WARRANT TO PURCHASE COMMON STOCK VOID AFTER 5:30 P.M., EASTERN TIME, ON THE EXPIRATION DATE
Exhibit 10.5
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WARRANT
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NO.
MSC-____
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MAGNOLIA
SOLAR CORPORATION
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________
Shares
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WARRANT TO PURCHASE COMMON
STOCK
VOID
AFTER 5:30 P.M., EASTERN
TIME,
ON THE EXPIRATION DATE
THIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
FOR VALUE
RECEIVED, MAGNOLIA SOLAR CORPORATION, a Nevada corporation (the “Company”), hereby
agrees to sell upon the terms and on the conditions hereinafter set forth, but
no later than 5:30 p.m., Eastern Time, on the Expiration Date (as hereinafter
defined) to ________________ or registered
assigns (the “Holder”), under the
terms as hereinafter set forth, __________________
(_____________) fully paid and non-assessable shares of the Company’s
Common Stock, par value $0.0001 per share (the “Warrant Stock”), at a
purchase price of ONE DOLLAR AND FIVE CENTS ($1.05) per share (the “Warrant Price”),
pursuant to this warrant (this “Warrant”). The
number of shares of Warrant Stock to be so issued and the Warrant Price are
subject to adjustment in certain events as hereinafter set forth. The
term “Common
Stock” shall mean, when used herein, unless the context otherwise
requires, the stock and other securities and property at the time receivable
upon the exercise of this Warrant. This Warrant was originally issued
to the Holder of the Holder’s predecessor in interest on ____________, 20091
(the “Issue Date”).
1. Exercise of
Warrant.
a. The
Holder may exercise this Warrant in whole or in part according to its terms by
delivering the Notice of Exercise to the Company at the address set forth in
Section 9, the Notice of Exercise attached hereto having then been duly executed
by the Holder, accompanied by cash, certified check or bank draft in payment of
the purchase price, in lawful money of the United States of America, for the
number of shares of the Warrant Stock specified in the Notice of Exercise, or as
otherwise provided in this Warrant, prior to 5:30 p.m., Eastern Time, on
__________________, 20162
(the “Expiration
Date”). Partial exercises of this Warrant resulting in
purchases of a portion of the total number of shares of Warrant Stock available
hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of
shares of Warrant Stock purchased
b. The
provisions of this Section 1(b) shall only be applicable (i) prior to the
Automatic Exercise Date (as defined below),if, and only if, the provisions of
the following sentence are satisfied, or (ii) on the Automatic Exercise Date,
whether or not such provisions are satisfied. Notwithstanding
anything contained herein to the contrary, if at any time after twelve (12)
months from the Issue Date of this Warrant there is no effective registration
statement registering, or no current prospectus available for, the resale of all
of the shares of Warrant Stock issuable hereunder, then the Holder may, in its
sole discretion, exercise this Warrant in whole or in part by means of a
“cashless exercise” in lieu of making a cash payment, and the Holder shall then
be entitled to receive a certificate for the number of shares of Warrant Stock
equal to the quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A)
= VWAP
(as defined below) on the Trading Day immediately preceding thedate of such election;
(B)
= the Warrant
Price of this Warrant, as adjusted; and
(X)
= the
number of shares of Warrant Stock issuable upon exercise of thisWarrant in accordance with the terms of this
Warrant by means of a cashexercise rather than a cashless
exercise.
For purposes of this Warrant, “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time));
(b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
listed or quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by Pink OTC
Markets, Inc. (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent closing bid price per share of the Common
Stock so reported; or (d) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding
and reasonably acceptable to the Company, the fees and expenses of which shall
be paid by the Company. For purposes of this Warrant, “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the New York Stock Exchange, NYSE Amex,
NASDAQ Capital Market, NASDAQ Global Market, or NASDAQ Global Select
Market. For purposes of this Warrant, “Trading Day” means a
day on which the Trading Market is open for trading.
