WARRANT AGREEMENT
Exhibit 10.3
THIS
WARRANT AGREEMENT, dated June 11, 2010 (this “Warrant Agreement”),
is entered into by COMVERGE,
INC., a Delaware corporation (“Comverge”);
and PROJECTS INTERNATIONAL,
INC., a District of Columbia corporation (“PI”).
BACKGROUND
Comverge
and PI have determined that they would benefit from a strategic alliance
arrangement between their respective organizations under which the Parties will
identify and jointly pursue opportunities for demand response, smartgrid and
energy efficiency projects in certain countries. To that end, the
Parties have entered into a Joint Venture Master Agreement, dated as of the date
hereof (the “Master
Agreement”). The Parties have agreed that Comverge will
issue to PI or its designated Affiliate warrants to purchase Common Stock of
Comverge from time to time, on the terms and conditions set forth in this
Warrant Agreement, based upon PI’s successful performance of its obligations
under the Master Agreement.
Defined
terms used in this Warrant Agreement have the meaning specified in Exhibit
A (Defined Terms) to the Master Agreement (unless otherwise defined in
this Warrant Agreement).
1. Purpose. If PI
achieves the performance objectives set forth in this Warrant Agreement, then
Comverge will issue to PI (or its designated Affiliate) warrants to purchase
shares of Comverge common stock, at the times and for the number of shares
specified in this Warrant Agreement. Such warrants will be in the
form attached as Exhibit
A to this Warrant Agreement and will be subject to the terms and
conditions set forth in this Warrant Agreement and in the form of warrant
attached as Exhibit
A to this Warrant Agreement.
Warrants
will be issued to PI or its designated Affiliate in tranches, for successfully
securing Eligible Contracts in the Territory pursuant to the Master Agreement,
according to formula specified in Section 6 of this Warrant
Agreement. Each Warrant would entitle the holder to purchase shares
of Comverge common stock during the term of the Warrant, subject to the terms
and conditions of this Warrant Agreement and the Warrant. For
purposes of this Warrant Agreement, an “Eligible Contract”
means a binding Customer Contract for a Project in the Territory which (i) has
been approved by Comverge (which approval will not be unreasonably withheld or
delayed), (ii) has received all required Governmental Authority and regulatory
approvals, and (iii) is not subject to any conditions to its
effectiveness.
2. Shares of Comverge Stock Subject to
Warrants. Comverge will issue Warrants to purchase up to a
maximum aggregate of 1,200,000 shares of Comverge common stock, recalculated for
any stock split(s) occurring after the Effective Date of the Master
Agreement.
3. Warrant Exercise
Price. The exercise price under each Warrant shall be equal to
$16.24.
4. Warrant
Tranches. Warrants will be earned and issued in increments of
120,000 shares upon the attainment of the appropriate threshold, as described in
Section 6 of this Warrant Agreement.
5. Minimum Performance
Metric. Warrants will be earned by PI if PI is successful
during the first three (3) years of the Master Agreement in securing a
Qualifying Contract resulting in a minimum of 100 Megawatts of delivered load
reduction over the term of the Qualifying Contract (the “Minimum Performance
Metric”).
6. Formula For Awarding Additional
Warrants Above the Minimum Performance Metric. Pursuant to the
table below, Warrants will be earned by PI if PI is successful in securing
Qualifying Contracts in increments of 120,000 shares for every 100 Megawatts of
delivered load reduction contracts, in aggregate, above the Minimum Performance
Metric. Warrants are earned at the rate of 1,200 shares for every one
(1) Megawatt of delivered load reduction in Qualifying Contracts, in aggregate,
above the Minimum Performance Metric. Warrants earned hereunder will
be fully vested when issued.
|
Warrant
Tranche
|
Shares
Earned
|
Cumulative
Performance Metric Attained Aggregate Megawatts of Project
Contracts |
|
0
|
<
100
|
|
|
1
|
120,000
|
100
|
|
2
|
120,000
|
200
|
|
3
|
120,000
|
300
|
|
4
|
120,000
|
400
|
|
5
|
120,000
|
500
|
|
6
|
120,000
|
600
|
|
7
|
120,000
|
700
|
|
8
|
120,000
|
800
|
|
9
|
120,000
|
900
|
|
10
|
120,000
|
1000
|
|
Total
|
1,200,000
|
1000
|
7. Warrant
Vesting. Warrants will be earned and issued each time that a
new threshold has been reached on a cumulative basis. For example,
assume that PI has previously delivered Qualifying Contracts with a cumulative
425 Megawatts of delivered load reduction. At that point, PI would
have been issued Warrants for an aggregate of 480,000 shares of Common Stock
(Tranche 4). If PI then delivers a new Qualifying Contract with 150
Megawatts of delivered load reduction (for a cumulative total of 575 Megawatts),
Comverge would issue an additional Warrant for 120,000
shares. Qualifying Contracts must be entered into on or before the
fifth (5th)
anniversary of the Effective Date of the Master Agreement in order to qualify
under this Warrant Agreement. Warrants earned hereunder will be fully
vested when issued.
