trustee for the holder or
holders of the Warrants.
4.3. CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of
stock and other securities and property receivable on the exercise of this
Warrant after the consummation of such reorganization, consolidation or merger
or the effective date of dissolution following any such transfer, as the case
may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in section 6.
5. ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN THE PURCHASE
PRICE IN EFFECT.
5.1. GENERAL. If the Company shall at any time or from time to time,
issue any additional shares of Common Stock (other than shares of Common Stock
excepted from the provisions of this section 5 by subsection 5.4 or 5.5) without
consideration or for a net consideration per share less than the Purchase Price
in effect immediately prior to such issuance, then, and in each such case: (a)
the Purchase Price shall be lowered to an amount determined by multiplying such
Purchase Price then in effect by a fraction:
(1) the numerator of which shall be (a) the number of shares
of Common Stock outstanding (on a fully-diluted, as converted basis, but
including only Common Stock (both voting and non-voting), the number of
shares of Common Stock into which all outstanding preferred stock of the
Company is convertible and all shares issuable pursuant to outstanding
options and warrants of the Company which have a conversion price or
exercise price equal to or greater than the then Purchase Price)
immediately prior to the issuance of such additional shares of Common
Stock, plus (b) the number of shares of Common Stock which the net
aggregate consideration, if any, received by the Company for the total
number of such additional shares of Common Stock so issued would purchase
at the Purchase Price in effect immediately prior to such issuance, and
(2) the denominator of which shall be (a) the number of
shares of Common stock outstanding (on a fully-diluted, as converted basis,
but including only Common Stock (both voting and non-voting), the number of
shares of Common Stock into which all outstanding preferred stock of the
Company is convertible and all shares issuable pursuant to outstanding
options and warrants of the Company which have a conversion price or
exercise price equal to or greater than the then Purchase Price)
immediately prior to the issuance of such additional shares of Common Stock
plus (b) the number of such additional shares of Common Stock so issued;
and (b) the holder of this Warrant shall thereafter, on the exercise hereof as
provided in section 1, be entitled to receive the number of shares of Common
stock determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this subsection 5.1) be issuable on such
exercise by the fraction of which (i) the numerator is the Purchase Price which
would otherwise (but for the provisions of this subsection 5.1) be in effect,
and (ii) the denominator is the Purchase Price in effect on the date of such
exercise.
5.2. DEFINITIONS, ETC. For purposes of this section 5 and of section
7:
The issuance of any warrants, options or other subscription or
purchase rights with respect to shares of Common Stock and the issuance of any
securities convertible into or exchangeable for shares of Common Stock (or the
issuance of any warrants, options or any rights with respect to such convertible
or exchangeable securities) shall be deemed an issuance at such time of such
Common Stock if the Net Consideration Per Share which may be received by the
Company for such Common Stock (as hereinafter determined) shall be less than the
Purchase Price at the time of such issuance and, except as hereinafter provided,
an adjustment in the Purchase Price and the number of shares of Common Stock
issuable upon exercise of this Warrant shall be made upon each such issuance in
the manner provided in subsection 5.1. Any obligation, agreement or undertaking
to issue warrants, options, or other subscription or purchase rights at any time
in the future shall be deemed to be an issuance at the time such obligation,
agreement or undertaking is made or arises. No adjustment of the Purchase Price
and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be made under subsection 5.1 upon the issuance of any shares of Common
Stock which are issued pursuant to the exercise of any warrants, options or
other subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any convertible securities if any adjustment
shall previously have been made upon the issuance of any such warrants, options
or other rights or upon the issuance of any convertible securities (or upon the
issuance of any warrants, options or any rights therefor) as above provided. Any
adjustment of the Purchase Price and the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to this subsection 5.2 which
relates to warrants, options or other subscription or purchase rights with
respect to shares of Common Stock shall be disregarded if, as, and when all of
such warrants, options or other subscription or purchase rights expire or are
cancelled without being exercised, so that the Purchase Price effective
immediately upon such cancellation or expiration shall be equal to the Purchase
Price in effect at the time of the issuance of the expired or cancelled
warrants, options or other subscriptions or purchase rights, with such
additional adjustments as would have been made to that Purchase Price had the
expired or cancelled warrants, options or other subscriptions or purchase rights
not been issued. For purposes of this subsection 5.2, the "Net Consideration Per
Share" which may be received by the Company shall be determined as follows:
(A) The "Net Consideration Per Share" shall mean the amount equal
to the total amount of consideration, if any, received by the Company for
the issuance of such warrants, options, subscriptions, or other purchase
rights or convertible or exchangeable securities, plus the minimum amount
of consideration, if any, payable to the Company upon exercise or
conversion thereof, divided by the aggregate number of shares of Common
Stock that would be issued if all such warrants, options, subscriptions, or
other purchase rights or convertible or exchangeable securities were
exercised, exchanged or converted.