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Insert date which is last day of calendar month in which 5th
anniversary occurs
1
c. This
Warrant may be exercised in whole or in part so long as any exercise in part
hereof would not involve the issuance of fractional shares of Warrant
Stock. If exercised in part, the Company shall, at the request of the
Holder, deliver to the Holder a new Warrant, identical in form, in the name of
the Holder, evidencing the right to purchase the number of shares of Warrant
Stock as to which this Warrant has not been exercised, which new Warrant shall
be signed by the Chairman, Chief Executive Officer or President and the
Secretary or Assistant Secretary of the Company. The term Warrant as
used herein shall include any subsequent Warrant issued as provided
herein.
d. No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. The Company shall pay cash in lieu of fractions
with respect to the Warrants based upon the fair market value of such fractional
shares of Common Stock (which shall be the closing sale price of such shares on
the exchange or market on which the Common Stock is then traded) at the time of
exercise of this Warrant.
e. In the
event of any exercise of the rights represented by this Warrant, a certificate
or certificates for the Warrant Stock so purchased, registered in the name of
the Holder, shall be delivered to the Holder within four (4) Trading Days (the
“Warrant Stock
Delivery Date”). The person or entity in whose name any certificate for
the Warrant Stock is issued upon exercise of the rights represented by this
Warrant shall for all purposes be deemed to have become the holder of record of
such shares immediately prior to the close of business on (i) the date on which
the payment of the Warrant Price if relevant is received
by the Company (ii) or the date of a cashless exercise pursuant to
Section 1 (b) . The Company shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on exercise of this Warrant. If the Company fails for
any reason to deliver to the Holder certificates evidencing the Warrant Stock
subject to a Notice of Exercise by the Warrant Stock Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Stock subject to such exercise (based on the VWAP of
the Common Stock on the date of the applicable Notice of Exercise), $10 per
Trading Day (increasing to $20 per Trading Day on the tenth Trading Day after
such liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such certificates are delivered.
f. Delivery of New Warrants
Upon Exercise. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Stock, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
g. Rescission
Rights. If the Company fails to cause the transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant
Stock pursuant to Section 1(e) by the Warrant Stock Delivery Date, then the
Holder will have the right to rescind such exercise.
h. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise. In
addition to any other rights available to the Holder, if the Company fails to
cause the transfer agent to transmit to the Holder a certificate or the
certificates representing the Warrant Stock pursuant to an exercise on or before
the Warrant Stock Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Warrant Stock that the Company was required to deliver to
the Holder in connection with the exercise at issue times (B) the price at which
the sell order giving rise to such purchase obligation was executed, and (2) at
the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of shares of Warrant Stock for which such exercise was not
honored or deliver to the Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. 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 certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.
i. If any
portion of this Warrant remains unexercised as of the Expiration Date and the
VWAP on the Expiration Date is greater than the applicable Warrant Price as of
the Expiration Date, then, without further action by the Holder, this Warrant
shall be deemed to have been exercised automatically at the time (the “Automatic
Exercise Date”) which is immediately prior to the close of business on the
Expiration Date (or, in the event that the Expiration Date is not a Trading Day,
the immediately preceding Trading Day) as if the Holder had duly given a Notice
of Exercise for a “cashless” exercise as contemplated by Section 1(b) hereof
(without regard to the satisfaction of the conditions provided in said Section
1(b) to the Holder’s giving such a Notice of Exercise), and the Holder (or such
other person or persons as directed by the Holder) shall be treated for all
purposes as the holder of record of such Warrant Stock as of the close of
business on such Automatic Exercise Date. This Warrant shall be
deemed to be surrendered to the Company on the Automatic Exercise Date by virtue
of this Section 1(i) without any action by the Holder.
2. Disposition of Warrant Stock
and Warrant.
a. The
Holder hereby acknowledges that this Warrant and any Warrant Stock purchased
pursuant hereto are, as of the date hereof, not registered: (i) under the
Securities Act of 1933, as amended (the “Act”), on the ground
that the issuance of this Warrant is exempt from registration under Section 4(2)
of the Act as not involving any public offering or (ii) under any applicable
state securities law because the issuance of this Warrant does not involve any
public offering; and that the Company’s reliance on the Section 4(2) exemption
of the Act and under applicable state securities laws is predicated in part on
the representations hereby made to the Company by the Holder that it is
acquiring this Warrant and will acquire the Warrant Stock for investment for its
own account, with no present intention of dividing its participation with others
or reselling or otherwise distributing the same unless such sale is made
pursuant to an effective registration statement covering such resale or pursuant
to an available exemption from such registration, subject, nevertheless, to any
requirement of law that the disposition of its property shall at all times be
within its control.