8. Warrant
Term. Warrants will be exercisable for up to five (5) years
from the Effective Date of the Master Agreement.
9. Transferability. Warrants
will be non-transferable except to PI’s designated Affiliate.
10. Partial Warrant Issuance.
While the Warrants are issued in tranches of 120,000 shares, on two (2)
occasions over the five (5) year term, PI may request a partial issuance of
Warrants for pro-rata Warrants earned above one Warrant tranche, but below the
next Warrant tranche. In the example in Section 7 above, PI could
request that Comverge issue a Warrant for 75 Megawatts (the excess above the
prior tranche of 500 Megawatts). If so requested, Comverge would
issue a Warrant for 90,000 shares (1,200 shares x 75 Megawatts). Such
partial issuance of Warrants will automatically reduce the next earned Warrant
tranche of 120,000 shares. Further, at the end of the five (5) year
Warrant vesting term, Comverge will issue Warrants for any partial tranche
earned at the end of the Warrant vesting term, at the rate of 1,200 shares per
Megawatt of Qualifying Contracts.
11. No Registration Rights. The
Warrants, and any shares acquired upon exercise of Warrants, will be issued
pursuant to appropriate federal and state securities laws exemptions, and
Comverge will have no obligation to register the Warrants or any shares acquired
upon exercise of the Warrants.
12. Termination. The
obligation to issue Warrants will terminate upon the fifth anniversary of the
Effective Date of the Master Agreement or such earlier date specified in the
Master Agreement.
13. Exercise of Option
Rights.
(a) If
Comverge exercises its rights under Section 12 of the Master Agreement, then the
obligation of Comverge to issue any additional Warrants under this Warrant
Agreement will terminate.
(b) If either
Party exercises its option rights under Section 13 of the Master Agreement, then
the obligation of Comverge to issue any additional Warrants under this Warrant
Agreement will terminate.
14. Notices. All
notices, certificates, acknowledgements, reports, and other communications to a
Party under this Warrant Agreement must be in writing and will be deemed duly
delivered upon receipt at the address for such party as follows, or to such
other address as such party may, by written notice provided in accordance with
this Section designate to the other.
0000
Xxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxxx,
Xxxxxxx 00000
Attention: Chief
Financial Officer
with a
copy to :
0000
Xxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxxx,
Xxxxxxx 00000
Attention: General
Counsel
and
King
& Spalding LLP
0000
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxx
B. Projects
International, Inc.
000
00xx
Xxxxxx XX
Xxxxx
0000
Xxxxxxxxxx,
X.X. 00000
Attention:
Chief Financial Officer
15. Assignment. This
Warrant Agreement may not be assigned or otherwise transferred by PI in whole or
in part, without the express prior written consent of Comverge.
16. Amendment and
Waiver. This Warrant Agreement may not be amended or modified,
nor will any waiver of any right under this Warrant Agreement be effective,
unless set forth in a document executed by duly authorized representative(s) of
all Parties. The waiver of any breach of any term, covenant, or
condition in this Warrant Agreement will not be deemed to be a waiver of such
term, covenant, or condition for any subsequent breach of the same.
17. Entire
Agreement. This Warrant Agreement, the Warrants issued in the
form attached as Exhibit A to this Warrant Agreement, together with the Master
Agreement and its exhibits, contain all of the agreements, representations, and
understandings of the Parties and supersede and replaces any and all previous
understandings, commitments, or agreements, oral or written, related to the
subject matter hereof and thereof.
18. Governing Law. This
Warrant Agreement and its enforcement will be governed by, and interpreted in
accordance with, the laws of the State of Delaware, without regard to
conflict-of-law principles.