(B) The "Net Consideration Per Share" which may be received by
the Company shall be determined in each instance as of the date of issuance
of warrants, options, subscriptions or other purchase rights, or
convertible or exchangeable securities without giving effect to any
possible future price adjustments or rate adjustments which
may be applicable with respect to such warrants, options, subscriptions or
other purchase rights or convertible securities.
For purposes of this section 5, if a part or all of the consideration
received by the Company in connection with the issuance of shares of the
Common Stock or the issuance of any of the securities described in this
section 5, consists of property other than cash, such consideration shall
be deemed to have the same value as shall be determined in good faith by
the Board of Directors of the Company.
This subsection 5.2 shall not apply under any of the circumstances
described in subsection 5.4.
5.3. DILUTION IN CASE OF OTHER SECURITIES. In case any Other
Securities shall be issued or sold, or shall become subject to issue upon the
conversion or exchange of any stock (or Other Securities) of the Company (or any
other issuer of Other Securities or any other person referred to in section 4)
or to subscription, purchase or other acquisition pursuant to any rights or
options granted by the Company (or such other issuer or person), for a
consideration per share such as to dilute the purchase rights evidenced by this
Warrant, the computations, adjustments and readjustments provided for this
section 5 with respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable on the exercise of the Warrants, so as
to protect the holders of the Warrants against the effect of such dilution.
5.4. EXTRAORDINARY EVENTS. In the event that the Company shall (i)
issue additional shares of the Common Stock as a dividend or other distribution
on outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock, or (iii) combine its outstanding shares of the Common Stock into a
smaller number of shares of the Common Stock, then, in each such event, the
Purchase Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this subsection 5.4. The
holder of this Warrant shall thereafter, on the exercise hereof as provided in
section 1, be entitled to receive that number of shares of Common Stock
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this subsection 5.4) be issuable on such
exercise by a fraction of which (i) the numerator is the Purchase Price which
would otherwise (but for the provisions of this subsection 5.4) be in effect,
and (ii) the denominator is the Purchase Price in effect on the date of such
exercise.
5.5. EXCEPTIONS. The following issuances shall be exempt from this
Section 5:
(a) shares of capital stock of the Company issued by reason of a
dividend, stock split, split-up or other distribution on shares of capital
stock of the Company; and
(b) up to an aggregate of 15,000,000 shares of common stock (voting
and/or non-voting) of the Company or options or warrants therefore issued
to employees or directors of, or consultants or advisors to, the Company or
any of its subsidiaries pursuant to a plan, agreement or arrangement
approved by the Board of Directors of the Company; less the 6,792,135
shares which has been issued upon exercise of options granted under that
Plan.
6. NO DILUTION OR IMPAIRMENT. 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 of the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of the
Warrants against impairment.
7. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable on the exercise of the Warrants, the Company will compute such
adjustment or readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by the
Company for any additional shares of Common Stock (or Other Securities) issued
or sold or deemed to have been issued or sold, (b) the number of shares of
Common Stock (or Other Securities) outstanding or deemed to be outstanding, and
(c) the Purchase Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to each holder of a Warrant, and
will, on the written request at any time of any holder of a Warrant, furnish to
such holder a like certificate setting forth the Purchase Price at the time in
effect and showing how it was calculated.
8. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Company of a record of the holders of any
class or securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or
any transfer of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities, or any right or option to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities (other than the issue of Common Stock on the
exercise of the Warrants),
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and stating
the amount and character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall be mailed at least 10 business days
prior to the date specified in such notice on which any such action is to be
taken.
9. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrants, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrants.
10. EXCHANGE OF WARRANTS. On surrender for exchange of any Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or, subject to Section 14 below, as such
holder (on payment by such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant or Warrants so
surrendered.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of any Warrant and,
in the case of any such loss, theft or destruction of any Warrant, on delivery
of an indemnity agreement or security reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
12. WARRANT AGENT. The Company may, by written notice to each holder of a
Warrant, appoint an agent having an office in either Boston, Massachusetts or
New York, New York for the purpose of issuing Common Stock (or Other Securities)
on the exercise of the Warrants pursuant to section 1, exchanging Warrants
pursuant to section 10, and replacing Warrants pursuant to section 11, or any of
the foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.
13. REMEDIES. The Company stipulates that the remedies at law of the holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
14. NEGOTIABILITY, ETC.
(a) This Warrant and the shares issued upon exercise hereof shall
not be sold or transferred unless either (i) they first shall have been
registered under the Securities Act of 1933, as amended (the "Act"), or
(ii) the Company first shall have been furnished with an opinion of legal
counsel of the registered holder, reasonably satisfactory to the Company,
to the effect that such sale or transfer is exempt from the registration
requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a registered holder which
is a corporation to a wholly owned subsidiary of such corporation or to a
parent of such corporation, a transfer by a registered holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, or to its nominee or from such nominee to its
beneficial owner, if the transferee agrees in writing to be subject to the
terms of this Section 14, or (ii) a transfer made in accordance with Rule
144 under the Act.
(c) Each certificate representing shares issued upon exercise of
this Warrant shall bear a legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be offered, sold or otherwise transferred, pledged or hypothecated
unless and until such securities are registered under such Act or an
opinion of counsel satisfactory to the Company is obtained to the
effect that such registration is not required."