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The
Holder hereby agrees that, unless such sale is made pursuant to an effective
registration statement, it will not sell or transfer all or any part
of this Warrant and/or Warrant Stock unless and until it shall first have
furnished to the Company either (i) an opinion from Company counsel or counsel
reasonably satisfactory to the Company (which shall include Xxxxxxx & Xxxxxx
LLP), to the effect that the proposed sale or transfer may be made without
registration under the Act and without registration or qualification under any
state law, or (ii) an interpretative letter from the Securities and Exchange
Commission to the effect that no enforcement action will be recommended if the
proposed sale or transfer is made without registration under the
Act.
b. If, at
the time of issuance of the shares issuable upon exercise of this Warrant, no
registration statement is in effect with respect to such shares under applicable
provisions of the Act, the Company may at its election require that the Holder
provide the Company with written reconfirmation of the Holder’s investment
intent and that any stock certificate delivered to the Holder of a surrendered
Warrant shall bear legends reading substantially as follows:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”
In
addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby on
its books and records and with those to whom it may delegate registrar and
transfer functions. Such “stop transfer” orders will be removed if
there is no legend on the stock certificate or when the legend, if any, is
removed.
3. Reservation of Shares; Valid
Issuance. The Company hereby agrees that at all times there
shall be reserved for issuance upon the exercise of this Warrant such number of
shares of its Common Stock as shall be required for issuance upon exercise of
this Warrant. The Company further agrees that all shares which may be
issued upon the exercise of the rights represented by this Warrant will be duly
authorized and will, upon issuance and against payment of the exercise price, be
validly issued, fully paid and non-assessable, free from all taxes, liens,
charges and preemptive rights with respect to the issuance thereof, other than
taxes, if any, in respect of any transfer occurring contemporaneously with such
issuance and other than transfer restrictions imposed by federal and state
securities laws.
4. Exchange, Transfer or
Assignment of Warrant. This Warrant is exchangeable, without
expense, at the option of the Holder, upon presentation and surrender hereof to
the Company or at the office of its stock transfer agent, if any, for other
Warrants of different denominations, entitling the Holder or Holders thereof to
purchase in the aggregate the same number of shares of Common Stock purchasable
hereunder. Upon surrender of this Warrant to the Company or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant shall promptly
be canceled. This Warrant may be divided or combined with other Warrants that
carry the same rights upon presentation hereof at the office of the Company or
at the office of its stock transfer agent, if any, together with a written
notice specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof.
5. Capital
Adjustments. This Warrant is subject to the following further
provisions:
a. Adjustment Upon Issuance of
Common Stock. If at any time while the Holder holds in excess
of 50% of the total number of shares of Warrant Stock available hereunder as of
the Issue Date, the Company issues or sells any shares of Common Stock or
securities convertible into or exercisable for Common Stock, other than an
Exempt Issuance (as defined below), for a consideration, conversion price or
exercise price per share of Common Stock (each, the “New Issuance Price”)
less than a price equal to the Warrant Price (subject to appropriate
adjustment for any stock dividend, stock split, stock combination,
reclassification or similar transaction after the date hereof) (a “Dilutive Issuance”),
then immediately after such Dilutive Issuance, the Warrant Price then in effect
shall be reduced to an amount equal to the New Issuance Price. For purposes of
this Warrant, “Exempt
Issuance” shall mean the issuance of (a) shares of Common Stock or
options to employees, officers, directors, or consultants of the Company
pursuant to any stock or option plan duly adopted for such purpose by a majority
of the non-employee members of the Board of Directors of the Company or a
majority of the members of a committee of non-employee directors, (b) securities
upon the exercise or exchange of or conversion of any securities issued
hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this Warrant,
provided that such securities have not been amended since the date of this
Warrant to increase the number of such securities or to decrease the exercise,
exchange or conversion price of such securities; and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a person which is either an owner of, or an entity that is, itself or
through its subsidiaries, an operating company in a business synergistic with
the business of the Company and in which the Company receives benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in
securities.