19. Consent to
Jurisdiction. Each party hereby irrevocably agrees that any
legal dispute with respect to this warrant agreement shall be brought only to
the exclusive jurisdiction of the courts of the State of Delaware or the federal
courts located in the State of Delaware, and each party hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that they any such suit, action or proceeding that is brought in any such court
has been brought in an inconvenient forum. During the period a legal
dispute that is filed in accordance with this section is pending before a
court, all actions, suits or proceedings with respect to such legal dispute or
any other legal dispute, including any counterclaim, cross-claim or
interpleader, shall be subject to the exclusive jurisdiction of such
court. Each party hereby waives, and shall not assert as a defense in
any legal dispute, that (a) such party is not subject thereto,
(b) such action, suit or proceeding may not be brought or is not
maintainable in such court, (c) such party’s property is exempt or immune
from execution, (d) such action, suit or proceeding is brought in an
inconvenient forum, or (e) the venue of such action, suit or proceeding is
improper. A final judgment in any action, suit or proceeding
described in this section following the expiration of any period permitted for
appeal and subject to any stay during appeal shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable laws.
20. Costs and
Expenses. Each Party will bear all costs and expenses incurred
in connection with the preparation, negotiation and execution of this Warrant
Agreement and the issuance and exercise of the Warrants.
[Remainder
of page left intentionally blank. Signature Page
follows.]
IN WITNESS WHEREOF, the
Parties have executed this Warrant Agreement the day and the year of the latest
date specified below:
By: /s/ Xxxxxxx
Xxxxxx
Name: Xxxxxxx
Xxxxxx
Title: EVP-CFO
Date: June 11,
2010
PROJECTS
INTERNATIONAL, INC.
By: /s/ Xxxxx
Xxxxx
Name: Xxxxx
Xxxxx
Title: President
Date: 6/11/2010
EXHIBIT
A
FORM
OF WARRANT
[Attached]
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.
Warrant
To Purchase Common Stock
Warrant
No.: ____
Number of
Shares of Common Stock: _______
Date of
Issuance: _______
COMVERGE, INC., a Delaware
corporation (the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, PROJECTS INTERNATIONAL, INC., the registered holder
hereof or its permitted assigns (the “Holder”), is entitled, subject
to the terms set forth below, to purchase from the Company, at the Exercise
Price then in effect, upon surrender of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or
times on or after the Issuance Date, but not after 11:59 p.m., New York Time, on
the Expiration Date, ___________ fully paid and nonassessable shares of the
Company’s Common Stock, free from all liens and
charges with respect to the issuance thereof. Capitalized terms used
in this Warrant have the meanings set forth in Section 16.
1. EXERCISE OF
WARRANT.
(a) Mechanics of
Exercise. Subject to the terms and conditions of this Warrant,
this Warrant may be exercised by the Holder on any day on or after the Issuance
Date and prior to the Expiration Date, in whole or in part, by delivery of a
written notice, in the form attached as Exhibit A (the “Exercise Notice”), of the
Holder’s election to exercise this Warrant, and (ii) (A) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the
number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in
cash or wire transfer of immediately available funds, or (B) by notifying the
Company that this Warrant is being exercised pursuant to a Cashless
Exercise. The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and
delivery of the Exercise Notice with respect to less than all of the Warrant
Shares 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 Warrant Shares. On or before the first (1st)
Business Day following the date on which the Company has received each of the
Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless
Exercise) (the “Exercise
Delivery Documents”), the Company shall transmit by facsimile an
acknowledgment of confirmation of receipt of the Exercise Delivery Documents to
the Holder and the Company’s Transfer Agent. On or before the third
(3rd)
Business Day following the date on which the Company has received all of the
Exercise Delivery Documents, the Company shall (X) provided that the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit Withdrawal Agent
Commission system, or (Y) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, issue and dispatch by overnight
courier to the address specified in the Exercise Notice, a certificate,
registered in the Company’s share register in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise. If this Warrant is submitted in
connection with any exercise pursuant to this Section 1(a) and the number of
Warrant Shares represented by this Warrant submitted for exercise is greater
than the number of Warrant Shares being acquired upon an exercise, then the
Company shall as soon as practicable and in no event later than three Business
Days after any exercise, and at the Company’s expense, issue a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised. No fractional shares of Common Stock are to be issued upon
the exercise of this Warrant, but rather the number of shares of Common Stock to
be issued shall be rounded up to the nearest whole number. The
Company shall pay any and all taxes which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this
Warrant.
(b) Exercise
Price. For purposes of this Warrant, “Exercise Price” means
$____, subject to
adjustment as provided in Section 2.