The foregoing legend shall be removed from the certificates representing any
such shares, at the request of the holder thereof, at such time as they become
eligible for resale pursuant to Rule 144(k) under the Act.
(d) This Warrant is issued upon the following terms, to all of
which each holder or owner hereof by the taking hereof consents and agrees
that subject to the foregoing:
(i) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of assignment at the
end hereof) and delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery;
(ii) any person in possession of this Warrant properly
endorsed is authorized to represent himself as absolute owner hereof and is
empowered to transfer absolute title hereto by endorsement and delivery
hereof to a bona fide purchaser hereof for value; each prior taker or owner
waives and renounces all of his equities or rights in this Warrant in favor
of each such bona fide purchaser, and each such bona fide purchaser shall
acquire absolute title hereto and to all rights represented hereby; and
(iii) until this Warrant is transferred on the books of
the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
15. NOTICES, ETC. All notices and other communications from the Company to
the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until any such holder furnishes to the
Company an address, then to, and at the address of, the last holder of this
Warrant who has so furnished an address to the Company.
16. LOCK-UP. If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, the registered holder
of this Warrant shall agree to enter into the form of lock-up agreement provided
by such underwriters to holders of capital stock of the Company providing that
such registered holder shall not sell any shares of capital stock of capital
stock of the Company without the consent of such underwriters for a period of
not more than 180 days following the effective date of the registration
statement relating to such offering; provided, however, that all persons
entitled to registration rights with respect to shares of Common Stock, all
other persons selling shares of Common Stock in such offering, all persons
holding in excess of 5% of the capital stock of the Company on a fully diluted
basis and all officers and directors of the Company shall also have agreed not
to sell publicly their Common Stock under circumstances and terms no more
favorable than those set forth in this Section 16.
17. The registered holder represents and warrants to the Company as
follows:
(a) Investment. The registered holder is acquiring the Warrant
and the shares of Common Stock issuable upon exercise hereof, for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same; and the registered holder has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof. The registered holder acknowledges that
an investment in this Warrant and the securities acquirable pursuant to this
Warrant is speculative and involves a high degree of risk and that a purchase of
such securities should only be made by persons who can afford the entire loss of
their investment. The registered holder is an "accredited investor" as defined
in Rule 501(a) under the Act. The registered holder further understands that
this Warrant has not been registered under the Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of the registered holder's investment intent as expressed herein.
(b) Authority. The registered holder has full power and authority
to enter into and to perform this Agreement in accordance with its terms. Any
registered holder that is a corporation, partnership or trust represents that it
has not been organized, reorganized or recapitalized specifically for the
purpose of investing in the Company.
(c) Experience. The registered holder has carefully reviewed the
representations concerning the Company contained in this Warrant and has made
detailed inquiry concerning the Company, its business and its personnel; the
officers of the Company have made available to the registered holder any and all
written information which it has requested and have answered to such registered
holder's satisfaction all inquiries made by the registered holder; and the
registered holder has sufficient knowledge and experience in finance and
business that it is capable of evaluating the risks and merits of its investment
in the Company and the registered holder is able financially to bear the risks
thereof.
18. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. This Warrant is being executed as an instrument
under seal. The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19. EXPIRATION; AUTOMATIC EXERCISE. The right to exercise this Warrant
shall expire at 5:00 P.M., Boston time, on the later of (i) June 30, 2013 or
(ii) at such time as all principal and interest on the Notes (as defined in the
Agreement) is paid in full. Notwithstanding the foregoing, this Warrant shall
automatically be deemed to be exercised in full pursuant to the provisions of
subsection 1.4 hereof, without any further action on behalf of the holder
hereof, immediately prior to the time this Warrant would otherwise expire
pursuant to the preceding sentence.
DATED: NOVEMBER 7, 2005 WORLD ENERGY SOLUTIONS, INC.
BY /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
XXXXXXX XXXXXXXXX,
CHIEF EXECUTIVE OFFICER
[Signature Page for Voting Common Stock Purchase Warrant]
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO WORLD ENERGY SOLUTIONS, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, ________ shares
of Common Stock of WORLD ENERGY SOLUTIONS, INC. and herewith makes payment of
$________ therefor, and requests that the certificates for such shares be issued
in the name of, and delivered to ________, whose address is ________.
Dated: ----------------------------------------
----------------- (Signature must conform to name of
holder as specified on the face of the
Warrant)
----------------------------------------
(Address)
----------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ________ the right represented by the within Warrant to purchase ________
shares of Common Stock of WORLD ENERGY SOLUTIONS, INC. to which the within
Warrant relates, and appoints ______________________ Attorney to transfer such
right on the books of WORLD ENERGY SOLUTIONS, INC. with full power of
substitution in the premises.
Dated: November 7, 2005 ----------------------------------------
(Signature must conform to name of
holder as specified on the face of the
Warrant)
----------------------------------------
(Address)
Signed in the presence of:
------------------------------------
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