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b. Recapitalization,
Reclassification and Succession. If any recapitalization
of the Company or reclassification of its Common Stock or any merger or
consolidation of the Company into or with a corporation or other business
entity, or the sale or transfer of all or substantially all of the Company’s
assets or of any successor corporation’s assets to any other corporation or
business entity (any such corporation or other business entity being included
within the meaning of the term “successor corporation”) shall be effected, at
any time while this Warrant remains outstanding and unexpired, then, as a
condition of such recapitalization, reclassification, merger, consolidation,
sale or transfer, lawful and adequate provision shall be made whereby the Holder
of this Warrant thereafter shall have the right to receive upon the exercise
hereof as provided in Section 1 and in lieu of the shares of Common Stock
immediately theretofore issuable upon the exercise of this Warrant, such shares
of capital stock, securities or other property as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of Common Stock immediately theretofore issuable
upon the exercise of this Warrant had such recapitalization, reclassification,
merger, consolidation, sale or transfer not taken place, and in each such case,
the terms of this Warrant shall be applicable to the shares of stock or other
securities or property receivable upon the exercise of this Warrant after such
consummation.
c. Subdivision or Combination
of Shares. If the Company at any time while this Warrant
remains outstanding and unexpired shall subdivide or combine its Common Stock,
the number of shares of Warrant Stock purchasable upon exercise of this Warrant
and the Warrant Price shall be proportionately adjusted.
d. Stock Dividends and
Distributions. If the Company at any time while this Warrant
is outstanding and unexpired shall issue or pay the holders of its Common Stock,
or take a record of the holders of its Common Stock for the purpose of entitling
them to receive, a dividend payable in, or other distribution of, Common Stock,
then (i) the Warrant Price shall be adjusted in accordance with Section 5(f) and
(ii) the number of shares of Warrant Stock purchasable upon exercise of this
Warrant shall be adjusted to the number of shares of Common Stock that the
Holder would have owned immediately following such action had this Warrant been
exercised immediately prior thereto.
e. Stock and Rights Offering to
Shareholders. If the Company shall at any time after the date
of issuance of this Warrant distribute to all holders of its Common Stock any
shares of capital stock of the Company (other than Common Stock) or evidences of
its indebtedness or assets (excluding cash dividends or distributions paid from
retained earnings or current year’s or prior year’s earnings of the Company) or
rights or warrants to subscribe for or purchase any of its securities (excluding
those referred to in the immediately preceding paragraph) (any of the foregoing
being hereinafter in this paragraph called the “Securities”), then in each such
case, the Company shall reserve shares or other units of such Securities for
distribution to the Holder upon exercise of this Warrant so that, in addition to
the shares of the Common Stock to which such Holder is entitled, such Holder
will receive upon such exercise the amount and kind of such Securities which
such Holder would have received if the Holder had, immediately prior to the
record date for the distribution of the Securities, exercised this
Warrant.
f. Spin Off. If,
for any reason, prior to the exercise of this Warrant in full, the Company spins
off or otherwise divests itself of a part of its business or operations or
disposes all or of a part of its assets in a transaction (the “Spin Off”) in
which the Company does not receive compensation for such business, operations or
assets, but causes securities of another entity to be issued to security holders
of the Company, then the Company shall notify the Holder at least thirty
(30) days prior to the record date with respect to such Spin-Off.