(c) Cashless
Exercise. The Holder may, in its sole discretion, exercise
this Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
of the Aggregate Exercise Price, elect instead to receive upon such exercise the
“Net Number” of shares
of Common Stock determined according to the following formula (a “Cashless
Exercise”):
Net Number = (A x B) - (A x
C)
For purposes of the foregoing
formula:
A = the
total number of shares with respect to which this Warrant is then being
exercised.
B = the
Weighted Average Price of the shares of Common Stock (as reported by Bloomberg)
for the five (5) consecutive Trading Days ending on the date immediately
preceding the date of the Exercise Notice.
C = the
Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.
(d) Disputes. In
the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue
to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 12.
(e) Insufficient Authorized
Shares. If at any time while this Warrant remains outstanding
the Company does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for issuance upon
exercise of this Warrant at least a number of shares of Common Stock equal to
100% (the “Required Reserve
Amount”) of the number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of all of this Warrant then outstanding
(an “Authorized Share
Failure”), then the Company shall immediately take all action necessary
to increase the Company’s authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for this
Warrant then outstanding. As soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event later than one
hundred and eighty (180) days after the occurrence of such Authorized Share
Failure, the Company shall hold a meeting of its stockholders for the approval
of an increase in the number of authorized shares of Common Stock. In
connection with such meeting, the Company shall provide each stockholder with a
proxy statement and shall use its reasonable efforts to solicit its
stockholders’ approval of such increase in authorized shares of Common Stock and
to cause the Company’s board of directors to recommend to the stockholders that
they approve such proposal.
2. ADJUSTMENT OF EXERCISE PRICE
AND NUMBER OF WARRANT SHARES. If the Company at any time
on or after the Issuance Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, then the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced, and the
number of Warrant Shares will be proportionately increased. If the
Company at any time on or after the Issuance Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, then the Exercise Price in
effect immediately prior to such combination will be proportionately increased,
and the number of Warrant Shares will be proportionately
decreased. Any adjustment under this Section 2 shall become effective
at the close of business on the date the subdivision or combination becomes
effective.
3. RIGHTS UPON DISTRIBUTION OF
ASSETS. If the Company distributes to all holders of Common
Stock assets (other than cash dividends or cash distributions payable
out of consolidated earnings or earned surplus or share dividends or
distributions resulting in an adjustment under Section 2), then the Exercise
Price to be in effect after such distribution shall be determined by multiplying
the Exercise Price in effect immediately prior to such distribution by a
fraction, the numerator of which shall be the total number of shares of Common
Stock outstanding multiplied by the Weighted Average Price per share of Common
Stock immediately prior to such distribution, less the fair market value (as
determined by the Company’s Board of Directors in good faith) of the assets so
distributed, and the denominator of which shall be the total number of shares of
Common Stock outstanding multiplied by such Weighted Average Price per share of
Common Stock immediately prior to such distribution. Such adjustment
shall be made successively whenever such a distribution is made.
4. FUNDAMENTAL
TRANSACTIONS. If the Company enters into, is a party to, or is
subject to a Fundamental Transaction, then the Company will provide written
notice of such Fundamental Transaction at least ten (10) Business Days prior to
the consummation of such Fundamental Transaction. The Holder must
exercise any unexercised portion of this Warrant at least two (2) Business Days
prior to the consummation of the Fundamental
Transaction. Notwithstanding any other provisions of this Warrant,
this Warrant will expire upon the consummation of a Fundamental Transaction, to
the extent not duly exercised in accordance with the preceding sentence and the
provisions of Section 1(a) of this Warrant.
5. NONCIRCUMVENTION. The
Company hereby covenants and agrees that the Company will not, by amendment of
its Certificate of Incorporation, Bylaws 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 this Warrant, and will at all times in good faith carry
out all the provisions of this Warrant. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par
value of any shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect, and (ii) shall take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. The Holder, solely in such Person’s capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the Holder of the Warrant Shares which
Holder is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on the Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company.
7. REISSUANCE OF
WARRANTS.
(a) Transfer of
Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, whereupon the Company will (subject
to Section 15) issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.
(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Warrant, the
Company shall execute and deliver to the Holder a new Warrant (in accordance
with Section 7(d)) representing the right to purchase the Warrant Shares then
underlying this Warrant.
(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a new Warrant
or Warrants (in accordance with Section 7(d)) representing in the aggregate the
right to purchase the number of Warrant Shares then underlying this Warrant, and
each such new Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such surrender;
provided, however, that no Warrants for fractional shares of Common Stock shall
be issued.
(d) Issuance of New
Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of shares of Common Stock underlying the other new Warrants issued
in connection with such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have an issuance date, as indicated
on the face of such new Warrant which is the same as the Issuance Date, and (iv)
shall have the same rights and be subject to the same terms and conditions as
this Warrant.
8. SHARE
LEGEND. The share certificates for the Warrant Shares issued
upon exercise of this Warrant will bear the following legend:
THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT.
9. NOTICES. Whenever
notice is required or permitted to be given under this Warrant, such notice must
be in writing and must given or delivered by one of the following methods of
delivery: (i) personal delivery, (ii) Registered or Certified Mail (in each
case, return receipt requested and postage prepaid), or (iii) by nationally
recognized overnight courier, with all fees prepaid.
In the case of notice to the Company,
such notice must be delivered to the following address:
0000
Xxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxxx,
Xxxxxxx 00000
Attention: Chief
Financial Officer
with a copy to:
0000
Xxxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxxxx,
Xxxxxxx 00000
Attention: General
Counsel
and
King
& Spalding LLP
0000
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxx
In the case of notice to the Holder,
such notice must be delivered to the following address:
Projects International,
Inc.
000
00xx
Xxxxxx XX
Xxxxx
0000
Xxxxxxxxxx,
X.X. 00000
Attention:
Chief Financial Officer
The Company will provide the Holder
with prompt written notice of all actions taken pursuant to this Warrant,
including in reasonable detail a description of such action and the reason
therefore. Without limiting the generality of the foregoing, the
Company will give written notice to the Holder (i) upon any adjustment of the
Exercise Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment, and (ii) at least ten (10) days prior to the
date on which the Company closes its books or takes a record with respect to any
dividend or distribution upon the shares of Common Stock.
Notice delivered in accordance with
this Section will be effective upon receipt.
10. AMENDMENT AND
WAIVER. The provisions of this Warrant may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company and Holder have agreed in
writing to such amendment, act or omission.
11. GOVERNING LAW AND
FORUM. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of Delaware. The parties hereto agree
to submit to the exclusive jurisdiction of the federal and state courts of the
State of Delaware with respect to the interpretation of this Warrant or for the
purposes of any action arising out of or related to this Warrant.
12. CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted
by the Company and Holder and shall not be construed against any person as the
drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant. As used in this Warrant, “including” means in each instance,
“including, without limitation.”
13. DISPUTE
RESOLUTION. In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall submit the disputed determinations or arithmetic calculations via
facsimile within two (2) Business Days of receipt of the Exercise Notice giving
rise to such dispute, as the case may be, to the Holder. If the
Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall, within two (2) Business Days, submit via
facsimile the disputed determination or calculation of the Exercise Price or the
Warrant Shares to an independent, reputable investment bank selected by the
Company and approved by the Holder. The Company shall cause at its
expense the investment bank to perform the determinations or calculations and
notify the Company and the Holder of the results no later than ten (10) Business
Days from the time it receives the disputed determinations or
calculations. Such investment bank’s determination or calculation, as
the case may be, shall be binding upon all parties absent demonstrable
error.
14. REMEDIES, OTHER
OBLIGATIONS. The remedies provided in this Warrant shall be
cumulative and in addition to all other remedies available under this Warrant,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to
pursue actual damages for any failure by the Company to comply with the terms of
this Warrant.
15. TRANSFER. This
Warrant may not be offered for sale, sold, transferred or assigned without the
prior written consent of the Company, except that Holder may transfer all or
part of this Warrant to an Affiliate of Projects International, LLC without the
prior consent of the Company. This Warrant is a “restricted security”
as such term is defined in Rule 144 promulgated under the Securities Act and
must be held indefinitely unless transferred pursuant to an exemption from
registration or qualification under applicable state and federal securities
laws.
16. CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms
have the following meanings:
(a) “Affiliate” means, as to any
Person, a Person that controls, is controlled by, or is under common control
with such Person. For this purpose, “control” means the ownership,
directly or indirectly, of more than 50% of the voting securities of a
Person.
(b) “Aggregate Exercise Price” has
the meaning specified in Section 1(a).
(c) “Authorized Share Failure” has
the meaning specified in Section 1(e).
(d) “Bloomberg” means Bloomberg
Financial Markets.
(e) “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.
(f) “Cashless Exercise” has the
meaning specified in Section 1(c).
(g) “Common Stock” means
(i) the Company’s Common Stock, $0.001 par value, and (ii) any share
capital into which such Common Stock has been changed or any share capital
resulting from a reclassification of such Common Stock.
(h) “Company” means Comverge, Inc.,
a Delaware corporation.