g. Adjustment for Spin
Off. If, for any reason, prior to the exercise of this Warrant in
full, the Company spins off or otherwise divests itself of a part of its
business or operations or disposes all or a part of its assets in a transaction
(the “Spin Off”) in which the Company does not receive compensation for such
business, operations or assets, but causes securities of another entity (the
“Spin Off Securities”) to be issued to security holders of the Company,
then
(a) the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had all
of the Holder’s unexercised Warrants outstanding on the record date (the “Record
Date”) for determining the amount and number of Spin Off Securities to be issued
to security holders of the Company (the “Outstanding Warrants”) been exercised
as of the close of business on the trading day immediately before the Record
Date (the “Reserved Spin Off Shares”), and (ii) to be issued to the Holder on
the exercise of all or any of the Outstanding Warrants, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by
(y) a fraction, of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the amount of the
Outstanding Warrants; and
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(b)
the Warrant Price on the Outstanding Warrants shall be adjusted
immediately after consummation of the Spin Off by multiplying the Warrant
Price by a fraction (if, but only if, such fraction is less than 1.0), the
numerator of which is the average closing bid price of the Common Stock
for the five (5) Trading Days immediately following the fifth Trading Day
after the Record Date, and the denominator of which is the average closing
bid price of the Common Stock on the five (5) trading days immediately
preceding the Record Date; and such adjusted Warrant Price shall be deemed
to be the Warrant Price with respect to the Outstanding Warrants after the
Record Date.
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h. Warrant Price
Adjustment. Except as otherwise provided herein, whenever the
number of shares of Warrant Stock purchasable upon exercise of this Warrant is
adjusted, as herein provided, the Warrant Price payable upon the exercise of
this Warrant shall be adjusted to that price determined by multiplying the
Warrant Price immediately prior to such adjustment by a fraction (i) the
numerator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately prior to such adjustment, and (ii) the
denominator of which shall be the number of shares of Warrant Stock purchasable
upon exercise of this Warrant immediately thereafter.
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i. Adjustment to Number of
Warrant Shares. If the Warrant Price is reduced pursuant to the
preceding provisions of this Section 5, the number of shares issuable on
exercise of the Warrants shall be increased to a number of shares (the “Adjusted Warrant Shares
Number”) such that the aggregate Warrant Price (after taking into account
such reduction) for the Adjusted Warrant Shares Number shall be equal to the
aggregate Warrant Price (immediately before such reduction) for the Warrant
Stock issuable on exercise of the Warrants prior to the adjustment contemplated
by this clause (g) (for purposes of all such calculations, all Warrants shall be
assumed to be fully exercisable without regard to any limitations, restrictions
or conditions that may be provided herein or in any other provision of any of
the Transaction Documents).
j. Certain Shares
Excluded. The number of shares of Common Stock outstanding at
any given time for purposes of the adjustments set forth in this Section 5 shall
exclude any shares then directly or indirectly held in the treasury of the
Company.
k. Deferral and Cumulation of
De Minimis Adjustments. The Company shall not be required to
make any adjustment pursuant to this Section 5 if the amount of such adjustment
would be less than one percent (1%) of the Warrant Price in effect immediately
before the event that would otherwise have given rise to such
adjustment. In such case, however, any adjustment that would
otherwise have been required to be made shall be made at the time of and
together with the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to not less than one percent
(1%) of the Warrant Price in effect immediately before the event giving rise to
such next subsequent adjustment.
l. Duration of
Adjustment. Following each computation or readjustment as
provided in this Section 5, the new adjusted Warrant Price and number of shares
of Warrant Stock purchasable upon exercise of this Warrant shall remain in
effect until a further computation or readjustment thereof is
required.
6. Call
Right. Subject to the provisions of Section 7, this Warrant
may be redeemed prior to the Expiration Date, at the option of the Company, at a
price of $0.001 per share of Warrant Stock (“Redemption Price”),
upon not less than 10 Trading Days’ prior written notice (“Redemption Period”)
to the Holder notifying Holder of the Company’s intent to exercise such right
and setting forth a time and date for such redemption (the “Redemption Date”);
provided, however, that no
redemption under this Section 6 may occur unless (i) the Company’s Common Stock
has had a per share closing sales price of at least 200% of the Warrant Price
for each of the sixty (60) consecutive Trading Days immediately prior to the
issuance of such notice (ii) in excess of 200,000 shares of the
Company’s Common Stock has traded for each of the sixty (60) consecutive Trading
Days immediately prior to such notice (iii) at the date of the redemption notice
and during the entire Redemption Period, there is an effective registration
statement covering the resale of the Warrant Stock or the
Warrant Shares issued in a cashless exercise may be
immediately resold in accordance with the provisions of Rule 144 ,(iv) the
Company is current in its required Periodic Filings with the SEC and (v) there
are at least 2 market makers for the Common Stock. This Warrant may be
thereafter exercised by the Holder, for cash or on a cashless basis, at any time
after notice of redemption has been given by the Company and prior to the time
and date fixed for redemption, and the other provisions of this Warrant shall
remain in full force and effect through and including the redemption date.. This
Warrant may be exercised by the Holder, for cash or on a cashless basis, at any
time after notice of redemption has been given by the Company
through the time and date fixed for redemption, and the other
provisions of this Warrant shall remain in full force and effect through and
including the Redemption Date. After the Redemption Date, the Holder
shall have no further rights except to receive, upon surrender of this Warrant,
the Redemption Price.
7. Limitation on
Exercises. Notwithstanding the provisions of this Warrant, in
no event (except (i) as specifically provided in this Warrant as an exception to
this provision, (ii) during the forty-five (45) day period prior to the
Expiration Date, (iii) during the Redemption Period, or (iv) while there is
outstanding a tender offer for any or all of the shares of the Company’s Common
Stock), the Company shall not effect the exercise of this Warrant, and the
Holder shall not have the right to exercise this Warrant, to the extent that
after giving effect to such exercise, the Holder (together with such Holder’s
affiliates) would beneficially own in excess of 4.99% of the shares of Common
Stock outstanding immediately after giving effect to such
exercise. For purposes of the foregoing sentence, the aggregate
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 shares of Common Stock which would be
issuable upon (A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by such Holder and its affiliates and (B) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company beneficially owned by such Person and its affiliates (including,
without limitation, any convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. To the extent that the limitation contained in this
Section 6 applies, the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any affiliate)
and of which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of Exercise shall be
deemed to be the Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any
affiliate) 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 the
determination. For purposes of this Warrant, in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (1) the Company's most
recent Form 10-K, Form 10-KSB, Form 10-Q, Form 10-QSB, Current Report on Form
8-K or other public filing with the Securities and Exchange Commission, as the
case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral
request of the Holder, the Company shall within one (1) business day confirm
orally and in writing to the 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 the Holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 6 to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation.
5
8. Notice to
Holders.
a. Notice of Record
Date. In case:
(i) the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of this Warrant) for the
purpose of entitling them to receive any dividend (other than a cash dividend
payable out of earned surplus of the Company) or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities, or to receive any other right;
(ii) of any
capital reorganization of the Company, any reclassification of the capital stock
of the Company, any consolidation with or merger of the Company into another
corporation, or any conveyance of all or substantially all of the assets of the
Company to another corporation; or
(iii) of any
voluntary dissolution, liquidation or winding-up of the Company;
then, and
in each such case, the Company will mail or cause to be mailed to the Holder
hereof at the time outstanding a notice specifying, as the case may be, (i) the
date on which a 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, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, 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 such stock or securities at the
time receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution or winding-up. Such
notice shall be mailed at least thirty (30) days prior to the record date
therein specified, or if no record date shall have been specified therein, at
least thirty (30) days prior to such specified date, provided, however, failure
to provide any such notice shall not affect the validity of such
transaction.
b. Certificate of
Adjustment. Whenever any adjustment shall be made pursuant to Section 5
hereof, the Company shall promptly make a certificate signed by its Chairman,
Chief Executive Officer, President, Vice President, Chief Financial Officer or
Treasurer, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and the Warrant Price and number of shares of Warrant Stock
purchasable upon exercise of this Warrant after giving effect to such
adjustment, and shall promptly cause copies of such certificates to be mailed
(by first class mail, postage prepaid) to the Holder of this
Warrant.
9. Loss, Theft, Destruction or
Mutilation. Upon receipt by the Company of evidence
satisfactory to it, in the exercise of its reasonable discretion, of the
ownership and the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company and, in the case of mutilation, upon surrender and cancellation
thereof, the Company will execute and deliver in lieu thereof, without expense
to the Holder, a new Warrant of like tenor dated the date hereof.
10. Warrant Holder Not a
Stockholder. Prior to the exercise of this Warrant in
accordance with its terms, the Holder of this Warrant, as such, shall not be
entitled by reason of this Warrant to any rights whatsoever as a stockholder of
the Company.
11. Notices. Any
notice required or contemplated by this Warrant shall be deemed to have been
duly given if transmitted by registered or certified mail, return receipt
requested, or nationally recognized overnight delivery service, to the Company at its
principal executive offices located at ______________________, Attention:
_______________Chief Executive Officer, or to the Holder at the name and address
set forth in the Warrant Register maintained by the Company.
12. Choice of
Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.
13. Jurisdiction and
Venue. The Company and Holder hereby agree that any dispute
which may arise between them arising out of or in connection with this Warrant
shall be adjudicated before a court located in New York County, New York and
they hereby submit to the exclusive jurisdiction of the federal and state courts
of the State of York located in New York County with respect to any action or
legal proceeding commenced by any party, and irrevocably waive any objection
they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is an
inconvenient forum, relating to or arising out of this Warrant or any acts or
omissions relating to the sale of the securities hereunder, and consent to the
service of process in any such action or legal proceeding by means of registered
or certified mail, return receipt requested, in care of the address set forth
herein or such other address as either party shall furnish in writing to the
other.
6
14. 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, to the fullest extent permitted by law, 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.
15. Supplements and Amendments;
Whole Agreement. This Warrant may be amended or supplemented
only by an instrument in writing signed by the parties hereto. This
Warrant contains the full understanding of the parties hereto with respect to
the subject matter hereof and thereof and there are no representations,
warranties, agreements or understandings other than expressly contained herein
and therein.
16. Descriptive
Headings. Descriptive headings of the several Sections of this
Warrant are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
7
IN
WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by its duly authorized officers, as of this __
day of _____________________, 2009.
| MAGNOLIA SOLAR CORPORATION | |||
|
|
By:
|
/s/ | |
| Name | |||
| Title | |||
8
NOTICE
OF EXERCISE
|
TO:
|
Magnolia
Solar Corporation
|
|
|
52-B
Xxxxxxxx Park
|
|
|
Suite
314
|
|
|
Woburn,
MA 01801
|
|
|
Attn:
Chief Financial Officer
|
|
|
Tel:
(___) ___-____
|
|
|
Fax:
(___) ___-____
|
(1) The
undersigned hereby elects to purchase ______________ shares of Warrant Stock of
the Company pursuant to the terms of the attached Warrant to Purchase Common
Stock, and tenders herewith payment of the exercise price in full, as
follows:
o CASH: $
=
(Exercise Price x Exercise Shares)
Payment is being made by:
o enclosed check
owire transfer
oother
o CASHLESS
EXERCISE [if available pursuant to Section 1(b)]:
Net number of Warrant Shares to be
issued to Holder
: _________*
* based
on: [(A-B)
(X)] / (A)
where:
A
= VWAP = $_______________
B
= Warrant
Price = $_______________
|
|
X
=
|
the
number of shares of Warrant Stock
issuable
|
upon exercise of this Warrant in
accordance with
the terms of this Warrant
(2) Please issue a certificate or
certificates representing said shares of Warrant Stock in the name of the
undersigned or in such other name as is specified below, by physical delivery of
a certificate(s) to:
The
shares of Warrant Stock shall be delivered to the following DWAC Account Number,
if permitted:
(3) Accredited Investor.
The undersigned is an “accredited investor” as defined in Regulation D
promulgated under the Securities Act of 1933, as amended.
9
[SIGNATURE OF HOLDER]
Name of
Investing
Entity: ____________________________________________________
Signature
of Authorized Signatory of Investing
Entity: ________________________________
Name and
Title of Authorized
Signatory: _______________________________________
Date: __________________________________________________________________
10
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form
and supply required information.
Do not
use this form to exercise the warrant.)
FOR
VALUE RECEIVED, all of or shares of the
foregoing Warrant and all rights evidenced thereby are hereby assigned
to
whose address is
Dated: ,
Holder’s
Name: ______________________________________________________
Holder’s
Signature: ____________________________________________________
Name and
Title of
Signatory: _____________________________________________
Holder’s
Address: ____________________________________________________
Signature
Guaranteed: _________________________________________________
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
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
11