(i) “DTC” means The Depository
Trust Company.
(j) “Exercise Delivery Documents”
has the meaning specified in Section 1(a).
(k) “Exercise Notice” has the
meaning specified in Section 1(a).
(l) “Exercise Price” has the
meaning specified in Section 1(b).
(m) “Expiration Date” means
________________, 2015 [i.e., the date
sixty (60) months after the date on which the Joint Venture Master Agreement is
executed] or, if such date falls on a day other than a Trading Day, the
next Trading Day.
(n) “Fundamental Transaction” means
that the Company, directly or indirectly, in one or more related transactions,
(i) consolidates or merges with or into (whether or not the Company is the
surviving corporation) another Person, or (ii) sells, assigns, transfers,
conveys or otherwise disposes of all or substantially all of the properties or
assets of the Company to another Person, or (iii) allows another Person to make
a purchase, tender or exchange offer that is accepted by the holders of more
than 50% of either the outstanding shares of Common Stock (not including any
shares of Common Stock held by the Person or Persons making or party to, or
associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (iv) consummates a stock purchase agreement or
other business combination (including a reorganization or recapitalization) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), or (v) reorganizes, recapitalizes or
reclassifies its Common Stock, or (vi) any “person” or “group” (as these terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than 50% of the outstanding shares of
Common Stock.
(o) “Holder” means Projects
International, Inc. or its permitted assigns.
(p) “Issuance Date” means
__________. [i.e., the date on
which the Warrant is issued in accordance with the terms of the Warrant
Agreement.]
(q) “Net Number” has the meaning
specified in Section 1(c).
(r) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.
(s) “Principal Market” means The
NASDAQ Global Market.
(t) “Required Reserve Amount” has
the meaning specified in Section 1(e).
(u) “Trading Day” means any day on
which the Common Stock is traded on the Principal Market, or, if the Principal
Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is
then traded; provided that “Trading Day” will not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00 p.m., New York Time).
(v) “Transfer Agent” means the
Company’s stock transfer agent.
(w) “Warrant” means this Warrant to
Purchase Common Stock and any Warrant issued in exchange, transfer or
replacement thereof in accordance with Section 7.
(x) “Warrant Shares” means the
shares of Common Stock for which this Warrant may be exercised in accordance
with the terms hereof.
(y) “Weighted Average Price” means,
for any security as of any date, the dollar volume-weighted average price for
such security on the Principal Market during the period beginning at 9:30 a.m.,
New York City time, and ending at 4:00 p.m., New York City time, as reported by
Bloomberg through its “Volume at Price” function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York City time, and ending at 4:00
p.m., New York City time, as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for
such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC. If the Weighted Average Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Weighted Average Price of such security on such date will be the fair market
value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of the
such security, then such dispute will be resolved pursuant to Section 13, with
the term “Weighted Average Price” being substituted for the term “Exercise
Price.” All such determinations will be appropriately adjusted for any share
dividend, share split or other similar transaction during such
period.
IN WITNESS WHEREOF, the
Company has caused this Warrant to Purchase Common Stock to be duly executed as
of the Issuance Date set out above.
By:
Name:
Title:
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE COMMON STOCK
The undersigned holder hereby exercises
the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Comverge,
Inc., a Delaware corporation (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.
1. Form of Exercise
Price. The Holder intends that payment of the Exercise Price
shall be made as:
|
|
____________
|
a
“Cash
Exercise” with respect to _________________
|
Warrant
Shares; and/or
|
|
|
____________
|
a
“Cashless
Exercise” with respect to _______________
|
Warrant
Shares.
|
2. Payment of Exercise
Price. If the Holder has elected a Cash Exercise with respect
to some or all of the Warrant Shares to be issued pursuant hereto, the Holder
shall pay the Aggregate Exercise Price in the sum of $___________________ to the
Company in accordance with the terms of the Warrant.
3. Delivery of Warrant
Shares. The Company shall deliver to the Holder __________
Warrant Shares in accordance with the terms of the Warrant.
Date:
_______________ __, ______
Name of
Registered Holder
By:
Name:
Title:
ACKNOWLEDGMENT
The Company hereby acknowledges this
Exercise Notice and hereby directs American Stock Transfer & Trust Company
to issue the above indicated number of shares of Common Stock in accordance with
the Transfer Agent Instructions dated _______________ from the Company and
acknowledged and agreed to by American Stock Transfer & Trust
Company.
COMVERGE, INC.
By:
Name:
Title:
